Marat v Hanjung Power Ltd [2014] PGSC 33; SC1357 (4 July 2014)

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JUDICIAL REVIEW – Regulation made pursuant to ss. 23 (2) (a) and 193 of the Customs Act, 1951 – Regulation prohibiting absolutely the importation of heavy fuel oil content exceeding the Maximum Prescribed Standards – Respondent a power plant operator using heavy fuel of a certain capacity likely to be adversely affected by the Regulation - Whether the respondent entitled to be heard before the making of the Regulation - Decisions by the National Executive Council and the Governor General to make the Regulation – Whether the decision justiciable - Appellants excluded from being heard at the hearing by the trial judge for failing to comply with pre-trial directions of the Court - Appellants' right to be heard – Exercise of Court's discretion - Whether the decisions by the National Executive Council and the Governor General to make the Regulation ultra vires and unreasonable in the Wednesbury sense - Whether the decision reviewable - Whether formulation of new "legitimate expectation" rule in favour of the respondent by the Court valid– Whether the rule could apply retrospectively.

CONSTITUTIONAL LAW – Sections 41 and 59 of the Constitution - Whether the National Court had jurisdiction to interpret ss. 41 and 59 of the Constitution – Power of the Supreme Court to interpret Constitutional provisions - Principles discussed.

Section 23 (2) (a) and 193 of the Customs Act, 1951, empowered the Governor General, acting with and in accordance with the advice of the National Executive Council ('the NEC') to make a Regulation prohibiting absolutely the importation of heavy fuel oil having a sulphur content in excess of the "Maximum Prescribed Standards". The fuel is essential for the operation of the respondent's power plant which is situated at Kanudi just outside of Port Moresby. The plant operates 24 hours per day supplying about a third of Port Moresby's electricity. The respondent applied for judicial review of the decision by the appellants to make the Regulation. Due to the purported non-compliance by the appellants with certain pre-trial directions of the Court, the trial Judge ordered the appellants not to appear at the hearing without leave of the court. The appellants were consequently not heard at the hearing. In his ruling, the trial Judge struck down the Regulation on the grounds that the NEC failed to accord the respondent natural Justice, failed to give reasons for its decision, and made a Regulation that is unreasonable in the Wednesbury sense and which contravened section 41 of the Constitution. The appellants appealed the decision arguing, inter alia, that the trial Judge erred in law in not according them natural justice and allowing them to be heard at the hearing and make submissions on the issues before the Court. The appellants also argued that the National Court lacked jurisdiction to decide the validity of the Regulation as it was a legislative enactment and that the advice of the NEC to the Governor General, and the decision to make the Regulation, were non-justiciable under the provisions of ss. 84 (6), 149 (5), 153 (2) and Schedule 1.7 of the Constitution. The Court therefore had no power to interfere with the Regulation by inquiring into the advice the NEC gave to the Governor General to make the Regulation resulting in the Regulation being struck down. It is to be noted that it was common ground between the parties that the Regulation was valid and was not inconsistent with the Customs Act, 1951.

4. (Per Collier J.): As a matter of strict statutory interpretation, the Regulation was not inconsistent with the power in s. 23 of the Customs Act, 1951, to make a regulation to prohibit the importation of goods absolutely. However, the decision by the NEC to make the Regulation was reviewable because the NEC as the decision maker had the duty to consult the respondent and give it an opportunity to be heard on whether the importation of heavy fuel oil should be prohibited. The decision breached the principles of natural justice and was ultra vires.

5. (Per Collier J.): The decision by the NEC to make the Regulation was also unreasonable in the Wednesbury sense as it would directly affect the respondent's business. The decision was therefore justiciable.

6. (Per Gavara-Nanu J.; David J. agreeing):The decision of the National Executive Council to advice the Governor- General to make the Regulation was made within the delegated legislative powers conferred by the Customs Act, 1951. Thus the decision was validly made and was non-justiciable.

7. (Per Gavara-Nanu J.; David J. agreeing): The Regulation not being inconsistent with s. 23 of the Customs Act, 1951, was a valid law which no court can question. Consequently, issues of ultra vires, natural justice and unreasonableness could not arise. Thus the learned trial judge erred in taking them into account and regarding them as grounds to review the NEC's decision to review the Regulation.

8. (Per Collier J.): The appellants failed to make attempts to comply with the detailed orders of the National Court, which orders were made to progress litigation in the proceeding. Thus, it was appropriate that the National Court acted to enforce its orders and deal with the appellants who chose to ignore the orders of the Court.

9. (Per Gavara-Nanu J.; David J. agreeing): The learned trial Judge erred in denying the appellants their right to appear and be heard as parties to the proceeding at the hearing, for appellants' purported failure to comply with Court's pre-trial directions. The appellants were denied a fair hearing. It would have been a proper exercise of discretion had the learned trial Judge given the appellants an opportunity to explain the reasons for their purported non-compliance with the Court's directions.

Aeava v National Executive Council [2001] PGNC 62;N2163
Air Niugini Limited v Doiwa [2000] PNGLR 347
Allan Pinggah v Margaret Elias (2005) N2850
Alois Kingsley Golu v. NEC (2011) N4425
Application by Gabriel Dusava (1998) SC581
Cann v. Cann [1963] PNGLR 256
Chief Collector of Taxes v. T.A Field Pty Ltd [1975] PNGLR 144
Cl Toulik v. Andy Kuek (2006) SC786
Commissioner General of Internal Revenue Commission v. Douglas Properties
Ltd (2002) N2192
Consort Express Lines Limited v Marat (OS 105 of 2009, 27
March 2009)
Curran v State [1994] PNGLR 230
David Coyle and Ors v. Loani Henao [2000] PNGLR 17, SC655
Forest Product Ltd v Ossima Resources Ltd (SCA 6 of 2012, 19
September 2013)
Gaman Holdings Pty Ltd v. Labu Holdings Pty Ltd (2000) N2017
Gabi v Nate [2006] PGNC 178
Gegeyo v Minister for Lands and Physical Planning [1987] PNGLR 331
Gerald Sidney Fallsheer v. Iambakey Okuk & The State [1980] PNGLR 101
Gipe v The State [2000] PGSC 10
Hon. Patrick Pruaich v. Chronox Manek (2010) SC1052
Iambakey Okuk and The State v. Gerald Sidney Fallsheer [1980] PNGLR 274;PGSC13
Issac Lupari v. The State (2008) SC930
In re Constitution Section 19 (1) Reference by Allan Marat [2012] PGSC 20
In re Moresby North East Election Petition, Patterson Lowa v. Goasa Damena
[1977] PNGLR 429
Jack Nou v. Richard Chirake (2004) N2539
Jimmy Maladina v. Posain Poioh (2004) N2568
Joseph Kimbu v. Eko Mason [1971] PNGLR 407
Joseph Lemuel Raz v. Paulus Matane [1986] PNGLR 38; N525
Kamit v Aus-PNG Research & Resources Impex Ltd N3112
Kawaso Ltd v. Oil Search PNG Ltd SC1218
Kekedo v Burns Philp (PNG) Ltd [1988-89] PNGLR 122
Kila Wari v. Gabriel Ramoi & Ors [1986] PNGLR 112; SC316
Kipalan v National Parliament [2004] PGSC 42
Kuya Kehi v Kelu Theodore [1978] PNGLR 217
Kwimberi v Independent State of Papua New Guinea [1998] PGSC 9
Lae Bottling Industries Ltd v. Lae Rental Homes Ltd (2011) SC1120
Lawrence Sausau v Joseph Kumgal (2006) N3253
Leo Nuia v. Benias Sabumei [1992) PNGLR 90
Ltd v. Eddie Tarsie (2010) SC1075
Mark Opur v. Dabar Enterprises Ltd (2004) N2528
Mas International Ltd v. David Sode (2008) SC944
Matu Mining Pty Ltd v. Philemon Embel (Attorney General) and Kare Puga
Development Corporation Pty Ltd (1995) SC483
Michael Kuman v. Digicel (PNG) Ltd (2013) SC1232
Mineral Resources Enga Ltd v. Mineral Resources Development (2010) N4279
Mision Askiki v Manasupe Zurenuoc (2005) SC 797
NCDC Crusoe Pty Ltd [1993] PNGLR 138, N836
Nima Holdings Ltd v. Noah Giali (2011) N4239
NTN Pty Ltd v. The State [1986] PNGLR 167
Ombudsman Commission v Peter Yama (2004) SC 747
Ombudsman Commission of PNG v Denis Donohoe [1985] PNGLR 348
Pansat Communications Pty Ltd v. John Momis, The State & Post and Telecommunication Corporation (1995) PGNC 19; N1321
Paul v Kispe [2001] PGNC 13
Philip Takori v. Simon Yagari SC905
PNG National Stevedoring Pty Ltd v. Andrew Baing (2001) N2069
Premdas v. The State [1979] PNGLR 329
Rakatani Peter v. South Pacific Brewary Ltd [1976] PNGLR 537, SC109
Ramu Nico Management (MCC) Ltd v. Eddie Tarsie (2010) SC1075
Re Election of Governor General (No.2) (2004) SC728
Reference by the East Sepik Provincial Executive (2011) SC1154
Re Validity of Value Added Tax Act, 1998 (2003) SC693
Saboka v Commissioner of Police and the State (2006) N2975
Sakawar Kasieng v. Andrew Baigry (2004) N2562
Sale v Tohian [1962] PGSC 9
SCR No. 2 of 1995, Reference by Western Highlands Provincial Executive (1995)
[1995] PNG SC 6;SC486
SCR No. 3 of 1990; Reference concerning s. 365 of the Income Tax Act, 1959 (17 December,1992)
Secretary for Law v Tenalom [1965-66] PNGLR 414
Special Reference by Fly River Provincial Government (2010) SC1057
Steven Pupune v. Ubum Makarai [1977] PNGLR 622
Telepage Pty Ltd v Post and Telecommunications Corporation [1987] PGNC3; N3605
Telikom PNG Ltd v. ICCC (2008) SC908
The Independent State of Papua New Guinea v. Philip Kapal [1987] PNGLR 417
The Minister for Lands v. William Robert Frame [1980] PNGLR 433
The State v. Downer Construction (PNG) Ltd (2009) SC979
The State v. Independent Tribunal, Ex parte Moses Sasakila [1976] PNGLR 491
The State v. Zachary Gelu (2003) SC716
Thomas Kavali v. Thomas Hoihoi [1984] PNGLR 182
Tindiwi v Nilkare and The State [1984] PNGLR 191
Titi Christian v. Rabbie Namaliu (OS No. 2 of 1995, 18 July, 1996)
Wari v Ramoi [1986] PGSC 11
The matter of Section 18 (1) of the Constitution, Southern Highlands Provincial Government v Sir Michael T Somare; Sir Matiabe Yuwi v Sir Michael Somare (2007) SC 854
WorkCover Authority of NSW v. Placer (PNG) Exploration Ltd (2006) N2003

PNG Statutes, Subordinate legislation, Books, Reports and Articles referred to:

Constitution of the Independent State of Papua New Guinea
Claims By and Against the State Act 1996
Customs Act 1951
Customs (Prohibited Exports) Regulation (Chapter No. 101) (Consolidated to No. 16 of 2007)
Customs (Prohibited Imports) 1973
Customs (Prohibited Imports – Certain Petroleum Products) Regulation 2008 (No. 7 of 2008)
Customs (Prohibited Imports) Regulation (Chapter No. 101) (Consolidated to No. 7 of 2011)
Harbours Board Act, (Chapter No. 240)
Land Acquisition Act 1974
Radio Communications Act, (Chapter No. 152)
Radio Communications (Television) Regulation 1986
Stamp Duties Act, (Chapter No. 117)
Supreme Court Act 1975
Supreme Court Rules 2012

Overseas Statutes, Subordinate legislation, Books, Reports and Articles referred to:

Administrative Decisions (Judicial Review) Act 1977 (Cwth)
Bennion on Statutory Interpretation 5th Edition
Delegated Legislation in Australia 4th Edition ( Butterworths ) by D. Pearce & S. Argument, Lexis Nexis
De Smith's Judicial Review 7th Edition (Sweet & Maxwell, London 2013)
Halsbury's Laws of England 5th Edition Volume 96

L. Jurth with D. Mel, for the first and second appellants
MM. Varitimos with K. Frank, for the respondent

1. GAVARA-NANU J; The appellants appeal against the whole of the judgment of Cannings J, given on 18 September, 2009. The appeal is by way of a Notice of Motion filed pursuant to Order 10 r. 1 of the Supreme Court Rules 2012.

2. The background facts are stated briefly as follows. The respondent operates a power plant at Kanudi outside the city of Port Moresby. The plant supplies about a third of the power used by Port Moresby residents. To operate the power plant the respondent uses heavy fuel. The plant has been in operation since 27 January, 1999. The Governor General acting with and in accordance with the advice of the National Executive Council ("the NEC") made a Regulation which is the subject of this appeal, namely, the Customs (Prohibited Imports – Certain Petroleum Products) Regulation, 2008 (No. 7 of 2008), ("the Regulation"). The Regulation was made pursuant to ss. 23 (2) (a) and 193 of the Customs Act 1951. It prohibits absolutely the importation of a petroleum product or heavy fuel oil which has sulphur content in excess of the "Maximum Prescribed Standards" under the Regulation.

3. It should be stated at the outset that the decision under review by the National Court was the decision of the NEC to advise the Governor General to make the Regulation. The Governor General merely made the Regulation pursuant to that advice as he was required by law to do: In re Constitution Section 19 (1) Reference by Allan Marat [2012] PGSC 20.

4. The effect of the Regulation, if it becomes operational, is that it will affect the viability of the respondent's business and commercial interests.

5. The respondent sought judicial review of the decision by the NEC and the Governor General to make the Regulation under Order 16 of the National Court Rules on the grounds that it was denied natural justice; that no reasons were given for the decision to make the Regulation and that the decision to make the Regulation was unreasonable pursuant to the well known principle enunciated in Association Provincial Picture House Ltd v. Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 K.B 223. Applying the Wednesbury sense of unreasonableness, the learned trial judge also found that the decision was harsh and oppressive under s. 41 of the Constitution.

6. Following the purported failure by the appellants to comply with certain pre-trial directions issued by the National Court, the learned trial judge ordered the appellants not to appear at the hearing and be heard without leave of the Court. The pre-trial directions were issued by Davani J; they required the appellants to produce documents and other materials relating to the decision by the NEC to advise the Governor General to make the Regulation. The appellants did not adduce any such evidence or materials, hence an order was made by the trial judge barring the appellants' lawyers from appearing at the hearing. The appellants did not seek leave to appear at the hearing. As a result, they were not heard on all the matters decided by the learned trial judge.

(i). The appellants had a duty to accord natural justice to the respondent prior to making the Regulation as it was obvious that the Regulation would have an immediate and substantial effect on the respondent's business and commercial interests.

(ii) The appellants had a duty to give reasons for their decision to make the Regulation. The appellants were in breach of the principles of natural justice when they failed to give their reasons for making the Regulation.

(iii) The decision by the appellants to make the Regulation was irrational and unreasonable because the Regulation prohibited the importation of a product which was essential to the viability of the respondent's business. The respondent does not hold a license to import fuel and there was no consultation with the respondent before making the Regulation. Thus, the decision to make the Regulation was harsh and oppressive under s. 41 of the Constitution.

1. The learned primary judge erred in purporting to grant judicial review of the decision of the Head of State (the Governor General) in the circumstances where:

(i) the Head of State can only act with and in accordance with the advice of the National Council; and

(b) in making the Customs [Prohibited Imports – Certain Petroleum Products] Regulation 2008 ["the Regulation"], Governor General was, at and for all material times, purposes and respects, acting:

(c) in the premises, in the exercise and performance of his privileges, powers, functions, duties and responsibilities in making the Regulation, the Governor General did not make any decision:

2. Further or alternatively, the learned primary judge erred in purporting to grant judicial review of the advice of the National Executive Council to the Governor General to make the Regulation in circumstances where:

[a] pursuant to s. 149 of the Constitution, the National Executive Council is responsible for the executive government of Papua New Guinea;

[i] the National Executive Council has the obligation to advise the Head of State, including in relation to an instrument made by or in the name of the Head of State; and

[c] pursuant to section 153 of the Constitution, the procedures of the National Executive Council is non-justiciable;

[d] in so doing the Governor-General, the National Executive Council was, at and for all material times, purposes and respects, acting:

[e] in the premises, the advice of the National Executive Council to the Governor-Governor is not a decision:

3. Further or alternatively, the learned primary judge erred in purporting to grant judicial review of the decision of the National Executive Council "to advise the Governor-General" [at page 6 of the Judgment] in circumstances where:

[a] pursuant to section 149 of the Constitution, the National Executive Council is responsible for the executive government of Papua New Guinea;

[i] the National Executive Council has the obligation to advise the Head of State, including in relation to an instrument made by or in the name of the Head of State; and

[c] pursuant to section 153 of the Constitution, the procedures of the National Executive Council is non-justiciable;

[d] in deciding to so advise the Governor-General, the National Executive Council was, at and for all material times, purposes and respects, acting:

[e] in the premises, any decision of the National Executive Council to so advise the Governor-General is not a decision:

4. Further or alternatively, the primary judge erred in purporting to grant judicial review of "a Regulation made under the Customs Act" [at page 4 of the Judgment] in circumstances where:

[c] making the Regulation is a legislative, further or alternatively, executive, decision or act;

5. The learned primary judge erred in purporting to answer questions relating to the interpretation and application of provisions of the Constitution in circumstances where:

[b] pursuant to section 18 of the Constitution the Supreme Court has, in respect of answering such questions:

[c] in the premises, the jurisdiction of the National Court pursuant to section 166 of the Constitution did not extend to answering such questions.

6. Further or alternatively, the learned primary judge erred in construing section 59 of the Constitution to include the exercise of legislative, further or alternatively, executive, power [at pages 7 and 8 of the Judgment] in circumstances where:

[a] upon its proper construction, section 59 of the Constitution does not so provide;

7. Further or alternatively, the learned primary judge erred in construing a breach of section 41 of the Constitution as providing a ground for judicial review [at page 13 of the Judgment] in circumstances where:

[a] there were no, alternatively no sufficient, facts to establish a breach of section 41 of the Constitution;

[b] upon its proper construction, section 41 of the Constitution does not so provide;

[c] further or alternatively, upon its property construction, the legislative, further or alternatively, executive, power of the National Executive Council is not capable of being challenged pursuant to section 41 of Constitution;

8. Further or alternatively, the learned primary judge erred in purporting to declare that the Regulation lawfully made under a valid Act of the Parliament is "null and void and of no effect" in circumstances where the National Court does not have jurisdiction to so declare.

9. The learned primary judge erred in purporting to "formulate a new rule" [page 8 of the Judgment] ["the New Rule"] in circumstances where:

[i] the New Rule involved policy considerations concerning the subject matter of the Regulation;

[ii] the Appellants made no, nor were permitted to make, submissions in respect of the Regulation or the applicable policy considerations;

[iii] the learned primary judge failed to follow the approach articulated in Momis & Ors v Attorney-General & Ors [2000] PNGLR 109 and New Britain Oil Palm Ltd v Vitus Sukuramu [2008] SC956.

[c] further or alternatively, it was unnecessary for the learned primary judge to make the Rule.

10. Alternatively, and to the extent that the learned primary judge did have the power to formulate the New Rule, the New Rule as articulated in the Judgment is:

11. Alternatively, and to the extent that the learned primary judge did have the power to formulate the New Rule and it is not wrong as matter of law, contrary to principle or against authority, the learned primary judge erred in applying the New Rule retrospectively.

12. The learned primary judge erred in hearing the proceedings, delivering the Judgment and making the Orders in circumstances where:

[a] the proceedings were judicial proceedings within the meaning of section 59 of the Constitution;

[i] the proceedings were not conducted fairly within the meaning of section 59 of the Constitution; and

[v] List of Materials relied on by the Applicant/Plaintiff filed 12th June 2009.

[b] A certified copy of the National (sic.) Order will be filed when uplifted.

STATUTORY INSTRUMENT
No. 7 of 2008
Customs (Prohibited Imports – Certain Petroleum Products) Regulation 2008
Being a Regulation.
MADE, by the Head of State, acting with, and in accordance with, the advice of the National Executive Council under the Customs Act (Chapter 101).

PART 1 – IMPORTATION OF PETROLEUM PRODUCTS NOT MEETING
PRESCRIBED STANDARDS PROHIBITED.

"Act" means the Customs Act (Chapter 101);
"petroleum" means any hydrocarbon in a liquid state and any product in a liquid state derived from any hydrocarbon;
"petroleum products" means petroleum or products derived from petroleum;
"Maximum Prescribed Standard for sulphur" means in respect of the Petroleum Products described in Column 1 of the Schedule the maximum permitted amount of sulphur as set out in column 2 of the Schedule.

The provisions of this Regulation are in addition to, and not in derogation of, the operation of any other law relating to the importation of goods.

3. Restriction on importation of petroleum products not meeting prescribed standards.

The importation of a Petroleum Product which has a sulphur content in excess of the relevant Maximum Prescribed Standard for sulphur is prohibited.

A person who imports a Petroleum Product which has a sulphur content in excess of the relevant Maximum Prescribed Standard for sulphur is guilty of an offence under the Act.

PETROLEUM PRODUCT DESCRIPTION	Column 1 Maximum Total Sulphur Content, ppm	Column 2 Maximum Total Sulphur Content % weight equivalent
Liquified Petroleum Gas for Automotive Use	100	0.01
Liquified Petroleum Gas for Heating Use (Propane)	100	0.01
Liquified Petroleum Gas for Heating Use (Butane)	100	0.01
91 Research Octane Numbr (RON) Unleaded Motor Gasoline	500	0.05
Dual Purpose Kerosene	3000	0.3
Standard Kerosene	3000	0.3
Jet A – 1	3000	0.3
Diesel Oil	500	0.05
Marine Diesel Oil	3500	0.35
Industrial Fuels, Heavy Fuel Oil, Low Sulphur Waxy Residue	3500	0.35

10. It is convenient to reproduce ss. 23 (2) (a) and 193 of the Customs Act, 1951, which authorised the Regulation. Section 23 appears in PART V of the Act, and is in these terms:

c. by prohibiting the importation of goods unless specified conditions or restrictions are complied with.

(3) Without limiting the generality of Subsection (2)(c), the regulations may provide –

a. that the importation of goods is prohibited unless a licence or permission to import the goods has been granted as prescribed; and

b. that a licence or permission so granted may be subject to conditions or requirements to be complied with, by the person to whom it is granted, either before or after the importation of the goods in respect of which the licence or permission has been granted.

(4) Where a licence or permission granted to a person under the regulations is subject to a condition or requirement to be complied with by him, he must comply with the condition or requirement.

Penalty: If not narcotic – subject to Sections 163, 164 and 165, a fine of not less than K5,000.00 and not exceeding K50,000.00.

(5) Goods the importation of which is prohibited under this section are prohibited.

11. Section 193 appears under the Miscellaneous Provisions in PART XV111 of the Act. It is in these terms:

The Head of State, acting on advice, may make regulations, not inconsistent with this Act, prescribing all matters that by this Act are required or permitted to be prescribed, or that are necessary or convenient to be prescribed for carrying out or giving effect to this Act or for the conduct of any business relating to the Customs, and in particular for prescribing –

(a) the nature, size and material of the packages in which imported goods or goods for export are to be packed, or the coverings in which they are to be wrapped; and

(b) the maximum and minimum weight or quantity of imported goods or goods for export that may be contained in a package; and

(c) the conditions or preparation or manufacture for export of any articles used –

(d) the conditions as to purity, soundness and freedom from disease to be met by goods for export; and

(e) the conditions of carriage of goods subject to the control of the Customs, and obligations of persons accepting such goods for carriage; and

(f) subject to Sections 163, 164 and 165, penalties of fines not exceeding K1,500.00 for offences against the regulations.

12. The central issue is whether the learned trial judge erred as a matter of law and principle in declaring the Regulation invalid and "null and void and of no effect".

13. Pursuant to s. 6 of the Supreme Court Act 1975, the appeal is by way of a rehearing on the evidence that was before the National Court subject of course to any fresh evidence which the Court may admit. It is open for the Court to draw its own inferences on the evidence.

14. It is an established principle that for the appeal to succeed the appellants must demonstrate that the learned trial judge fell into error by acting on wrong principles, or allowing extraneous and irrelevant matters to guide or affect him, or if he mistook facts, or failed to take into account matters which should have been taken into account: Ramu Nico Management (MCC) Ltd v. Eddie Tarsie (2010) SC1075; Telikom PNG Ltd v. ICCC (2008) SC908; Hon. Patrick Pruaich MP. V. Chronox Manek (2010) SC1052 and House v, King [1936] CLR 499 at 504; Air Marshall McCormack v. Vance [2008] ACTCA 16; Micallef v. ICI Australia Operations Pty Ltd [2001] NSWCA 274 and Kawaso Ltd v. Oil Search PNG Ltd SC1218.

15. The principal argument by Mr. Jurth of counsel for the appellants is that the learned trial judge erred in law and principle in reviewing the decision of the Governor General (acting on advice) to make the Regulation. This argument is based on a number of grounds. First, the Regulation is a valid law. In other words, it is not inconsistent with the Customs Act, which is the enabling Act. The Regulation is therefore not ultra vires the Act. Second, pursuant to s. 86 (4) and Schedule 1.7 of the Constitution, the advice given to the Governor General by the NEC could not be reviewed because it was non-justiciable. Third, the Regulation was a legislative enactment, therefore the trial judge had no power to interfere with it. For this reason the appellants had no obligation to give reasons to the respondent for making the Regulation. He argued that the Government has unlimited power to legislate on all matters and in this case the NEC was exercising its delegated legislative power when it advised the Governor General to make the Regulation.

16. It was also argued that the learned trial judge erred in law in formulating a new "legitimate expectation" rule which he applied retrospectively for the respondent's benefit. It was submitted that there was no basis for formulating the rule.

17. It was further argued that the learned trial judge erred in denying the appellants their right to be heard at the substantive hearing which thereby deprived them of making submissions on the issues which affected their interests. It was argued that the appellants were denied a fair hearing. As such, the orders made by the learned trial judge breached the principles of natural justice.

18. It is important to note that the validity of the Regulation and its enabling legislation viz; Customs Act 1951, in particular the two provisions of the Act, viz; ss. 23 (2) (a) and 193 which authorised the Regulation, is not disputed. The validity of the Regulation is in fact common ground between the parties. This is also reflected in the following passage of the learned trial judge's judgment: "So, making a Regulation that prohibits the import of heavy fuel oil does not by itself go beyond the power conferred by the Customs Act." (My underlining).

19. Mr. Varitimos of counsel for the respondent argued that because the Regulation would directly affect the respondent, the appellants should have notified the respondent of their intention to make the Regulation and should have heard the respondent on the Regulation before making it. It was submitted that this could have been done by the appellants putting public notices in the National and Post Courier newspapers.

20. It was submitted that the ramifications of the respondent's power plant being shut down as a result of the effect of the Regulation would have a "multiplier" effect on the country's economy, residents and business community. Thus, whilst the Regulation was valid, the decision to make the Regulation was irrational and unreasonable in the Wednesbury sense and the Regulation offended against s. 41 of the Constitution as being harsh and oppressive.

21. It was further submitted by the respondent that by declaring the Regulation "null and void and of no effect", the learned trial judge avoided the possible disastrous consequences and crisis which could have resulted from the possible closure of the power plant.

22. In regard to the appellants not being allowed by the learned trial judge to appear and be heard at the hearing, it was submitted that it was as a result of the appellants' (lawyers) own making by not complying with the Court's directions. It was submitted that the decision by the learned trial judge was prompted by the deliberate failure by the appellants to comply with the detailed and considered directions issued by the Court. Mr. Varitimos submitted that the lawyers for the respondent wrote to the Attorney General and the Secretary for Justice on at least 10 occasions reminding them of their obligations under the directions, but the appellants had failed to comply with the directions. On 5 June, 2009, the learned trial judge made the following orders in relation to the appellants:

"The defendants cannot take any step in the proceeding including appearing to defend the proceedings, without leave of the Court, sought by Notice of Motion, on at least (3) day Notice to the plaintiff."

23. As noted, no motion was filed by the appellants under these Orders to seek leave of the Court to appear and defend the action. The Orders are a ground of this appeal.

24. Mr. Varitimos referred to Customs (Prohibited Imports) Regulation, 1973 and argued that when that Regulation is compared with this Regulation there is a stark difference between them in that under the 1973 Regulation, the prohibition against the importation of goods was made subject to certain conditions, such as obtaining the permission of the relevant authorities. He argued that this is the reason s.23 of the Customs Act provides for the power that may be exercised to make regulations for the importation of goods under certain conditions, such as the granting of a license to import. He argued that the current Regulation does not provide for the respondent to apply for a license to import the prohibited goods. Based on this argument, Mr. Varitimos submitted that the decision to make the Regulation was not one which any reasonable person or tribunal could make, thus it was unreasonable in the Wednesbury sense.

25. I should state now that this argument is in my view flawed in a number of respects. First, the argument is based on a misconstruction of s. 23, it particularly ignores s. 23 (2) (a) which expressly authorises the Regulation. Second, it is pointless and indeed absurd for the respondent to attack the reasonableness and validity of the Regulation when it has conceded that the Regulation which was made pursuant to s. 23 is a valid law. The respondent has seriously contradicted itself on this point. Third, the argument offends against a well established principle that the Court cannot interfere with a valid legislative enactment. This principle is rooted in the doctrine of separation of powers which is entrenched in the Constitution in s. 199 (2) and (3): PNG National Stevedoring Pty Ltd v. Andrew Baing (2001) N2069; Application by Gabriel Dusava (1998) SC581; The Minister for Lands v. William Bobert Frame [1980] PNGLR 433. The Government has power through the Parliament to legislate on all matters and the laws so enacted are valid laws as long as they are not inconsistent with the Constitution or the enabling laws (s.10 of the Constitution). In this case, the Regulation was made by lawful authorities which had the power to make it. Thus, there is no legal basis for the respondent to challenge the validity of the Regulation. For the same reason, the issue of reasonableness cannot arise. The appellants had no duty to give reasons for making the Regulation. No court can question the reasonableness and policy of such law unless the law is made mala fide or is ultra vires: Carltona Ltd v. Commissioners of Works and Ors [1943] 2 All ER 560 at 564; The State v. Zachary Gelu (2003) SC716; PNG National Stevedoring Pty Ltd v. Andrew Baing (supra) and The Minister for Lands v. William Robert Frame (supra). For the same reason, I reject the arguments put forward by the respondent on natural justice, harsh and oppressiveness and legitimate expectation. These were irrelevant matters which should not have been considered but were taken into account by the learned trial judge. These issues were, with respect, misconceived.

26. Mr. Varitimos has argued that the validity of the Regulation like all subordinate legislations is open to challenge and it is within the power of the court to rule that the Regulation is invalid. Many local and overseas cases have been cited in support of his argument. Whilst it is true that the court has the power to strike down a subordinate legislation, that can only happen if the subordinate legislation is inconsistent with its enabling legislation or is made in bad faith: The Minister for Lands v. Robert William Frame (supra) and Carltona Ltd v. Commissioners of Works and Ors (supra). That said, I find that none of the cases cited by Mr. Varitimos can assist the respondent because they all affirm the well established principle that a subordinate legislation must not be inconsistent with its enabling legislation (s. 10 of the Constitution): Rakatani Peter v. South Pacific Brewary Ltd [1976] PNGLR 537; SC109. If a subordinate legislation is inconsistent with its enabling legislation then that would empower the court to strike it down.

27. One of the cases which Mr. Varitimos cited is NTN Pty Ltd v. The State [1986] PNGLR 167. The part of the judgment relied on is a passage where the learned trial judge in that case, Kidu CJ, said, that had he needed to decide, he would have held that the Radio Communications (Television) Regulation, 1986, which was made pursuant to the powers conferred by s. 14 of Radio Communications Act, (Chapter No. 152), was invalid because it abrogated the plaintiff's private contractual rights, which he said was beyond the scope of the power conferred by s. 14. It is important to note that these remarks were made after his Honour had declared the Regulation invalid on the basis that it was prohibitive in its effect. Section 14 only conferred power to make regulations which would regulate and restrict. In other words, the Regulation was inconsistent with the Act, and was thus ultra vires the enabling legislation. In that case, an Agreement was entered into between the parties for the plaintiff to commence transmission of radio communications within twelve months. In the summons, the plaintiff sought certain declarations and an injunction to restrain the State from acting contrary to the Agreement. Unbeknown to the plaintiff the State, through the Minister for Telecommunications, made a submission to the NEC to advise the Governor General to make a Regulation to "stop" the plaintiff from transmitting. The Governor General was advised accordingly. The Regulation was signed by the Governor General and came into effect the same day. Section 2 of the Regulation was headed: "PROHIBIT ON TELEVISION BROADCASTING". Section 14 of the Act did not give the Governor General power to make regulations which had a prohibitive effect. At page 177 of his judgment, his Honour said:

"The second order sought by the plaintiffs is that the Regulation (Television) Regulation 1986 – which is produced earlier in this judgment is invalid for the reason that it is contrary to the Radio Communications Act, (Chapter No. 152). The submission is based on the general rule that the power to regulate or prescribe does not include the power to prohibit.

...It is apparent from the preamble to the Act that there is no permission given to the regulation making authority to totally prohibit the establishment of either radio communication stations or radio communications generally. The authority in the Act is to regulate and restrict rather than prohibit". (My underlining).

"It is at once clear as well that s. 14 of the Act, on the face of it does not authorise the Head of State on advice to make regulations prohibiting either setting up of communication stations or radio communications generally. It does not in particular, enable the Head of State to enact regulations stopping people or companies who hold licenses to establish stations or broadcast.

When an Act of Parliament authorises an authority to make regulations or rules or by-laws then the authority must act within the powers given to it by the relevant Act of Parliament". (My underlining).

29. His Honour then stressed s. 10 of the Constitution, which states, inter alia, that subordinate legislation are to be read subject to the enabling Acts of Parliament. His Honour then, at page 179, said:

"...It is clear from the wording of s. 14 of the Radio Communications Act, that the power given to the Head of State on advice to make regulations does not include the power to prohibit a person or a company which has been given a license under s. 6 of the Radio Communications Act to establish a television station and also to broadcast".

30. His Honour cautioned that he would not grant orders which sought to restrain the State from enacting laws which an Act of Parliament allowed it to enact, nor would it be proper for the Court to restrain the Parliament indirectly (by restraining the State) from enacting legislation on television. His Honour however said he would grant orders restraining the State from doing any act which would undermine any rights the plaintiffs had under the Agreement.

31. It is quite plain from the above excerpts of his Honour's judgment that he declared the Regulation invalid because it was inconsistent with s.14 of the Radio Communications Act. That particular section allowed for regulations to be made which would regulate and restrain only but not prohibit. His Honour said that the Court had no power to interfere with the power of Parliament to make laws or to delegate its law making power to authorities to make subordinate legislation such as rules, by-laws and regulations, unless they were in conflict or inconsistent with the legislation enabling them.

32. In that case, his Honour did not state any contrary view to the well established principle that courts have no power to interfere with a subordinate legislation which is not inconsistent with the Act of Parliament under which it is made.

33. The point to stress regarding NTN Pty Ltd v. The State (supra), is that the Regulation was declared void or struck down because it was inconsistent with the enabling Act. The statement in the passage of the judgment Mr. Varitimos relied on was made because the regulation also abrogated the private contractual rights of the plaintiff under the Agreement between the parties. His Honour said that, that was outside the scope of the power conferred by the enabling Act.

34. It is, in my view, clear from the foregoing that NTN Pty Ltd v. The State (supra) is distinguishable from the case before the Court and I cannot see how it can assist the respondent. I am also of the firm view that other cases relied on by the respondent go no further than to affirm the well established principle that a legislative enactment or a subordinate legislation must not be inconsistent with the enabling legislation. Where there is no inconsistency between the subordinate legislation and the enabling Act, the subordinate legislation is as equally valid as the enabling legislation and no court has the power to interfere with it. It is therefore quite absurd for the respondent to challenge the validity and reasonableness of the Regulation if, as was conceded, it is valid: NTN Pty Ltd v. The State (supra) was followed by Pansat Communications Pty Ltd v. The Independent State of Papua New Guinea and Post and Telecommunication Corporation (1995) N1321 and was later cited with approval by the Supreme Court in Matu Mining Pty Ltd v. Philemon Embel (Attorney General) and Kare Puga Development Corporation Pty Ltd (1995) SC483. The principle enunciated by all these cases was, in my view, succinctly stated by the Supreme Court in Isaac Lupari v. The State (2008) SC930 when it said:

"The first thing we note is that, this question is not clear as to what is the Regulation to be read ultra vires against. Is it ultra vires the Act or the Constitution? Secondly, we note that the question raises an issue of an interpretation and validity of a regulation, and not an Act of Parliament against the Constitution.

Regulations are enacted under their respective enabling Acts of Parliament. Usually, whenever an issue arises as to validity of a regulation, the enquiry starts with its enabling Act to determine if any of the matters covered in the regulation are authorized by its enabling legislation. Surely this does not raise any constitutional issue. There are checks and balances in legislation following the hierarchy of laws under s. 10 of the Constitution. Hence, when a question arises as to the validity of any legislation, the enquiry starts in the order provided for in s. 10, for example, if the validity of a regulation is in question as in this case, it gets checked against its enabling legislation. If applying that process results in a revelation that a regulation is inconsistent or not authorized by an Act of Parliament, it can be struck down to the extent that it is inconsistent or not authorized. That is a matter within the jurisdiction of the National Court. The Supreme Court cannot be drawn into it, except on appeal by an aggrieved party after the National Court has made a decision".

35. In this case, the Regulation, which prohibits absolutely the importation of petroleum products having a sulphur content exceeding the "Maximum Prescribed Standards", is expressly authorised by s. 23 (2) (a) of the Customs Act, which is the enabling legislation. The Regulation, as required by s. 193 of the Customs Act, is not inconsistent with the Customs Act. It follows that there is nothing in the Regulation which can render it inconsistent with the enabling Act, to make it an invalid law. The Court's function in such situations is to give effect to the Regulation: Joseph Kimbu v. Eko Mason [1971] PNGLR 407; The State v. Independent Tribunal; Ex parte Moses Sasakila [1976] PNGLR 491 at 506-507; SCR No.2 of 1995; Reference by Western Highlands Provincial Executive (1995) [1995] PNGSC 6; SC486 and Re Validity of Value Added Tax Act, 1998 (2002) SC693.

36. As noted, the respondent has relied on some overseas authorities in support of its contention that the decision by the appellants to make the Regulation was unreasonable in the Wednesbury sense, or was absurd, irrational, not reasonably proportionate, outrageous or produced exceptional results and achieved a purpose which the statute did not contemplate. A Text Book titled – "Judicial Review of Delegated Legislation", Chapter 12, by Professor Pearce, is one of the authorities. It is important to stress that these authorities are persuasive only and have no binding effect in this jurisdiction: David Coyle v. Loani Henao [2000] PNGLR 17, SC655; Thomas Kavali v. Thomas Hoihoi [1984] PNGLR 182; SCR No.3 of 1990; Reference concerning s. 365 of the Income Tax Act, 1959 (1992) – Unreported and unnumbered Judgment – 17 December, 1992; Titi Christian v. Rabbie Namaliu (1996) (OS No.2 of 1995) 18 July, 1996; Mineral Resources Enga Ltd v. Mineral Resources Development (2010) N4279.

37. In any event, I consider that the respondent's argument would have basis if the Regulation is inconsistent with the Customs Act. If I understand the respondent's argument correctly, it says the Regulation has to be considered separately from the decision to make the Regulation. It is argued that when looked at that way, it can be seen that whilst the Regulation may be valid, the adverse effect and the result the Regulation would have on the respondent makes the decision to make the Regulation unreasonable in the Wednesbury sense, which must render the Regulation invalid. This argument must fail for two basic reasons. First, it offends against the fundamental principle of statutory interpretation that if the Regulation is a valid law the Court must apply and give effect to it. Second, as I said earlier, the Regulation is a valid legislative enactment and the Court has no power to interfere with it.

38. The Regulation and the statutory provisions which authorise it have to be read and understood in the context and scheme of the Customs Act as a whole, to understand their purpose and legislative intent. When read this way it becomes plain that the purpose of the Customs Act, and in particular the Regulation now under consideration, is to give the State greater control over importation of the types of petroleum products and the content of such product into Papua New Guinea. In making the Regulation, the Government through the NEC and the Governor General acted within the policy and intent of the Customs Act, and no court can question it. The Regulation and the Act are clearly in harmony with each other: The State v. Downer Construction (PNG) Ltd (2009) SC 979. Sections 23 (2) (a) and 193 of the Act, cannot be considered piece meal, they have to be construed in the context and scheme of the whole Act. For instance s. 23 needs to be read together with s. 146 which deals with forfeited goods, which include prohibited goods. Section 3 of the Regulation which restricts the content of imported sulphur needs to be read together with s. 193 (b) of the Act. It is significant in that regard to also note that the Act defines Customs Act as including rules, regulations or by-laws made under the Act. In this case, it is the Regulation. As I said, these subordinate legislations must be in harmony and not be inconsistent with the enabling Act, to see their purpose and intent: In re Moresby North East Election Petition, Patterson Lowa v. Goasa Damena [1977] PNGLR 429. It is significant to note that the Customs Act, like its sister legislations including the Income Tax Act, 1959, and Stamp Duties Act, (Chapter No. 117) come under the general administration of the Commissioner General of the Internal Revenue Commission. The Customs Act governs and regulates the functions of the Customs Division of the Internal Revenue Commission. These legislations like the Claims By and Against the State Act, 1996, by their scheme and legislative intent, favour the State because they are enacted primarily to serve and protect the interests of the State viz; the people: Steven Pupune v. Ubum Makarai [1977] PNGLR 622; The State v. Downer Construction (PNG) Ltd (supra); Commissioner General of Internal Revenue Commission v. Douglas Properties Ltd (2002) N2192; Mark Opur v. Darbar Enterprises Ltd (2004) N2528; Chief Collector of Taxes v. T.A Field Pty Ltd [1975] PNGLR 144 and Mas International Ltd v. David Sode (2008) SC 944.

39. It is also significant to note that two other regulations made under the Customs Act, also prohibit absolutely either the exportation or importation of certain goods, viz; the Customs (Prohibited Exports) Regulation (Chapter 101) (Consolidated to No.16 of 2007) and the Customs (Prohibited Imports) Regulation (Chapter No. 101) (Consolidated to No.7 of 2011). The former prohibits absolutely the exportation of timber logs such as conifers and certain other tree species: Balsa, Blackbean, Cordia, Ebony, Rosewood and Teak. The Government did not have to give reasons and explain why these Regulations were made because it has no obligation to do so. These Regulations, like the one before the Court, were made within the Government's power to legislate and it cannot be questioned by the courts. It is also significant to note that whilst these regulations were newly enacted, their enabling legislation, namely the Customs Act, has been in force since 1951. So the power to make these regulations has also been available since 1951. In this case, the NEC and the Governor General have used that statutory power to make the Regulation.

40. I am of the firm view that issues of the Regulation being harsh and oppressive and that the respondent was denied natural justice under ss. 41 and 59 of the Constitution respectively were misconceived. They were irrelevant matters which the Court should not have considered. The 'new rule' of legitimate expectation (which is an equitable relief) which the learned trial judge purported to develop is interwoven with principles of natural justice, and in my view it was also misconceived. It is important to note that the Regulation was not aimed personally at the respondent, it was meant to apply generally. If the respondent is affected by the Regulation then it is up to it to raise it with the relevant authorities and discuss ways that would address its needs. There is no evidence that the respondent has raised its concerns with the Government. In regard to the issue of natural justice, to me it is clear that the terms of s. 59 preclude it from being raised because the section is meant to apply to "judicial and administrative" decisions only. It is not intended to apply to a decision to make a regulation as in this case: Nima Holdings Ltd v. Noah Giali (2011) N4239. The issue of legitimate expectation may be raised, for example, in cases where a license holder is expecting his license to be renewed or a passport holder is expecting his passport to be renewed, and there are no good reasons to refuse to renew the license or to issue a new passport and so on: Premdas v. The State [1979] PNGLR 329; Joseph Lemuel Raz v. Paulus Matane [1986] PNGLR 38, N525; Telepage Pty Ltd v. PTC (1987) N605 and NCDC v. Crusoe Pty Ltd [1993] PNGLR 138, N836. The respondent has also raised the issue of proportionality of the decision by the NEC and the Governor General to make the Regulation and the effect of the Regulation on the respondent. For the reasons already given, this argument is also misconceived. The decision under review was not an administrative decision. Therefore, no issue of proportionality could arise: Premdas v. The State (supra).

41. To me, this appeal turns on the fundamental question of whether the courts have power to interfere with a valid legislative enactment. As I said earlier the question involves the application of the doctrine of separation of powers between the three arms of the Government, as entrenched in the Constitution in s. 99 (2) and (3). The principle that courts cannot interfere with a legislative enactment was elaborately discussed by the Supreme Court in The Minister for Lands v. William Robert Frame (supra). The discussion is helpful and I will canvass the decision in a bit more detail here. The case involved an appeal by the Minister for Lands against the amount of compensation determined by the trial judge for the respondent's plantation which had been compulsorily acquired by the State. The appeal was dismissed by majority comprising Greville-Smith and Pratt JJ, with Kapi J (as he then was) dissenting. The difference in the opinions between the majority and the dissenting judge related to the issue of whether the trial judge had power to review the amount of compensation the Minister paid pursuant to a prescribed factor contained in a regulation made by the Governor General under the powers conferred on him by the Land Acquisition Act, 1974. The majority held that, although the amount of compensation the State offered through the Minister for the plantation was determined pursuant to a prescribed factor fixed by the Governor General under the regulation, the actual determination of the amount of compensation was made by the Minister therefore the trial judge had power to review it. The Minister's determination was also made pursuant to the Valuer –General's report which was specifically provided for under s. 23 of the Lands Acquisition Act, 1974. This section also specifically provided for an appeal against the correctness of the amount determined by the Minister. The majority held that the amount determined by the trial judge which increased the amount of compensation paid for the plantation by the Minister was fair and that the trial judge had jurisdiction to decide the adequacy of the compensation. The appeal was thus dismissed. In his dissenting judgment, Kapi J said the trial judge had no jurisdiction to review the amount of compensation because it was determined by the prescribed factor fixed by the Governor General in the regulation which he said was a legislative enactment and the trial judge or the court had no power to interfere with it. His Honour said the amount was not determined by the Minister, rather it was determined by the prescribed factor fixed by the regulation.

42. It is important to note that all three judges expressed a common view that ordinarily a regulation, or a provision of a regulation, made by the Governor General under an Act or legislation was a valid legislative enactment and the courts have no power to interfere with such regulation.

43. In elaborating his view on the principle, Greville-Smith J at pages 444 to 445 of the judgment said:

"...I now turn to a further argument by the appellant, which rests upon the provision contained in s. 20 of the Act that the mode of fixation of the factor by the Governor in Council is fixation by regulation. The court on an appeal, says the appellant, has no power to alter the amount of compensation the Government is to pay on the basis that the factor prescribed by the Governor in Council was an incorrect factor. This follows, says the appellant, from the fact that the factor was fixed by regulation. To alter the factor would be to "amend" a regulation, which is, because it is a legislative Act, something that a court cannot do....I do not think that this argument has a valid basis, and I need not carry the matter beyond that basis...it would seem to me quite clear that what the claimant is given a right of appeal against is the correctness of the size, of the amount, of money the Minister's determination, the application of the formula prescribed under s. 19, has arrived at measured in the light of the meaning of the word "compensation" as I view it...It is to correct the Minister's determination; that is, to specify the amount that should have been determined but was not, due to an error or errors somewhere along the line, to calculate and specify what amount would be the real compensation, the true compensation, the true value of land.

The factor fixed by regulation by the Governor in Council was not really "altered" by the learned trial judge at first instance. His Honour did not amend" the regulation. The factor was fixed under s. 20 for use by the Minister, not the appeal court, and was (subject to what is said later) used by the Minister." (My underlining).

"It is the Minister who is charged with the administration of the Act and it is the Minister who, in the words of s. 23, must make a determination under s. 22. Consequently it would obviously be the Minister against whom one appealed under sub-s. 1(a) or (b), on the basis that the Minister had fallen into error because the Valuer-General had arrived at either incorrect valuations or incorrect average annual net profit figures, or finally that the prescribed factor determined by regulation, and therefore used by the Minister in order to achieve the final compensation figure, was incorrect... Unlike counsel for the appellant, I can see no reason why the Minister should not be selected as the person responsible for legally justifying the use of the factor, he is the one who must finally decide the figure to be paid out in compensation and authorise the appropriate finance authorities so to do, and he must do that within the directions given to him under the Act and material supplied to him by the Governor-General.

...The purpose of the regulation has been fulfilled, namely the factor has been gazetted and has been used by the Minister and having been used, a compensation figure has then been offered to or paid over to the claimant. In such circumstances therefore, any appeal by the claimant against the use of the factor would not result in the court amending the regulation; it would simply mean that the court, having upheld the right of appeal, determine that the factor was incorrect and in the light of the evidence produced before it has then ascertained what the correct factor should be." (My underlining).

45. Pratt J also expressed the view that if the regulation was inconsistent with the enabling Act or legislation then the regulation can be challenged as being ultra vires the Act. At page 459 this same view was expressed by Kapi J, where his Honour said:

"When the prescribed factor is fixed by the Governor-General in a statutory instrument and is not inconsistent with the Act, that is the end of the matter. It is the law. It seems to me that the court has no right to question the adequacy of the factor fixed by the statutory instrument made under the Act."

46. Kapi J, in support of this proposition went on to quote a passage from the judgment of Lord Greene M.R. in Carltona, Ltd. v. Commissioners of Works and Ors (supra) at 459. The Court of Appeal in that case was considering the application of a Defence (General) Regulation. His Lordship said:

"It has been decided as clearly as anything can be decided that, where a regulation of this kind commits to an executive authority the decision of what is necessary or expedient and that authority makes the decision, it is not competent to the courts to investigate the grounds or the reasonableness of the decision in the absence of an allegation of bad faith. If it were not so it would mean that the courts would be made responsible for carrying on the executive government of this country on these important matters. Parliament, which authorises this regulation, commits to the executive the discretion to decide and with that discretion if bona fide exercised no court can interfere. All that the court can do is to see that the power which it is claimed to exercise is one which falls within the four corners of the powers given by the legislature and to see that those powers are exercised in good faith. Apart from that, the courts have no power at all to inquire into the reasonableness, the policy, the sense, or any other aspect of the transaction."(My underlining).

"Having come to the conclusion I have reached, I must give effect to it whether I like it or not. The words of the Earl of Halsbury L.C. are fitting in Cooke v. The Charles A. Vogeler Company [1900] UKLawRpAC 60; [1901] A.C 102 at 107:

"But a court of law has nothing to do with the reasonableness or unreasonableness of a provision...If the law has intended, and has expressed its intentions...no Court has any jurisdiction to disregard what the Legislature has enacted. And if, on the other hand, it is manifest that the language of the statute does not reach the case supposed, no court has jurisdiction to enlarge the ambit ...of the legislation beyond what the Legislature has permitted."

"Admittedly, it would be unfair for a claimant to have no right of appeal on the fixation of factor. However, the Parliament has power to pass any law which may seem to be unfair to others, including the courts. The question is not what the courts think is fair, but what the intention of the Parliament as expressed in the Act." (My underlining).

49. The passages highlighted above again reflect the doctrine of separation of powers between the three arms of Government as entrenched in s. 99 (2) and (3) of the Constitution. In reflecting this doctrine, the passages re-emphasise that the courts cannot interfere with a valid legislative enactment made by an authority with delegated legislative power given to it by the Parliament which has unlimited powers of law making. In this case, the power exercised by the appellants to make the Regulation was a delegated legislative power given by the Parliament under the Customs Act; the Regulation as I said therefore has the same force and effect as the Act itself.

50. In PNG National Stevedores Pty Ltd v. Andrew Baing (2001) (supra), Kapi DCJ (as he then was) refused to grant orders sought by the plaintiff to repeal the By-Laws made by the Harbours Board pursuant to the powers conferred on it by s. 30 of the Harbours Board Act, Chapter No. 240. The By-Laws were not inconsistent with the Act. They were made for the control, regulation and management of the declared ports and the affairs of the Board, in particular providing for or in relation to regulation and licensing of stevedoring. His Honour said the By-Laws were a legislative enactment made under a delegated legislative power and the Court could not interfere with the exercise of that power.

51. It is important to stress that in The Minister for Lands v. William Robert Frame (supra) all three judges were unanimous in their view that a regulation made pursuant to an Act, by the Governor General is a legislative enactment and the courts have no power to interfere with it, unless the regulation was inconsistent with the enabling Act, or was made in bad faith.

52. Here, the Court is not concerned with the result or the effect of the legislation, nor is it the concern of the Court to make pronouncements on the wisdom or reasonableness of the legislation. The court's function is to give meaning to the legislation and to apply and give effect to it. In discharging this function the court should construe the words of the legislation according to their ordinary and natural meaning: Amalgamated Society of Engineers v. Adelaide Steamships Co. Ltd [1920] HCA 54; (1920) 28 CLR 129 at 161.

53. In this case, the trial judge concerned himself with the result of the Regulation instead of interpreting and applying it. His Honour clearly fell into error by applying wrong principles and taking into account irrelevant and extraneous matters in coming to his decision.

54. I also find that his Honour wrongly deprived the appellants from appearing before him and making submissions on issues affecting them. The appellants, as parties to the proceeding, had the right to be heard. If there were complaints regarding non-compliance with the Court's pre-trial directions by the appellants then, in my view, they should have been raised before Davani J upon application being made by the respondent under the Listings Rules. No such application was made. Even if the learned trial judge had power to bar the appellants from being heard, his Honour failed to give the appellants an opportunity to explain and give reasons for their non-compliance. In any event, the directions given to the appellants by Davani J appear to have been directed at the matters relating to the decision of the NEC and its advice to the Governor General to make the Regulation, which pursuant to ss. 86 (4), 153 (2) and Schedule 1.7 of the Constitution were non-justiciable. These are pertinent legal and constitutional issues which were open for the appellants to raise and rely on had they been given the opportunity to explain the reasons for their failure to comply with the directions of the Court. The Court would then have had the opportunity to decide whether the matters for which directions were given were non- justiciable: The courts have power to look behind the veil of non-justiciabily and review a decision if the authority making that decision had acted ultra vires or made the decision in bad faith: Reference by the East Sepik Provincial Executive (2011) SC1154; Special Reference by Fly River Provincial Government (2010) SC1057; Alois Kingsley Golu v. NEC (2011) N4425; Kila Wari v. Gabriel Ramoi & Ors [1976] PNGLR 112; SC316; Re Election of Governor General (No.2) (2004) SC728; The Minister for Lands v. Robert William Frame (supra) and The State v. Independent Tribunal; Ex parte Sasakila (supra).

55. A party to a proceeding has a right to be heard unless the rules of court or express provisions of an Act of Parliament exclude the party from being heard. There is an abundance of case law on this point: Jack Nou v. Richard Chirake (2004) N2539; Jimmy Maladina v. Posain Poioh (2004) N2568; Iambakey Okuk and The Stae v. Gerald Sidney Fallsheer [1980] PNGLR 274; Gerald Sidney Fallsheer v. Iambakey Okuk and The State [1980] PNGLR 101; Leo Nuia v. Benias Sabumei [1992] PNGLR 90; Sakawar Kasieng v. Andrew Baigry (2004) N2562; Cl Toulik v. Andy Kuek (2006) SC786; Lae Bottling Industries Ltd v. Lae Rental Homes Ltd (2011) SC1120; Premdas v. The State (supra); Phillip Takori v. Simon Yagari SC905; Michael Kuman v. Digicel (PNG) Ltd (2013) SC1232; Gaman Holdings Pty Ltd v. Labu Holdings Pty Ltd (2000) N2017; WorkCover Authority of NSW v. Placer (PNG) Exploration Ltd (2006) N3003 and Cann v. Cann [1963] PNGLR 256. The common principle applied in all these cases is that if a party with a right to be heard is deprived of that right then that would constitute a ground for review.

56. In my view, the appellants as parties to the proceeding, whose interests were affected by the issues before the trial court, had the right to be fully and properly heard. Being denied that right was a fundamental error of law. It was a denial of natural justice as demonstrated by the cases cited above.

57. I would for the foregoing reasons uphold the appeal and set aside the Orders given by the learned trial judge.

58. The respondent will pay the appellants' costs of and incidental to the appeal.

59. David, J: I have had the benefit of reading the draft judgment by Gavara-Nanu J, and I respectfully agree entirely with his Honour's reasoning and conclusions.

60. However, I wish to add a few brief comments of my own.
The validity of regulations made under statutory authority may be inquired into by the courts: Dyson v Attorney General [1910] UKLawRpKQB 203; (1911) 1 KB 410; Kuya Kehi v Kelu Theodore (1978) PNGLR 217.

61. The courts have always taken the view that a subordinate legislation will be invalid if it contradicts or is repugnant to the enabling legislation under which it is made: see for example Pansat Communication Pty Ltd v John Momis, The Independent State of PNG and Post and Telecommunication Corp (1995) N1321; Re Isaac Lupari v The State (2008) SC930. The oft cited statement about this view was made by Chanell, J in Gentel v Rapps [1902] 1 KB 166 where it was held:

"A by-law is not repugnant to the general law merely because it creates a new offence, and says that something shall be unlawful which the law does not say is unlawful. It is repugnant if it makes unlawful that which the law says is lawful... Again, a by-law is repugnant if it adds something not inconsistent with the provisions of a statute creating the same offence; but if it adds something not inconsistent, that is not sufficient to make the by-law bad as repugnant."

62. The concept of repugnancy is usually viewed as running parallel with the notion of simple ultra vires, but there is a slight difference. A regulation will be deemed ultra vires where there is no power whatsoever to make it: Kuya Kehi v Kelu Theodore (1978) PNGLR 217; Re Isaac Lupari v The State (2008) SC930. On the other hand, a regulation will be deemed repugnant to the enabling legislation where the making of it on a subject matter is authorised, but the form which it takes is inconsistent with the provisions of the enabling legislation: Pansat Communication Pty Ltd v John Momis, The Independent State of PNG and Post and Telecommunication Corp (1995) N1321; Re Isaac Lupari v The State (2008) SC930.

63. I concur with His Honour that the courts have power to look behind the veil of non-justiciability and review a decision of the National Executive Council or body or authority making a regulation if they acted ultra vires or made the decision in bad faith: The State v Independent Tribunal; Ex parte Sasakila (1976) PNGLR 491; William Robert Frame; Kila Wari v Gabriel Ramoi & Ors [1986] PNGLR 112, SC316; The Independent State of Papua New Guinea v Philip Kapal [1987] PNGLR 417; Kekedo v Burns Philp (PNG) Ltd [1988-89] PNGLR 122; Re Election of Governor General (No.2) (2004) SC728; The matter of Section 18 (1) of the Constitution, Southern Highlands Provincial Government v Sir Michael T Somare; Sir Matiabe Yuwi v Sir Michael Somare (2007) SC 854; Special Reference by Fly River Provincial Government (2010) SC1057; Reference by the East Sepik Provincial Executive (2011) SC1154; Alois Kingsley Golu v NEC (2011) N4425; Reference by Dr. Allan Marat, In the matter of Prime Minister and NEC Act 2002 Amendments.

64. In Reference by Dr. Allan Marat, In the matter of Prime Minister and NEC Act 2002 Amendments at paragraph 157, Injia, CJ held:

"It is established principle that the position of the Head of State is symbolic or ceremonial; he has no independent power to make any decision. It is for a written law to make express provision for the Head of State to act in accordance with the advice of the appropriate authority. The real decision is made by the National Executive Council, Parliament or other statutory authority that is empowered to make a decision on the matter in question. If that decision is subsequently found by the Courts to have been invalidly made, that decision is rendered invalid and ineffective; and as a natural consequence thereof, the actions of the Head of State in recognizing the decision suffers the same fate: Kekedo v Burns Philp (PNG) Ltd [1988-89] PNGLR 122, Kila Wari and others v Gabriel Ramoi and Another [1986] PNGLR 112, The Independent State of Papua New Guinea v Philip Kapal [1987] PNGLR 417 at 420-421, The matter of Section 18 (1) of the Constitution, Southern Highlands Provincial Government v Sir Michael T Somare; Sir Matiabe Yuwi v Sir Michael Somare (2007) SC 854; SCR No 3 of 2011 Reference by East Sepik Provincial Executive (2011) SC 1154."

65. The question of what advice was given to the Head of State or by whom it was given is non-justiciable according to Constitution, Section 86 (4).

66. The question of immunity of the actions of the Head of State acting on advice was extensively addressed by the Supreme Court in Kila Wari. It was held that the Head of State is immune from all legal proceedings with respect to the exercise and performance of the powers, duties and responsibilities of his or her office. It was also held that proceedings brought against the exercise and performance of the executive power by the Head of State on behalf of the people of Papua New Guinea should be against the Independent State of Papua New Guinea.

67. It was common ground at the hearing that the Customs (Prohibited Imports–Certain Petroleum Products) Regulation 2008 (the Regulation) was made pursuant to Sections 23 and 193 of the Customs Act, Chapter 101 (the Customs Act). So issues of repugnancy or ultra vires do not arise in the present case. Section 23(1)(2)(a) of the Customs Act authorised the promulgation of regulations to prohibit the importation of goods absolutely. The Regulation was made by or in the name of the Head of State in accordance with the advice of the National Executive Council pursuant to Section 193 of the Customs Act for the conduct of business relating to Customs and Constitution, Section 86(2)(3): Minister for Lands v William Robert Frame [1980] PNGLR 433; Reference by Dr. Allan Marat, In the matter of Prime Minister and NEC Act 2002 Amendments (2012) SC1187, PGSC 20. The position of the Head of State is a symbolic or ceremonial one and he has no independent power to make any decision nor does he have any discretion under Constitution, Section 86 (2): William Robert Frame; Reference by Dr Allan Marat, In the matter of Prime Minister and NEC Act 2002 Amendments.

68. There was no evidence before the primary judge that the decision to make the Regulation was made in bad faith.

69. Collier J: The background facts to this appeal are not in dispute. The respondent, Hanjung Power Limited ("Hanjung") operates a power plant at Kanudi. The power plant has been in operation since 27 January 1999. It is a source of supply to users of electricity in Papua New Guinea, supplying approximately 30% of the power used by the City of Port Moresby.

70. In the National Court Hanjung submitted that the viability of this power plant and its supply of power to the city were threatened by the Customs (Prohibited Imports – Certain Petroleum Products) Regulation 2008 ("the Regulation"). Hanjung challenged the validity of the Regulation. In a judgment delivered in OS (JR) 123 of 2009, Cannings J upheld the claims of Hanjung, and ruled that the Regulation was invalid.

71. The appellants now appeal his Honour's decision by Notice of Motion filed 27 October 2009.

Customs (Prohibited Imports – Certain Petroleum Products) Regulation 2008

MADE, by the Head of State, acting with, and in accordance with, the advice of the National Executive Council under the Customs Act (Chapter 101).

PART 1 – IMPORTATION OF PETROLEUM PRODUCTS NOT MEETING PRESCRIBED STANDARDS PROHIBITED.

"petroleum" means any hydrocarbon in a liquid state and any product in a liquid state derived from any hydrocarbon;

"Maximum Prescribed Standard for Sulphur" means in respect of the Petroleum Products described in Column I of the Schedule the maximum permitted amount of sulphur as set out in Column 2 of the schedule.

The provisions of this Regulation are in addition to, and not in derogation of, the operation of any other law relating to the importation of goods.

The importation of a Petroleum Product which has a sulphur content in excess of the relevant Maximum Prescribed Standard for sulphur is prohibited.

A person who imports a Petroleum Product which has a sulphur content in excess of the relevant Maximum Prescribed Standard for sulphur is guilty of an offence under the Act.

PETROLEUM PRODUCT DESCRIPTION	Column 1 Maximum Total Sulphur Content, ppm	Column 2 Maximum Total Sulphur Content, % weight equivalent
Liquified Petroleum Gas for Automotive Use	100	0.01
Liquified Petroleum Gas for Heating Use (Propane)	100	0.01
Liquified Petroleum Gas for Heating Use (Butane)	100	0.01
91 Research Octane Numbr (RON) Unleaded Motor Gasoline	500	0.05
Dual Purpose Kerosene	3000	0.3
Standard Kerosene	3000	0.3
Jet A-1	3000	0.3
Diesel Oil	500	0.05
Marine Diesel Oil	500	0.05
Industrial Fuels, Heavy Fuel Oil, Low Sulphur Waxy Residue	3500	0.35

74. It was common ground at the hearing that the Regulation was made pursuant to sections 23 and 193 of the Customs Act 1951 which provide as follows:

Penalty: If not narcotic – subject to Sections 163, 164 and 165, a fine of not less than K5,000.00 and not exceeding K50,000.00.

75. In his judgment the trial judge summarised the case before him in the following terms:

The plaintiff, Hanjung Power Ltd, owns and operates a power plant at Kanudi in the National Capital District. It is applying for judicial review of a Regulation made under the Customs Act that prohibits the importation into the country of the heavy fuel oil it needs to run its plant.

The Regulation in question is the Customs (Prohibited Imports – Certain Petroleum Products) Regulation 2008. It was made by the Governor-General under the Customs Act acting with and in accordance with the advice of the National Executive Council. Section 3 of the Regulation states:

The importation of a Petroleum Product which has a sulphur content in excess of the relevant Maximum Prescribed Standard for sulphur is prohibited.

The type of heavy fuel oil that Hanjung uses for the two very large, slow-speed diesel engines that generate power at its plant has a sulphur content in excess of the maximum prescribed standard. Section 4 of the Regulation makes it an offence to import it. Commencement of the Regulation has been stayed by order of the National Court, pending determination of this judicial review.

Hanjung seeks a declaration that the Regulation is void and of no effect on four grounds:

The defendants were denied a right of appearance at the hearing of the judicial review due to their persistent failure to comply with orders and directions of the Court as to clarification of issues, provision of documents and other pre-trial matters. The Court has not been told why the Regulation was made, in particular whether environmental issues led to its making.

76. His Honour then turned to the four grounds on which Hanjung sought a declaration of invalidity of the Regulation and found in summary as follows.

77. In relation to Hanjung's claim of breach of the principles of natural justice, his Honour found that Hanjung had substantiated the claim. In particular, his Honour observed:

Hanjung says that its commercial interests and the livelihood of its employees were obviously going to be directly and substantially affected by the making of the Regulation, so the NEC was obliged to observe the principles of natural justice before advising the Governor-General to make the Regulation. The NEC should have notified Hanjung of the proposal to make the Regulation, consulted Hanjung and given it a right to be heard.

I accept and find as a fact that the Hanjung plant at Kanudi supplies 30% of Port Moresby's electricity. The plant has been operating continuously since January 1999. It was built at a cost of US$44 million. The two very large engines at the plant were designed and built to use heavy fuel oil, which has been imported without restriction since commencement of power generation at the plant. The engines cannot run on fuel with a lower sulphur content. The sulphur has a lubricant effect on the engines. Heavy fuel oil is not manufactured locally. It must be imported. Hanjung has a contractual obligation to provide electricity under a 15 year power purchase agreement which commenced in January 1999. It has an ongoing fuel supply agreement with InterOil Products Ltd under which heavy fuel oil is pumped to the plant.

The effect of the Regulation, if it allowed to operate, will be that InterOil will not import heavy fuel oil. Hanjung's power plant will be shut down, 30% of Port Moresby's power supply will be lost and many people will lose their jobs. That will be the immediate impact of the Regulation. The multiplier effect on the country's economy and the residents of Port Moresby will also be considerable.

In these circumstances did the NEC have a duty to observe the principles of natural justice before deciding to advise the Governor-General to make the Regulation?

78. His Honour referred to numerous authorities – Dunlop v Woollahra Municipal Council [1975] 2 NSWLR 446, White v Ryde Municipal Council [1977] 2 NSWLR 909, Development Co Ltd v Village of Wyoming (1980) 116 DLR (3rd) 1, Lyster v Camberwell City Council (1989) 69 LGRA 250 and McWilliam v Civil Aviation Safety Authority [2004] FCA 1701; (2004) 142 FCR 74. The judge found that there had been a trend in common law jurisdictions for the courts to qualify the exercise of delegated legislative power by saying that if the effect of a piece of delegated legislation is direct, immediate and substantial on a particular person or class of persons, the power can only be exercised after complying with the principles of natural justice in regard to the affected person or class of persons. His Honour had regard to sections 59 and 60 of the Constitution, as well as National Goal 5 in the Preamble to the Constitution, in respect of the principles of natural justice, and observed:

It is not hard to find in those constitutional provisions a call for government institutions and lawmakers to allow those who will be most affected by their decisions to participate in the making of those decisions. To be consulted before the decisions are made. To be listened to. To be given a right to be heard. If possible to reach a consensus. That is the Papua New Guinean way of doing things. Not making decisions from on high without consulting those will be directly affected.

To the extent that it is or has been a rule of the underlying law that a duty to observed natural justice does not apply to the exercise of legislative power such as the making of a Regulation under the Customs Act (and it is arguable that that is what the underlying law says given that we adopted under Sections 3 and 4 of the Underlying Law Act the common law in force in England immediately before 16 September 1975) I consider that it is no longer appropriate and I now formulate a new rule as follows:

Applying that rule, it must have been obvious to the NEC that prohibiting the import of heavy fuel oil would have an immediate and substantial effect on Hanjung's commercial interests (and the economy and many other people as well). If it was not obvious it ought to have been. Hanjung had a legitimate expectation, given its prominence in the local economy and that heavy fuel oil had been imported lawfully and continuously for nine years, that it would be consulted before the law under which it was doing business was changed. The NEC, being the decision-making body which advised the Governor-General to make the Regulation, therefore had a duty to consult Hanjung and give them a right to be heard on whether the importation of heavy fuel oil should be prohibited.

Nothing of that sort happened. Hanjung was not consulted by any government official. Hanjung was denied natural justice by the NEC. The first ground of judicial review is upheld.

80. His Honour referred to Ombudsman Commission v Peter Yama (2004) SC 747 and Mision Askiki v Manasupe Zurenuoc (2005) SC 797 as authority for the proposition that a decision-maker is required to give good, proper and sufficient reasons for its decision. In this case the National Executive Council ("NEC") did not notify persons to whom it owed a duty of natural justice – including Hanjung – of the reasons for the decision concerning the Regulation. Accordingly his Honour considered that this ground of judicial review was upheld.

81. Before his Honour Hanjung argued that the decision to make the Regulation was unreasonable (in the sense explained in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223) having regard to the effect on Hanjung's business, the Papua New Guinea economy, and the livelihood of many people.

When the primary law-making authority (in this case, the National Parliament) delegates law-making power (the power to make regulations) to another authority (here, the Governor-General, acting with and in accordance with the advice of the NEC) the delegation is subject to some fundamental, implied constraints: one of which is that the power must be exercised reasonably and rationally having regard to the purposes of the enabling...

83. His Honour observed that unreasonableness is an ultra vires ground of judicial review of delegated legislation, which has been adopted in a number of PNG cases resulting in pieces of delegated legislation being declared null and void (for example, NTN Pty Ltd v The State [1986] PNGLR 167 and Matu Mining Pty Ltd v Embel (1995) SC 483) although not on the basis of unreasonableness. However his Honour continued:

So, making a Regulation that prohibits the import of heavy fuel oil does not by itself go beyond the power conferred by the Customs Act. But prohibiting the import of that product without regard to the effect of prohibition can be beyond that power if the effect is so prejudicial to the legitimate interests of a person and the community that no reasonable law-making authority could have made that Regulation.

That is the test of unreasonableness that I have applied in this case. And the test is satisfied. The NEC's decision to advise the Governor-General to make the Regulation, which imposed an absolute prohibition on the import of a product used by the plaintiff that was essential to the viability of its business, without any provision for a licence to import – especially without consulting the company that was going to be immediately and substantially affected by it – was so prejudicial to the legitimate interests of the company and the community that no reasonable decision-maker in the position of the NEC could have made the decision. The decision was irrational and absurd and unreasonable. The third ground of judicial review is upheld.

84. Hanjung argued that the Regulation was harsh, oppressive and contrary to the standards set by section 41 of the Constitution which provides:

85. His Honour noted that there was a difference of opinion in the National Court as to whether breach of section 41 was a proper ground of judicial review, however expressed the view that section 41 could form the basis of such an application. His Honour also considered that, although a prohibition on heavy fuel oil imports did not show a disregard for the rights and dignity of mankind as contemplated by section 41 (1)(c), nonetheless he was satisfied that the decision to make the Regulation contravened the other provisions of section 41. In particular, his Honour considered that the decision to make the Regulation was irrational, absurd and unreasonable, and that accordingly it was "harsh and oppressive" within the meaning of section 41 (1)(a) and disproportionate to the requirements of the particular circumstances as contemplated by section 41 (1)(b).

86. As his Honour considered that the Regulation was "seriously defective", the learned Judge ordered that it was null and void and of no effect.

87. The appellants appealed the whole of his Honour's decision on grounds which may be summarised as follows:

88. At the hearing Mr Jurth for the appellants referred the Court to his detailed written submissions, but said that the ultimate issue for decision by the Court for decision was simple. In summary:

90. Hanjung submits that the appeal should be dismissed as there is no basis to interfere with the exercise of the trial Judge's discretion in declaring the Regulation null and void.

91 Mr Varitimos for Hanjung drew to the attention of the Court that in earlier judicial review proceedings the Regulation had been held to be arguably invalid for the same reasons as held by his Honour in Consort Express Lines Limited v Marat (unreported 2009, OS 105 of 2009, 27 March 2009, Davani J).

92. As was the case in relation to the appellants, detailed oral and written submissions were provided on behalf of Hanjung. In summary Hanjung argued:

94. First, did his Honour deny the appellants a fair hearing in the National Court proceeding?

96. Third, was the decision under review by his Honour an exercise of legislative or executive discretionary power?

97. Fourth, was that decision justiciable, or excluded from judicial review by statute or otherwise?

98. Fifth, in relation to the Regulation as subordinate legislation, as a matter of strict statutory interpretation, does the Regulation fall within the parameters of section 23 of the Customs Act?

99. Sixth, is the only ground of review of the decision whether, as a matter of strict statutory interpretation, the Regulation falls within the parameters of section 23 of the Customs Act (as was, in essence, submitted by the appellants)?

Seventh – if the answer to the sixth question is "no", does the Court have power to review the validity of the Regulation on other grounds relating to excess of power, including breach of the principles of natural justice, Wednesbury unreasonableness or breach of section 41 of the Constitution (as was, in essence, submitted by Hanjung)?

Issue 1 – did his Honour deny the appellants a fair hearing in the National Court proceeding?

101. The appellants rely on section 59 of the Constitution and claim that they were denied a fair hearing because the National Court refused to allow them the opportunity to:

103. That section 59 of the Constitution applies to the conduct of proceedings in Court is clear: Gipe v The State [2000] PGSC 10, Kwimberi of Paulus M Dowa Lawyers v Independent State of Papua New Guinea [1998] PGSC 9, Okuk and State v Fallscheer [1980] PGSC 13. The section extends to a failure to enable a party to attend a hearing and present its case: Gabi v Nate [2006] PGNC 178, Ombudsman Commission of PNG v Denis Donohoe [1985] PNGLR 348; Okuk and State v Fallscheer [1980] PGSC 13.

104. It is not in dispute that detailed directions orders were made by Davani J on 7 April 2009 in this proceeding, requiring the appellants to (inter alia) file and serve a list of documents enumerating relevant documents concerning

105. The State failed to file a List of Documents or respond to multiple requests by Hanjung for copies of relevant documents, notwithstanding orders of Davani J and letters to the Attorney General, the Solicitor General and the Minister for Justice. On 5 June 2009 Cannings J heard an application by Hanjung for summary determination of its application for judicial review pursuant to order 9 rules 13 and 15 of the National Court Rules. His Honour noted that the appellants had conceded their failure to comply with the orders of Davani J, and found that the failure to comply had been flagrant. Notwithstanding this, his Honour was not, in the circumstances, prepared to make a summary order finding the Regulation invalid. His Honour explained:

So, even though the first and third defendants have not defended the case properly and they have been guilty of dilatory conduct and clear and flagrant breaches of the court's orders, the consequences of summarily declaring a law invalid would in my view would [sic] be too harsh. The penalty would be too severe.

So I am going to refuse to make the sort of orders that the plaintiff is seeking in its notice of motion. Having said that, I do not think it would be right to allow this judicial review to continue as if there had been no breach of the court's orders. I have already said, I agree with Mr Varitimos' submission that failure to comply with court orders must have and must be seen to have severe consequences.

So what I have decided to do is put some steps in place that will allow for a special form of summary determination which will in effect penalize the first and third defendants for their dilatory conduct and for their breach of court orders and it will allow for an expedited hearing which will encompass putting the onus on the plaintiff to prove its case. What I am going to do is remove the right of appearance for the first and third defendants and order that they cannot take any step in these proceedings without the leave of the court and I will set in train dates for an expedited hearing.

106. The orders of his Honour were strict. However, in my view the conduct of his Honour did not breach section 59 of the Constitution because:

This Court has wide powers to control the conduct of proceedings before it, subject of course, to jurisdictional limitations fixed by Statute. It is in the inherent jurisdiction of the Court to take firm control of the proceedings to ensure that the business of the Court is conducted in an orderly and fair and timely manner and to ensure that justice is done in the particular case.

It is clear that the appellants had failed to make any attempt to comply with detailed orders of the National Court, which orders were made to progress litigation in the proceeding. It is appropriate that the National Court act to enforce its own orders and deal with parties who choose to ignore them.

107. I do not consider that the decision of Cannings J the subject of this appeal should be quashed on the ground of breach of section 59 of the Constitution.

108. The decision under review by his Honour in these proceedings was clearly the decision of the NEC to advise the Governor-General to make the Regulation under section 23 of the Customs Act. That this is so is evident from the following.

109. First, section 23 of the Customs Act provides that regulations may prohibit the importation of goods into the country. Section 193 of the Customs Act provides (inter alia) that the Head of State, acting on advice, may make regulations prescribing all matters that by this Act are required or permitted to be prescribed.

110. It is therefore clear that the Regulation is the result of an exercise of discretionary power under the Customs Act.

Except as provided by Section 96(2) (terms and conditions of employment), in the exercise and performance of his privileges, powers, functions, duties and responsibilities the Head of State shall act only with, and in accordance with, the advice of the National Executive Council, or of some other body or authority prescribed by a Constitutional Law or an Act of the Parliament for a particular purpose as the body or authority in accordance with whose advice the Head of State is obliged, in a particular case, to act.

112. For the purposes of the current issue, the effect of section 86 of the Constitution was explained by Injia CJ in In re Constitution Section 19(1) - Special reference by Allan Marat [2012] PGSC 20 at [157] as follows:

The submissions of Mr Henao of counsel for the affirmative is helpful as his exposition of the case law accurately reflects the law on s 86 of the Constitution. I recapitulate the main principles that are pertinent to this case. It is established principle that the position of the Head of State is symbolic or ceremonial; he has no independent power to make any decision. It is for a written law to make express provision for the Head of State to act in accordance with the advice of the appropriate authority. The real decision is made by the National Executive Council, Parliament or other statutory authority that is empowered to make a decision on the matter in question. (emphasis added)

113. Third, it is clear from the judgment of his Honour that it was the decision-making process of the NEC, acted on by Head of State, which was challenged in the National Court before his Honour. So, for example, Cannings J referred to:

114. This reasoning is consistent with comments of Davani J in Consort Express Lines Limited v Allan Marat (unreported, OS 105 of 2009 (JR), 27 March 2009) where her Honour – in an unrelated decision considering the Regulation the subject of the present appeal – referred to "the Head of State's decision who acting on advice of the National Executive Council, made the Regulation in so far as that said Regulation purported to prohibit the importation of heavy fuel oil".

Issue 3: was the decision under review by his Honour an exercise of legislative or executive discretionary power?

115. Whether the power to make subordinate legislation is an exercise of legislative or executive discretionary power is, to some extent, of peripheral relevance in this case. Indeed, there were only brief submissions concerning this question by Hanjung, which referred to the judgment of Kirby P in State of New South Wales v Macquarie Bank Limited (1992) 30 NSWLR 307. To this extent, the issue does not appear (in the submission of the parties) to be determinative of this case.

116. One reason to consider the issue is that, as explained by the learned authors of Delegated Legislation in Australia 4th Edition (D Pearce and S Argument, LexisNexis Butterworths, 2012) at pages 3-4 of their book, there is some authority supporting the proposition that some grounds of review which are available for review of decisions of an administrative character (for example, breach of the rules of natural justice) are not properly exercisable for review of legislative decisions. This is particularly the case in jurisdictions where there is a codified approach to administrative review (such as, for example, Australia, where judicial review of administrative decisions is subject to the Administrative Decisions (Judicial Review) Act 1977 (Cth)).

117. There is certainly a strongly held view in academic writings that the delegation of legislative power by means of an enabling act is an aspect of the grant of executive power rather than legislative power (see, for example F Bennion Bennion on Statutory Interpretation 5th edition LexisNexis, London, 2008 at page 241, Halsbury's Laws of England 5th Edition volume 96 paragraph 1142). Certainly, this was the view taken by Kirby P in State of New South Wales v Macquarie Bank Limited (1992) 30 NSWLR 307 at 322-323 where his Honour said:

Unsurprisingly, the concept of proportionality is extensively used in the jurisprudence of the European community (and thus in England) in the field of administrative law. In a sense, the making of subordinate legislation by the Executive Government under a power conferred upon it by the legislature is simply another administrative act which must conform to the requirements conventionally laid down for the validity of such acts....

118. This view has also been adopted in the United Kingdom including for example National Transport Co-operative Society Limited v The Attorney General of Jamaica [2009] UKPC Case Ref 48 at [32] and Oakley Inc v Animal Ltd [2006] EWCA Civ 1191 at [67].

119. In these proceedings Cannings J clearly considered that the exercise of power to make the Regulation was an exercise of legislative power. There is also extensive authority supporting the proposition that the promulgation of delegated legislation can be an exercise of legislative power: for example McWilliam v Civil Aviation Safety Authority [2004] FCA 1701; (2004) 142 FCR 74 at 84, Percy v Hall [1997] Q.B. 924 at 950, Australian Mining & Smelting Europe Ltd v Commission of the European [1983] Q.B. 878.

120. The complexities inherent in developing consistent principles to determine this issue were highlighted in the discussion of Professor Pearce and Mr Argument at 406 where they observed that, as a result, individual cases tended to be decided on their particular facts (cf discussion in Blackpool Corporation v Locker [1948] 1 K.B. 349]. Indeed, as observed in the decision of the Federal Court of Australia in McWilliam v Civil Aviation Safety Authority [2004] FCA 1701; (2004) 142 FCR 74:

[39] For this purpose CASA seeks to distinguish decisions of an administrative character from those of a legislative character. I note that this distinction would seem to have been drawn in some of the cases. For example, Gummow J in Queensland Medical Laboratory & v Blewett [1988] FCA 423; (1988) 84 ALR 615 ... at 633-634 drew attention to the constitutional distinction between legislative, executive and judicial powers and then sought to identify the relevant characteristics of 'administrative' decisions by reference to that distinction. The Full Court did the same in RG Capital Radio Ltd v Australian Broadcasting Authority [2001] FCA 855; (2001) 185 ALR 573 ... at 580 ff. However, these decisions should not be understood as suggesting that administrative and legislative decisions fall into two mutually exclusive categories and that such categories can be identified by particular characteristics.

[40] Even in relation to the distinction between judicial and executive decisions it is not possible to draw clear distinctions based upon specified criteria. I attempted to make this point in Civil Aviation Safety Authority v Boatman [2004] FCAFC 165 at [75]...

121. Significantly, the distinction between legislative power and executive power is of less relevance in jurisdictions where there is not a codified approach to administrative review (for example, Papua New Guinea). As Dixon J observed in Arthur Yates & Co Pty Ltd v Vegetable Seeds Committee [1945] HCA 55; (1945) 72 CLR 37 at 79-80

Indeed I do not think that in English law such a question will be found ever to be solved by ascertaining whether, upon a correct juristic analysis, the power should or should not be described as legislative. It will depend rather upon the nature of the authority in whom the power is reposed and upon the measure and extent of the power, its subject matter and its limitations and the conditions in or upon which it is exercisable.

122. In my view, to the extent that it is necessary to decide this issue, on the facts of this case the Regulation in this case can most accurately be characterised as an exercise of legislative power in that:

Issue 4: was that decision justiciable, or excluded from judicial review by statute or otherwise

123. The appellants have directed the attention of the Court to section 86 (4) of the Constitution, which provides:

The question, what (if any) advice was given to the Head of State, or by whom, is non-justiciable.

124. Accordingly, in the submission of the appellants, the advice of the NEC to the Head of State to make the Regulation was not reviewable in a Court of law. I do not accept this proposition.

125. First, it is clear that "advice" for the purposes of section 86 (4) of the Constitution is quite limited. As Kapi DCJ explained in Wari v Ramoi [1986] PGSC 11.

The question remains, whether the advice and the reasons for the advice upon which the Head of State acts may be reviewed by a court of law. Section 86(4) of the Constitution directly addresses the issue. It protects:

126. Second, as recently explained by Gavara-Nanu J in In re Constitution Section 19(1) - Special reference by Allan Marat [2012] PGSC 20 at [440]

Any advice given to the Governor-General is non-justiciable under s86 (4) of the Constitution, as long as the person or authority giving such advice had acted within the powers given to it by law: Kila Wari and Others v Gabriel Ramoi and Sir Kingsford Dibela [1986] PNGLR 112. Likewise, any decision made by the Governor-General is amendable to review by the Court, if the decision is unconstitutional or unlawful: Burns Philp (PNG) Ltd v Independent State of Papua New Guinea (1989) N769.

127. Injia CJ in the same case at [157] observed in relation to the decision or advice of the NEC provided to the Head of State:

If that decision is subsequently found by the Courts to have been invalidly made, that decision is rendered invalid and ineffective; and as a natural consequence thereof, the actions of the Head of State in recognizing the decision suffers the same fate: Kekedo v Burns Philp (PNG) Ltd [1988-89] PNGLR 122, Kila Wari and others v Gabriel Ramoi and Another [1986] PNGLR 112, The Independent State of Papua New Guinea v Philip Kapal [1987] PNGLR 417 at 420-421, The matter of Section 18 91) of the Constitution, Southern Highlands Provincial Government v Sir Michael T Somare; Sir Matiabe Yuwi v Sir Michael Somare (2007) SC 854; SCR No 3 of 2011 Reference by East Sepik Provincial Executive (2011) SC 1154. (emphasis added)

Therefore, s 86(4) protects any advice which is given within the discretion permitted by an Act but does not protect:

129. Statements of principle by Kidu CJ and Kapi DCJ in Wari were also strongly endorsed by the five-member Supreme Court bench in Kipalan v National Parliament [2004] PGSC 42.

130. Accordingly, if it can be demonstrated that the decision of the NEC and the advice upon which that decision was based is, for example, beyond power, the decision and advice are reviewable.

131. Finally, on the basis that delegated legislation made by the Head of State pursuant to the advice of the NEC is not excluded from judicial review by section 86 (4) of the Constitution, it is clear that there is no impediment in the common law to judicial review of delegated legislation (including the Regulation). Professor Pearce and Mr Argument write at 170 of their book:

The courts have, for many years, considered it to be within their power to rule delegated legislation invalid. For example, in 1702 Holt CJ said "... every by-law is a law, and as obligatory to all persons bound by it, ... as any Act of Parliament, only with this difference, that a by-law is liable to have its validity brought in question": The City of London v Wood (1702) 12 Mod 669 at 678; 88 ER 1592 at 1597. Lord Herschell LC in Institute of Patent Agents v Lockwood [1894] UKLawRpAC 38; [1894] AC 347 at 360 reiterated this view in almost identical words.

132. Indeed, that regulations and by-laws can be the subject of judicial review in Papua New Guinea has been an accepted principle for many years: see for example Secretary for Law v Tenalom [1965-66] PNGLR 414 and Sale v Tohian [1962] PGSC 9, and more recently cases including NTN Pty Ltd v The State [1986] PNGLR 167, Telepage Pty Ltd v Post and Telecommunication Corporation Act [1987] PGNC 3 and Pansat Communications Pty Ltd v Momis [1995] PGNC 19.

Issue 5: in relation to the Regulation as subordinate legislation, as a matter of strict statutory interpretation, is the Regulation consistent with section 23 of the Customs Act?

133. As a matter of strict statutory interpretation, the Regulation is consistent with section 23 of the Customs Act pursuant to which it was purportedly made.

134. As is clear from section 23 (2)(a), regulations may be made pursuant to the Customs Act to prohibit the importation of goods absolutely. A power to prohibit an activity absolutely can be validly exercised to prohibit part only of the conduct falling within the activity: Shire of Charlton v Ruse [1912] HCA 33; (1912) 14 CLR 220 and see the discussion in Pearce and Argument at page 247 paragraph 15.18. This may be contrasted with circumstances where the enabling Act confers a power to make regulations to regulate an activity only – such legislation does not extend to prohibition of the activity: NTN Pty Ltd v The State [1986] PNGLR 167.

135. As a general proposition the Courts strictly apply a power to prohibit because such a power potentially impacts seriously on the rights of persons in the community. In this case the Regulation is so drafted as to limit the types of fuel which may be imported. This constitutes a qualified prohibition on the importation of fuel which – as a matter of statutory interpretation – is consistent with section 23 of the Customs Act.

Issue 6: is the only ground of review of the decision whether, as a matter of strict statutory interpretation, the Regulation is consistent with section 23 of the Customs Act?

136. Mr Jurth for the appellants submitted that the issue for the Court in this case was simple – namely that the only question was whether the Regulation was made in terms of the power granted by sections 23 and 193 of the Customs Act.

137. This contention has the great attraction of simplicity. Indeed, it is not in dispute that the validity of subordinate legislation like the Regulation must be considered in the light of the provisions of the relevant enabling Act (in this case the Customs Act): Pansat Communications Pty Ltd v Momis [1995] PGNC 19, NTN Pty Ltd v The State [1986] PNGLR 167, Matu Mining Pty Ltd v Embel [1995] PGSC 4, Telepage Pty Ltd v Post & Telecommunication Corporation Act (Ch 394) [1987] PGNC 3. To that extent, a clear ground of invalidity of a regulation is inconsistency with the relevant legislation.

138. However, it is also clear from the numerous authorities to which I have referred that the true question in respect of the validity of a decision of the NEC relating to advice to the Head of State is whether the decision was beyond the power conferred by the Customs Act.

139. That this is so is apparent from such cases as NTN Pty Ltd v State [1986] PGNC 41. In that case as Kidu CJ observed:

When an Act of Parliament authorises an authority to make regulations or rules of bylaws then the authority must act within the powers given to it. If it goes beyond those powers then it exercises powers that are not given to it by the relevant Act of Parliament. The Constitution of Papua New Guinea says this in s 10 thereof.

All written laws (other than this Constitution) shall be read and construed subject to:

(c) in the case of adopted laws or subordinate legislative enactments — the Organic Laws and the laws by or under which they were enacted or made, and so as not to exceed the authority to make them properly given, to the intent that where any such law would, but for this section, have been in excess of the authority so given it shall nevertheless be a valid law to the extent to which it is not in excess of that authority."

140. Over many years the common law has developed principles of judicial review of executive, legislative and administrative decisions. A case in point in the development of jurisprudence in this area has been the adoption by the courts of the so-called principles of Wednesbury unreasonableness, which have been embraced at high level in Courts in this country (for example Ombudsman Commission v Peter Yama (2004) SC 747, Saboka v Commissioner of Police (2006) N2975) as well as in other common law jurisdictions (for example, Minister for Immigration and Citizenship v Li [2013] HCA 18, Tesco Stores Ltd v Secretary of State for the Environment [1995] UKHL 22; [1995] 1 WLR 759).

141. In my view the law does not restrict grounds of invalidity of either regulations or the decisions pursuant to which regulations are made to basic categories of strict statutory interpretation as urged upon the Court by the appellants. Challenging regulations or the decisions pursuant to which they were made as being beyond the power for reasons other than strict failure to comply with the statute is not new. In NTN the applicants also claimed that the relevant regulations were invalid as having been made for an improper purpose and because the regulations had abrogated private contractual rights, and similar circumstances have arisen for decision in other common law jurisdictions (for example State of New South Wales v Macquarie Bank Limited [1992] 30 NSWLR 307).

142. The rationale for these developments in the law can be seen in the comments of Wilson J in the High Court of Australia in FAI Insurances Ltd v Winneke [1982] HCA 26; (1982) 151 CLR 342 at 401:

In arguing that the citizen finds his protection, where decisions of the Governor in Council are concerned, in the principles of responsible government rather than in the processes of judicial review, the Solicitor-General understandably relied on earlier decisions such as Theodore v. Duncan (1919) AC 696, at p 706, and Australian Communist Party v. The Commonwealth [1951] HCA 5; (1951) 83 CLR 1, at pp 179, 221, 257, 280 . However, the views of members of this Court in the recent case of Reg. v. Toohey; Ex parte Northern Land Council [1981] HCA 74; (1981) 151 CLR 170 supply a somewhat different perspective. It is a perspective which attempts to deal realistically with the role of the courts in providing a measure of review of the decisions of an expanding executive government. In so doing the decision reflects the trend which has been evident for some time in England, Canada and New Zealand. It is unnecessary to refer again to the cases which are discussed in the judgments in that case. The Supreme Court of Canada, in a unanimous judgment in a recent case dealing with the duty of the Governor in Council to be fair - Attorney-General (Canada) v. Inuit Tapirisat of Canada (1980) 115 DLR (3d) 1, at p 14 - affirmed ". . . the essence of the principle of law here operating is simply that in the exercise of a statutory power the Governor in Council, like any other person or group of persons, must keep within the law as laid down by Parliament or the Legislature. Failure to do so will call into action the supervising function of the Superior Court whose responsibility is to enforce the law, that is to ensure that such actions as may be authorised by statute shall be carried out in accordance with its terms, or that a public authority shall not fail to respond to a duty assigned to it by statute."

It is the legislative intent of the statute in question which will determine the availability of judicial review, and the courts will not be excluded merely because a power is reposed in the Governor in Council.

143. In light of these principles, the real question for decision by this Court is whether his Honour was correct in finding that the decision of the NEC was invalid for reasons of

Issue 7 – does the Court have power to review the validity of the Regulation on grounds relating to excess of power, including breach of the principles of natural justice, Wednesbury unreasonableness and section 41 of the Constitution?

145. Mr Varitimos for Hanjung submitted that if the Court accepted the findings of Cannings J in respect of only one ground of invalidity of the Regulation, the appeal should be dismissed. This submission was not disputed by the appellants, and I accept it.

146. In short, the appellants submit that the rules of natural justice were not applicable in these circumstances because they only apply to persons affected by a relevant decision or exercise of power as individuals, and not in circumstances where a decision is based on general or policy considerations without having regard to the interests or circumstances of a particular individual.

147. Hanjung however argues that a party affected by subordinate legislation is entitled to be heard and consulted, in accordance with the principles of natural justice, and contends that his Honour was correct in his findings and formulation of a rule requiring consultation with particular persons whose commercial interests are immediately and substantially affected.

148. The requirement under the Constitution and the common law for natural justice to be accorded to a relevant person was explained by Amet J in Gegeyo v Minister for Lands and Physical Planning [1987] PNGLR at 336 in the following terms:

In the circumstances of this case it is my strong view, that if any administrative decision will or may affect the reputation, integrity or standing in the community of persons holding public office then the minimum requirement of fairness must be afforded that person or persons. I consider that that minimum requirement should be to give advice or notice in writing of the reasons for a decision proposed to be taken which will affect the status of such a person. And if that reason is likely to case negative aspersions on the character, integrity or reputation of that person, then I consider that an opportunity should be given to that person to be heard before such a reason or reasons are relied upon as the basis for that decision.

149. In the proceedings the subject of this appeal, Cannings J in essence found that Hanjung was entitled to procedural fairness in respect of the decision concerning the promulgation of the Regulation because it was particularly affected by the terms of the Regulation. Similarly in Consort Express Lines Limited v Marat & Ors Davani J found there was a serious question to be tried on the facts before her Honour that Hanjung (which was the applicant in that proceeding) was entitled to judicial review of the decision to make the regulation because of the absence of prior consultation with Hanjung.

150. Mr Jurth for the appellant submitted that it is both unreasonable and unduly burdensome to require the NEC to consult with every single person whose commercial or other interests could be adversely affected by the making of a regulation. Pearce and Argument at page 4 of their learned text observe that the principles of natural justice are of minor significance where subordinate legislation results from the exercise of legislative power (as is the case here).

At the same time there is authority that an especially unfair operation of a regulation-making power will cast doubt on the validity of the relevant regulation: State of New South Wales v Macquarie Bank at 321. An illustration of the application of this principle is the decision of the High Court of Australia in FAI Insurances Ltd v Winneke [1982] HCA 26; (1982) 151 CLR 342. In that case the appellant had conducted the business of worker's compensation insurance in the State of Victoria for twenty years, and had a licence approved by the Governor in Council under Workers Compensation Act 1958 (Vic) to permit it to conduct that business. Relevant regulations required the licence to be renewed annually. The Governor in Council refused to approve the renewal of a licence to the appellant, which meant that the appellant could no longer accept insurance premiums or carry on a business of worker's compensation insurance. The High Court held that the appellant was entitled to natural justice in respect of the decision to refuse the renewal of the licence. In particular, Wilson J observed at 398-399:

But this view of the scope of the power, while material, is not determinative of the question whether there is to be implied in the Act an obligation to give the company the opportunity of being heard before the power is exercised so as to withhold a renewal of the approval. It is undoubtedly a serious consideration. As Gibbs J. said in Salemi (No. 2) (1977) 137 CLR, at p 420, speaking of the power of deportation conferred on the Minister by s. 18 of the Migration Act 1958 (Cth):

"This is a field in which it is unwise to generalize, but the fact that the power is conferred quite unconditionally is a circumstance that suggests - not necessarily conclusively - that the principles of natural justice are not intended to apply".

This may be a case where the discretionary content of a power reposed in the Governor is not of itself sufficient to exclude a right to be heard. Much depends upon the nature of the decision that is made in a particular case. In many cases where decisions are committed to the Governor in Council there could be no question of that decision-making process being attended with a duty to be fair and so to allow individual representations from persons affected by the decision to be incorporated into the process. The problem does not arise where decisions are of a legislative character or of a kind which affect the community as a whole or large sections of it. Again, if it were the fact that a decision affecting an individual is dictated by the application of a principle of government policy, with the result that considerations personal to the individual do not and could not influence the outcome, then there is no applicable principle of fairness which requires more than that the individual in question be informed of that overriding policy consideration. In such a case it would be positively unfair to encourage the person concerned to think that anything could be gained by his making representations. Of course, in a democracy there are ways and means of challenging government policy but the processes of judicial review cannot be harnessed to that end. On the other hand, there will be cases where there is no relevant policy or the policy is not so clear-cut in its application to a particular case as to pre-determine the result. So long as there are considerations personal to the individual which may influence the outcome, then the objective of fairness may require that he be given to understand the general nature of those considerations and provided with an opportunity to submit written material by way of answer or explanation in relation to them together with any other matters which may support a favourable decision. In such a case fairness would no doubt require that such material be honestly considered. But that having been done, there can be no fetter on the freedom of the Governor and his advisers to determine the result, whether because of countervailing considerations or because, ultimately, of the effect given to government policy.

20. It would appear that the present case falls into the class of case to which I have last referred. The refusal to renew the approval of the company as an insurer for the purposes of the Act was based on considerations personal to the company. There is no suggestion of any overriding government policy which dictated the result. (emphasis added)

151. In this case the impact of the Regulation on Hanjung is not plain from the terms of the Regulation. However the facts before his Honour were clear. A very significant business of Hanjung would be very significantly affected by the Regulation. While for reasons already explained in this judgment the facts before his Honour were incomplete for want of the appellant tendering evidence, given the nature of the prohibition imposed by the Regulation it is not apparent that anyone except for Hanjung was directly affected by the Regulation. There was certainly no evidence to suggest otherwise. Notwithstanding this, it is clear that no consultation with Hanjung was undertaken at any time by the appellants in relation to either the decision or the Regulation.

152. Second, while cases in which breach of the rules of natural justice are found to have occurred generally appear to involve decisions affecting persons personally (for example, dismissal from a position in Aeava v National Executive Council [2001] PGNC 62) this appears to be a case where, on the facts, Hanjung was not only personally affected, but specifically affected.

153. In my view his Honour was correct in finding that the decision in respect of the Regulation was invalid for contravention of the rules of natural justice.
While the consequence of this finding is that the appeal should be dismissed, it is appropriate to briefly consider the other reasons for his Honour's decision.

Failure to give reasons Neither the appellant nor Hanjung made beyond cursory submissions concerning this issue. I do not consider it necessary in the circumstances to make any findings in this respect.

154. As I noted earlier in this judgment, the appellants' grounds of appeal concerning unreasonableness primarily concerned:

155. The concept of "Wednesbury unreasonableness" is well-known to the common law. In summary, as explained by Lord Greene MR in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223, the principle refers to a decision which is so unreasonable that no reasonable decision-maker could have made it.

156. It is clear that, traditionally, the Courts have approached with great caution the prospect of finding regulations invalid and beyond power on the basis of "unreasonableness". As a general proposition, Courts are reluctant to substitute their own opinion on the merits of a provision for that of the legislation maker (cf discussion in Pearce and Argument page 334). Helpfully, Professor Pearce and Mr Argument set out in some detail the developments in the common law with respect to concepts of unreasonableness, particularly in respect of subordinate legislation. So, whereas in the nineteenth century the English Courts were not prepared to find subordinate legislation invalid for want of reasonableness (for example, Slattery v Naylor (1988) 13 App Cas 446 and Kruse v Johnson [1898] UKLawRpKQB 101; [1898] 2 QB 91), by the second half of the twentieth century the Courts appeared reconciled to unreasonableness as a ground of invalidity of subordinate legislation.

157. One example is the Court of Appeal decision (subsequently affirmed by the House of Lords) of Mixnam's Properties Ltd v Chertsey Urban Council [1964] 1 QB 214 where Diplock LJ observed at 237-238:

The various special grounds upon which subordinate legislation has sometimes been said to be void - for example, because it is unreasonable; because it is uncertain; because it is repugnant to the general law or to some other statute - can, I think, today be properly regarded as being particular applications of the general rule that subordinate legislation, to be valid, must be shown to be within the powers conferred by the statute. Thus, the kind of unreasonableness which invalidates a by-law is not the antonym of "reasonableness" in the sense of which that expression is used in the common law, but such manifest arbitrariness, injustice or partiality that a court would say: "Parliament never intended to Rive authority to make such rules; they are unreasonable and ultra vires";

97 It is perhaps at this stage appropriate to consider what is meant by irrationality. In their book Judicial Review the learned authors the Right Honourable the Lord Clyde and Denis Edwards at page 572 conveniently set out a number of the leading definitions of irrationality:

"In modern times, the meaning of irrationality has been put in various ways. In the GCHQ case, where Lord Diplock first adopted irrationality as the term for 'Wednesbury unreasonableness', his Lordship defined the concept in strong terms:

'It applies to a decision which is 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'.

In another case Lord Scarman considered that a decision vitiated by rationality meant that it was 'so absurd that he (the minister) must have taken leave of his senses'. In R v Hillingdon London Borough Council, ex parte Pulhofer Lord Brightman considered that irrationality meant that the decision was 'perverse' and demonstrated 'unreasonableness verging on an absurdity". Lord Lowry has given a possibly more restrained definition: 'so unreasonable that no statutory authority/public officer acting reasonably could have come to it'".

98 It is clearly a substantial hurdle which the petitioner must overcome to satisfy the test of irrationality. In McCrae v Parole Board for Scotland 1997 SLT 97 Lord Weir observed at 101 where there was a challenge to the reasonableness of the decision of the Parole Board and where fairness to the prisoner required to be balanced by the issue of public safety:

"A very strong case has to be made out before intervention by judicial review is justified."

159. A relatively recent example of a case where a Court of the United Kingdom has considered the application of principles of Wednesbury unreasonableness in the context of the validity of subordinate legislation is the decision of the Court of Appeal in R v Secretary of State for Social Security [1996] EWCA Civ 1293; [1997] 1 WLR 275. As explained in the headnote to that decision:

Persons from abroad seeking asylum were treated as special cases under the Income Support (General) Regulations 1987 and were entitled to claim urgent cases payments amounting to 90 per cent. of the normal income support benefit, until their claims for asylum were finally determined. The Secretary of State for Social Services, pursuant to sections 135(1)(2), 137(2)(a) and 175(3)(a) of the Social Security Contributions and Benefits Act 1992, made the Social Security (Persons from Abroad) Miscellaneous Amendments Regulations 1996 . Regulation 8 of the Regulations of 1996 amended regulations 21(3) and 70 of the Regulations of 1987 so as to exclude from entitlement to urgent cases payments those who sought asylum otherwise than on arrival in the United Kingdom and those whose claims for asylum had been adversely determined by the Secretary of State for the Home Department and were awaiting appeal. An exception was made in cases where the Home Secretary had made a declaration that the country of which the asylum seeker was a national was subject to a fun-damental change in circumstances such that the person would not normally be asked to return to that country. The applicants, the Joint Council for the Welfare of Immigrants and B., an asylum seeker, sought judicial review by way of a declaration that the Regulations of 1996 were invalid. The Divisional Court dismissed their applications.

160. In the Court of Appeal the applicants claimed that the validity of the relevant regulations had to be assessed by the discretion of the promoting Minister being subject to Wednesbury principles. In summary, however, State argued that

161. The majority of the Court of Appeal rejected the submissions of the State, and ruled in favour of the applicants on this ground of review. Importantly as Simon Brown LJ observed (Waite LJ concurring) at 291-292

I do not pretend to have found this by any means an easy case. Powerful arguments are advanced on both sides. The Ex parte Leech principle [1993] EWCA Civ 12; [1994] Q.B. 198 is undoubtedly of assistance to the applicants and yet the analogy with Ex parte Leech is not, as it seems to me, exact. As stated, I for my part have no difficulty in accepting the Secretary of State's right to discourage economic migrants by restricting their benefits. That of itself indicates that the Regulations are not invalid merely because of their "chilling" effect (Dickson J.'s phrase in Solosky v. The Queen 105 D.L.R. (3d) 745, 760) upon the exercise of the deprived asylum seekers' rights under the Act of 1993.

It is, moreover, as I recognise, one thing, as in Ex parte Leech, to condemn direct interference with the unquestioned basic rights there identified; another to assert that the Secretary of State here is bound to maintain some benefit provision to asylum seekers so as to ensure that those with genuine claims will not be driven by penury to forfeit them, whether by leaving the country before their determination or through an inability to prosecute them effectively. The present challenge, I therefore acknowledge, involves carrying the Ex parte Leech principle a step further and this, moreover, in a field where Parliament has been closely involved in the making of the impugned Regulations.

I have nevertheless concluded that it is a step the court should take. Parliamentary sovereignty is not here in question: the Regulations are subordinate legislation only. The Hammersmith approach [1991] UKHL 3; [1991] 1 A.C. 521 cannot, in my judgment, avail the Secretary of State: it applies only once the court has determined that the Regulations do not contravene the express or implied requirements of a statute — the very question here at issue. Parliament for its part has clearly demonstrated by the Act of 1993 a full commitment to the United Kingdom's Convention obligations. When the regulation-making power now contained in the Act of 1992 was first conferred, there was no question of asylum seekers being deprived of all benefit and thereby rendered unable to pursue their claims.

For the purposes of this appeal, however, it suffices to say that I for my part regard the Regulations now in force as so uncompromisingly draconian in effect that they must indeed be held ultra vires. I would found my decision not on the narrow ground of constructive refoulement envisaged by the U.N.H.C.R. and rejected by the Divisional Court, but rather on the wider ground that rights necessarily implicit in the Act of 1993 are now inevitably being overborne. Parliament cannot have intended a significant number of genuine asylum seekers to be impaled on the horns of so intolerable a dilemma: the need either to abandon their claims to refugee status or alternatively to maintain them as best they can but in a state of utter destitution. Primary legislation alone could in my judgment achieve that sorry state of affairs.

163. In my view there are strong parallels between the circumstances of the case before their Lordships in R v Secretary of State for Social Security and both the contentions and the facts before us.

164. Further, the appellants claim that the fact that the decision involved issues of policy in itself excludes the operation of principles of unreasonableness. However it is clear that, in more recent times, this issue has not been considered a reason to exclude judicial review in respect of unreasonableness. As the learned authors of De Smith's Judicial Review 7th edition (Sweet and Maxwell, London 2013) write at 21:

Courts are able, and indeed obliged, to require that decisions, even in the realm of "high policy" are within the scope of the relevant legal power or duty, and arrived at by the legal standards of procedural fairness.

The courts display reserve in impinging upon the substance of policy decisions, but even here they may legitimately intervene if the decision is devoid of reason and not properly justified. Judges always possess the capacity to probe the evidence and assess whether the reasons and motives for decisions are rationally related to their aims.

166. Finally on the facts of this case his Honour adopted the strong view that the decision to promulgate the Regulation was unreasonable in the Wednesbury sense. Those facts included:

167. In my view the principles of Wednesbury unreasonableness can be invoked as a ground of review of the validity of a decision of the NEC, advising the Head of State, in respect of the making of delegated legislation. The question is one of the validity of the exercise of the power to make the relevant delegated legislation, in this case the Regulation.

168. I consider that his Honour did not err in conducting a judicial review of the decision of the NEC in light of Wednesbury principles. Further, in the circumstances of this case, I am not prepared to find his Honour erred in concluding that the appellants had acted unreasonably.

The appellants' grounds of appeal referable to this aspect of his Honour's judgment cannot be sustained.

169. In the circumstances it is unnecessary to conclusively determine whether his Honour erred in respect of the application of section 41 of the Constitution in the proceedings before him. At the hearing Mr Varitimos for the respondent submitted, in effect, that the respondent placed more weight in its contentions on the grounds of review referable to natural justice and unreasonableness, and that the Court need not resolve the conflict of authority on this point in this case. I agree. As in my view there are other grounds for upholding his Honour's decision I do not consider it necessary in this context to rule on the power of the National Court to apply provisions of the Constitution for the purposes of section 18.

_________________________________________________
Steeles Lawyers: Lawyers for the Appellants
Young & Williams Lawyers: Lawyers for the Respondent

Supreme Court of Papua New Guinea

Marat v Hanjung Power Ltd [2014] PGSC 33; SC1357 (4 July 2014)