Alleged Improper Borrowing of AUD1.239 Billion Loan, In re [2017] PGSC 8; SC1580 (30 March 2017)

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Waigani: Salika DCJ, Mogish J,
Cannings J, Kassman J, Higgins J
2017: 17 February, 30 March

CONSTITUTIONAL LAW – powers and functions of Ombudsman Commission– investigation of conduct of governmental bodies, officers and employees of governmental bodies etc – Constitution, Section 219(1)(a), Organic Law on the Ombudsman Commission, Section 13.

OFFICE OF PRIME MINISTER –Constitution, Section 142 – whether conduct of Prime Minister can be investigated under Organic Law on the Ombudsman Commission – whether conduct of Prime Minister can be subject of comment or findings when Ombudsman Commission publishes results of investigation.

OMBUDSMAN COMMISSION – procedures for investigation under Organic Law on the Ombudsman Commission – Section 17(1): requirement to inform “the responsible person” of intention to make investigation – whether Prime Minister is a “responsible person” for purposes of an investigation into alleged improper overseas borrowing by National Government – whether failure to inform a “responsible person” means Commission lacks jurisdiction to investigate and publish results of investigation regarding conduct of that person.

CONSTITUTIONAL INTERPRETATION – Constitution, Subdivision II.2.C – whether Ombudsman Commission has jurisdiction to make comments, in a report of an investigation, involving interpretation or application of provisions of Constitutional Laws – whether such comments offend against Constitution, Section 18 (original interpretative jurisdiction of the Supreme Court).

The National Court referred 11 questions of constitutional interpretation and application to the Supreme Court under Section 18(2) of the Constitution. The questions arose during court proceedings commenced by the Prime Minister against the Ombudsman Commission. The Prime Minister challenged the jurisdiction of the Ombudsman Commission regarding an investigation under the Organic Law on the Ombudsman Commission into the conduct of various governmental bodies and officers relating to an overseas bank loan obtained by the National Government and procurement of consultants, in so far as the investigation was in relation to his conduct. He also challenged the power of the Commission to distribute a provisional report of that investigation, which contained comments that he considered were adverse to and derogatory of him. He sought various declarations and orders, including a permanent injunction restraining the Commission from further investigating his conduct and publishing any further report of its investigation in relation to his conduct. The questions referred to the Supreme Court raised four general issues: (1) whether the Commission can investigate conduct of the Prime Minister under the Organic Law on the Ombudsman Commission (questions 1 to 4); (2) whether conduct of the Prime Minister can be the subject of comment or findings when the Commission publishes the results of an investigation under that Organic Law (question 5); (3) whether the Commission is obliged, before investigating conduct of the Prime Minister under the Organic Law on the Ombudsman Commission, to inform the Prime Minister of its intention to make the investigation (questions 6 to 10); (4) whether the Commission can in any report published by it under that Organic Law make comments involving interpretation or application of Constitutional Laws (question 11). Commission

Albert Karo v Ombudsman Commission [1995] PNGLR 547
Application by Herman Joseph Leahy (2006) SC855
Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223
Constitutional Reference No 1 of 1978 [1978] PNGLR 345
Denis Donohoe v Ombudsman Commission [1985] PNGLR 348
James Kond v National Development Bank Ltd (2015) SC1432
John Mua Nilkare v Ombudsman Commission [1999] PNGLR 333
Lucas-Smith & Ors v Coroner’s Court of the ACT & Ors [2009] ACTSC 40
Madang Timbers Ltd v Valentine Kambori (2009) SC1000
M^cGregor & Pearce v The Hon John Gallop & the Attorney-General of the ACT [2002] ACTSC 45
Peter O’Neill v Ombudsman Commission, Rigo A Lua & Phoebe Sangetari (2015) N5857
Re Moresby Northeast Election Petition; Patterson Lowa v Goasa Damena [1977] PNGLR 429
Reference by East Sepik Provincial Executive [2011] 2 PNGLR 126
Reference by Morobe Provincial Executive (2012) SC1202
S v DPP and Others [2007] ACTSC 100
SCR No 1 of 2008, Reference by the Ombudsman Commission re the Organic Law on Provincial Governments and Local-Level Governments (Amendment No 10) Law 2006 (2010) SC1058
SCR No 3 of 1982, In re the Commissioner of Correctional Services [1982] PNGLR 405
SCR No 5 of 1982, Berghuser v Aoae [1982] PNGLR 379

This is the determination of questions of constitutional interpretation and application referred to the Supreme Court by the National Court under Section 18(2) of the Constitution.

V L Narokobi & M Efi, for the first, second & third Interveners
M M Varitimos QC & P Tabuchi, for the fourth Intervener
D Levy, for the fifth Intervener

1. BY THE COURT: This is the determination of 11 questions of constitutional interpretation and application referred to the Supreme Court by the National Court under Section 18(2) of the Constitution.

REFERENCE

2. On 19 July 2016 the National Court, constituted by the Honourable Justice Catherine Davani, referred the questions, which arose in proceedings before her Honour, OS No 15 of 2015. In those proceedings the Prime Minister, the Honourable Peter O’Neill MP, challenged the jurisdiction of the Ombudsman Commission regarding an investigation conducted under the Organic Law on the Ombudsman Commission in so far as the investigation related to his conduct. The subject of the investigation was the alleged improper borrowing of AUD1.239 billion from the Union Bank of Switzerland (UBS) by the National Government to purchase 149,390,244 shares in Oil Search Ltd and improper tender and procurement of consultants in relation to the borrowing.

3. The Prime Minister challenged the power of the Commission to distribute a provisional report of that investigation, which contained comments that he considered were adverse to and derogatory of him.

4. He sought various declarations and orders, including a permanent injunction restraining the Commission from further investigating his conduct and publishing any further report of its investigation.

5. The Prime Minister’s fundamental contention in the National Court was that the Commission lacked jurisdiction to investigate his conduct and to make and publish findings of wrong conduct against him under the Constitution, Section 219(1)(a) and Section 13 of the Organic Law on the Ombudsman Commission, those being the Constitutional Laws under which the Commission purported to conduct its investigation and prepare and circulate to certain bodies and individuals its provisional report.

6. Prior to trial of the originating summons Mr O’Neill applied by notice of motion for an order that certain questions of constitutional interpretation and application be referred to the Supreme Court under Section 18(2) of the Constitution, which states:

Subject to this Constitution, where any question relating to the interpretation or application of any provision of a Constitutional Law arises in any court or tribunal, other than the Supreme Court, the court or tribunal shall, unless the question is trivial, vexatious or irrelevant, refer the matter to the Supreme Court, and take whatever other action (including the adjournment of proceedings) is appropriate.

Justice Davani granted the application and referred the 11 questions to the Supreme Court.

7. Her Honour made various findings of fact for the purposes of the reference, which are set out in her Honour’s judgment, giving reasons for making the reference, Peter O’Neill v Ombudsman Commission, Rigo A Lua & Phoebe Sangetari (2015) N5857, and a document entitled “Facts (Pertaining to the Reference)”, prepared by her Honour, which forms part of the Reference, as required by Order 4, Rule 4(a) of the Supreme Court Rules. Other uncontentious facts emerged at the hearing of the Reference.

8. On 22 May 2014 the Ombudsman Commission gave notice to 11 permanent heads of various government departments and other governmental bodies of its intention to investigate, on its own initiative, the alleged improper borrowing of AUD1.239 billion from the UBS by the Government to purchase 149,390,244 shares in Oil Search Ltd and improper tender and procurement of consultants in relation to the borrowing. Notice was given under Section 17(1) of the Organic Law on the Ombudsman Commission. No such notice was given to the Prime Minister.

9. An investigation was conducted and on 8 December 2014 the Ombudsman Commission distributed a provisional report of the results of
its investigation, on a confidential basis, to various persons, including the Prime Minister. The provisional report stated in its first paragraph:

This is the provisional report by the Commission of an own initiative investigation under Section 219(1)(a) (functions of the Commission) of the Constitution and Section 13 (functions of the Commission) of the Organic Law on the Ombudsman Commission into the alleged improper borrowing of AUD1.239 billion loan from the UBS by the Government to purchase 149,390,244 shares in Oil Search Ltd and improper tender and procurement of consultants in relation to the borrowing.

10. The investigation and the provisional report were not prepared and conducted under Division III.2 (leadership code) of the Constitution or the Organic Law on the Duties and Responsibilities of Leadership.

11. The Prime Minister is of the view that the provisional report contains comments that are adverse to and derogatory of him. He considers that if it is further distributed it will adversely affect his reputation and standing as Prime Minister and cause him irreparable damage. No finding has been made or evidence produced to verify the soundness of the Prime Minister’s opinion nor whether those comments are soundly based.

First intervener : Ombudsman Commission
Second intervener : (Chief Ombudsman) Rigo A Lua
Third intervener : (Ombudsman) Phoebe Sangetari
Fourth intervener : (Prime Minister) Hon Peter O’Neill MP
Fifth intervener : (Attorney-General) Hon Ano Pala MP

13. Mr Lua and Ms Sangetari signed the provisional report in their capacity as Chief Ombudsman and Ombudsman respectively. They are named as second and third defendants in the National Court proceedings. The Ombudsman Commission is the first defendant.

14. The first, second and third interveners are unsurprisingly uniform in their answers to the questions. They contend that each question should be answered in a way opposite to the contentions of the fourth intervener, the Prime Minister. The fifth intervener, the Attorney-General, supports the contentions of the Prime Minister, without qualification.

16. The first, second and third interveners (who are for the sake of convenience referred to as the Ombudsman Commission) contend that the first, second and fourth issues should be resolved in the affirmative and the third issue should be resolved in the negative. The position of the fourth and fifth interveners is directly opposed to the Ombudsman Commission’s position.

19. The questions are rather complex, so after reciting each question, we will restate it in simpler terms. Most questions are drafted in the negative. For example question 1 asks, in the negative, ‘whether the Prime Minister does not come within certain descriptions’ rather than in the affirmative, such as ‘does the Prime Minister come within certain descriptions?’ In our restatement of each question we have retained the negative drafting of the question, as to restate it in the affirmative would necessitate a change in the answer to the question.

20. After our restatement of the question, we set out the positions of the parties. We then determine that question before moving to the next question.

Question 1: Whether, on the proper interpretation or application of Section 219(1)(a) of the Constitution, the Prime Minister of the Independent State of Papua New Guinea does not come within the description of any “member”, “officer”, “employee” or “person” under Section 219(1)(a) of the Constitution.

21. Restated, the question is: Does the Prime Minister not come within the description of any “member”, “officer”, “employee” or “person” under Section 219(1)(a) of the Constitution?

23. Section 219(1)(a) prescribes some of the functions of the Ombudsman Commission. It states:

Subject to this section and to any Organic Law made for the purposes of Subsection (7), the functions of the Ombudsman Commission are ... to investigate, on its own initiative or on complaint by a person affected, any conduct on the part of—

(i) any State Service or provincial service, or a member of any such service; or

(ii) any other governmental body, or an officer or employee of a governmental body; or

(iii) any local government body or an officer or employee of any such body; or

(A) that is wholly or mainly supported out of public moneys of Papua New Guinea; or

(B) all of, or the majority of, the members of the controlling authority of which are appointed by the National Executive,

(v) any member of the personal staff of the Governor-General, a Minister or the Leader or Deputy Leader of the Opposition; or

(vi) any other body or person prescribed for the purpose by an Act of the Parliament,

specified by or under an Organic Law in the exercise of a power or function vested in it or him by law in cases where the conduct is or may be wrong, taking into account, amongst other things, the National Goals and Directive Principles, the Basic Rights and the Basic Social Obligations. [Underlining added.]

24. The Prime Minister and the Attorney-General argue that the Prime Minister does not come within the description of any “member”, “officer”, “employee” or “person” in Section 219(1)(a). We agree that, clearly, the Prime Minister is not:

25. It is not so clear that the Prime Minister is not an “officer” or “employee” of a “governmental body”, as referred to in Section 219(1)(a)(ii).

“Governmental body” is defined by Schedule 1.2(1) (rules for shortening and interpretation of the constitutional laws) of the Constitution, which provides:

(c) an arm, department, agency or instrumentality of the National Government or a provincial government; or

(d) a body set up by statute or administrative act for governmental or official purposes.

26. The term “National Government” is described in Section 99 (structure of government) of the Constitution, which states:

(1) Subject to and in accordance with this Constitution, the power, authority and jurisdiction of the People shall be exercised by the National Government.

(a) the National Parliament, which is an elective legislature with, subject to the Constitutional Laws, unlimited powers of law-making; and

(c) the National Judicial System, consisting of a Supreme Court of Justice and a National Court of Justice, of unlimited jurisdiction, and other courts.

(3) In principle, the respective powers and functions of the three arms shall be kept separate from each other.

27. The term “National Executive” is described in Section 139 (the national executive) of the Constitution, which states:

(a) the Head of State acting in accordance with Division V.2 (functions, etc, of the Head of State); and

28. The “National Executive Council” is established by Section 149 (the national executive council) of the Constitution, which states:

(2) The Council shall consist of all the Ministers (including the Prime Minister when he is present as Chairman).

(a) to be responsible, in accordance with this Constitution, for the executive government of Papua New Guinea; and

(b) such other functions as are allocated to it by this Constitution or any other law.

(4) Except where the contrary intention appears, nothing in this Constitution prevents the powers, functions, duties or responsibilities of the Council from being exercised, as determined by it, through a Minister.

(5) Subject to any Organic Law or Act of the Parliament, the procedures of the Council are as determined by it.

29. The office of Prime Minister is established by Section 142 (the prime minister) of the Constitution, which states:

(2) The Prime Minister shall be appointed, at the first meeting of the Parliament after a general election and otherwise from time to time as the occasion for the appointment of a Prime Minister arises, by the Head of State, acting in accordance with a decision of the Parliament.

(3) If the Parliament is in session when a Prime Minister is to be appointed, the question of the appointment shall be the first matter for consideration, after any formal business and any nomination of a Governor-General or appointment of a Speaker, on the next sitting day.

(4) If the Parliament is not in session when a Prime Minister is to be appointed, the Speaker shall immediately call a meeting of the Parliament, and the question of the appointment shall be the first matter for consideration, after any formal business and any nomination of a Governor-General or appointment of a Speaker, on the next sitting day.

(a) shall be dismissed from office by the Head of State if the Parliament passes, in accordance with Section 145 (motions of no confidence), a motion of no confidence in him or the Ministry, except where the motion is moved within the last 12 months before the fifth anniversary of the date fixed for the return of the writs at the previous general election; and

(b) may be dismissed from office in accordance with Division III.2 (leadership code); and

(c) may be removed from office by the Head of State, acting in accordance with a decision of the Parliament, if the Speaker advises the Parliament that two medical practitioners appointed by the National Authority responsible for the registration or licensing of medical practitioners have jointly reported in accordance with an Act of the Parliament that, in their professional opinions, the Prime Minister is unfit, by reason of physical or mental incapacity, to carry out the duties of his office.

(a) by the tribunal appointed under an Organic Law made for the purposes of Section 28 (further provisions), pending an investigation into a question of misconduct in office within the meaning of Division III.2 (leadership code), and any resultant action; or

(b) in accordance with an Act of the Parliament, pending an investigation for the purposes of Subsection (5)(c), and any resultant action by the Parliament.

(7) An Organic Law made for the purposes of Subdivision VI.2.H (protection of elections from outside or hidden influence and strengthening of political parties) may provide that in certain circumstances a member of the Parliament is not eligible to be appointed to or hold the office of Prime Minister.

30. We uphold the submissions of Dr Narokobi, for the Ombudsman Commission, that the literal meaning of the words of Section 219(1)(a)(ii) of the Constitution support the proposition that the Prime Minister, having been appointed to a specific “office” established by the Constitution, is properly regarded as an “officer” of a “governmental body”.

31. The Prime Minister is an officer of a governmental body, in at least three respects:

32. Mr Varitimos QC, counsel for the Prime Minister, supported by Mr Levy, counsel for the Attorney-General, submitted that it was clear and unambiguous that the Prime Minister does not fall within the meaning of any of the terms “member”, “officer”, “employee” or “person” in Section 219(1)(a) of the Constitution, for various reasons.

33. First he pointed out that there is no mention of the Prime Minister or any Minister in Section 219(1)(a).

34. Secondly he submitted that there is already in place, through other provisions of the Constitution, an intricate system of accountability imposed on the Prime Minister. It was not intended, and it is unnecessary, for there be an additional layer of accountability by making the Prime Minister subject to the jurisdiction of the Ombudsman Commission under its ‘administrative’, as distinct from ‘leadership’, jurisdiction.

35. Thirdly it was emphasised that the office of Prime Minister is established directly by the Constitution. The holder of the office is therefore beyond the Ombudsman Commission’s powers of investigation under its administrative jurisdiction, in the same way as are other holders of offices directly established by the Constitution, such as the Public Solicitor.

36. We cannot agree that the words in Section 219(1)(a) are clear and unambiguous. If they were, this Reference would be unnecessary.

37. We do not agree that the fact that the office of Prime Minister is not referred to in Section 219(1)(a) is conclusive of the issue of whether, as a matter of law, the holder of the office falls within the meaning of the terms “member”, “officer”, “employee” or “person”. We have determined that in literal terms the Prime Minister is an officer of a governmental body. So it is unnecessary that the office of Prime Minister be expressly referred to.

38. We agree that that there is already in place, through other provisions of the Constitution, a system of accountability imposed on the Prime Minister. Section 142(5) makes the Prime Minister accountable to the People by providing three means for his dismissal or removal from office:

(a) dismissal from office by the Head of State if the Parliament passes a motion of no confidence in him or the Ministry;

(c) removal from office by the Head of State, acting in accordance with a decision of the Parliament on the ground that the Prime Minister is unfit, by reason of physical or mental incapacity, to carry out the duties of his office.

39. It does not follow, however, that the Prime Minister is not and should not be subject to a further level of accountability by being subject to the administrative jurisdiction of the Ombudsman Commission.

40. If we were satisfied that, at Independence, the intention or will of the People expressed in the Constitution (following the deliberations of the Constitutional Planning Committee, the House of Assembly and the Constituent Assembly) was that the Prime Minister would not be subject to the administrative jurisdiction of the Ombudsman Commission, we would be required to assess whether that intention was still relevant and appropriate to the present circumstances of the country. And whether it still represented the will of the People.

41. We must not lose sight of the fact that we are interpreting provisions of Constitutional Laws. A special, careful approach is required. This was highlighted in SCR No 1 of 2008, Reference by the Ombudsman Commission re the Organic Law on Provincial Governments and Local-Level Governments (Amendment No 10) Law 2006 (2010) SC1058, by Injia CJ, who stated:

28. In discharging its function of interpreting the laws, the Court must give paramount consideration to the dispensation of justice: Constitution, s 158(2). The Constitution is a living document, dynamic in character and it speaks from time to time: Constitution, Sch 1.4. Each Constitutional Law is intended to be read as a whole: Constitution, Sch 1.5(1).

29. In cases where the word or expression used in the Constitution is clear and capable of being accorded its plain or ordinary meaning, then the Court should accord that meaning and apply it to the circumstances of the case before it.

30. But often the Court is asked to interpret a word or expression in the Constitution in which its meaning may be in doubt. The Court must engage in a construction exercise that will produce the correct meaning of that word or expression. The Court must give a fair and liberal meaning to the constitutional provision in question, to ensure that the legislature’s intention, spirit and purpose expressed in the provision is achieved: Constitution, Sch 1.5(2). The Court must adopt an expansive and purposive approach rather than a narrow and restrictive approach: PLAR No 1 of 1980 [1980] PNGLR 326;SCR No 2 of 1992, Special Reference by the Public Prosecutor [1992] PNGLR 336; SCR No 3 of 1986, Reference by Simbu Provincial Executive [1987] PNGLR 151;Haiveta v Wingti (No 3) [1994] PNGLR 192. The judges are urged to use "judicial ingenuity" in appropriate cases, to do justice”: Kearney J in The State v Independent Tribunal, Ex Parte Moses Sasakila [1976] PNGLR 491. In a case where there are a number of possible interpretations open, the Court must avoid the interpretation which will or is likely to produce unjust and absurd situations or results.

42. We agree with the learned Chief Justice that we must reach into the Constitution itself for guidance on how it and the other Constitutional Laws should be interpreted. We are obliged to apply principles of interpretation set out, in particular, in Section 158 and Schedules 1.4 and 1.5 of the Constitution.

(1) Subject to this Constitution, the judicial authority of the People is vested in the National Judicial System.

(2) In interpreting the law the courts shall give paramount consideration to the dispensation of justice.

(2) All provisions of, and all words, expressions and propositions in, a Constitutional Law shall be given their fair and liberal meaning.

44. We have applied those principles to the question whether the Prime Minister is an officer of a governmental body for the purposes of the Constitution, and therefore within the administrative jurisdiction of the Ombudsman Commission. If it was ever the intention of the People expressed in Section 219(1)(a) of the Constitution that the Prime Minister should not be so regarded, such an intention should no longer be regarded as prevalent and appropriate to the present circumstances of the country.

45. Forty-one years after Independence the People of Papua New Guinea are increasingly concerned about the conduct of leaders, especially political leaders. They are concerned about accountability and transparency of all levels of government. They are more suspicious of corruption in government than 41 years ago. The People, we consider, are desirous of more accountability being imposed on leaders such as the Prime Minister, rather than less. It would be in the interests of justice to interpret the term “officer” in Section 219(1)(a) of the Constitution in a way that encompasses the Prime Minister. It would allow the Constitution to speak in dynamic, contemporary terms, as a whole, so that its provisions, in particular Section 219(1)(a), and the words and expressions in it, including “officer” and “governmental body”, are given their fair and liberal meaning.

46. Mr Varitimos QC submitted that the decision of the Supreme Court in Constitutional Reference No 1 of 1978 [1978] PNGLR 345 supports the proposition that the holder of an office that is created directly by the Constitution – in that case, it was the Public Solicitor – is not to be regarded as an “officer” for the purposes of Section 219(1)(a), unless the office-holder is by some other means brought within Section 219(1)(a) (for example, by virtue of being members of State Services, such as the Commissioner of Police and the Commander of the Defence Force).

47. Constitutional Reference No 1 of 1978 is a significant and relevant decision for the purposes of the present reference. It was a special reference by the Ombudsman Commission under Section 19 of the Constitution. The principal question was whether the Ombudsman Commission had power under its administrative jurisdiction to investigate conduct of the Public Solicitor or an officer or employee of the Public Solicitor’s Office. Issues very similar to those in the present reference, arose: Was the Public Solicitor an officer of a governmental body? Was the Office of Public Solicitor a governmental body? Was a lawyer employed in the Office of Public Solicitor an officer of a governmental body?

48. The majority (Prentice CJ, Wilson J; Pritchard J dissenting) answered all questions in the negative. It was held that the Ombudsman Commission did not have power under its administrative jurisdiction to investigate conduct of the Public Solicitor or an officer or employee of the Public Solicitor’s Office. The Public Solicitor himself, and officers and employees in the Office of Public Solicitor, were not regarded as officers or employees of a governmental body for the purposes of Section 219(1)(a) of the Constitution. Why? We discern the principal reasons were that:

49. As the Supreme Court said in Application by Herman Joseph Leahy (2006) SC855, constitutional office-holders stand in a unique position in the structure of government (see generally, A J Regan, O Jessep and E Kwa, Twenty Years of the Papua New Guinea Constitution, Lawbook Co ©2001, A J Regan, Chapter 15: “Protection of the Independence of Constitutional Office-holders”, pp 233-252). They form an exclusive group, defined by Section 221 of the Constitution to consist only of the following office-holders:

50. The Prime Minister is not a constitutional office-holder. Though the office of Prime Minister is established directly by the Constitution, it is not an office protected by constitutional guarantees of independence in the same way as are the offices of the constitutional office-holders. The facts of the present reference are therefore in sharp distinction from those in Constitutional Reference No 1 of 1978.

51. The fact that the office of Prime Minister is created directly by the Constitution does not mandate the conclusion that the Prime Minister is not an officer of a governmental body.

52. The answer to the question ‘does the Prime Minister not come within the description of any “member”, “officer”, “employee” or “person” under Section 219(1)(a) of the Constitution?’, is no.

53. The Prime Minister comes within the description of “officer”. He is an officer of a governmental body and therefore falls within the administrative jurisdiction of the Ombudsman Commission under Section 219(1(a) of the Constitution.

Question 2: If the answer to question (1) above is yes, does the Ombudsman Commission therefore lack jurisdiction to investigate any conduct on the part of the Prime Minister of the Independent State of Papua New Guinea under Section 219(1)(a) of the Constitution into the alleged improper borrowing of AU$1.239 billion loan from the UBS AG by the Government to purchase 149,309,244 shares in Oil Search Ltd and improper tender and procurement of consultants in relation to the borrowing.

Restated, the question is: Does the Ombudsman Commission lack jurisdiction to investigate conduct of the Prime Minister under Section 219(1)(a) of the Constitution?

As this question is prefaced by the qualifier that question 1 is answered yes, and question 1 was answered no, it is strictly speaking unnecessary to answer it. However as it raises the general issue of whether the Ombudsman Commission lacks jurisdiction to investigate conduct of the Prime Minister under Section 219(1)(a) of the Constitution, we reiterate our determination of question 1.

55. The Prime Minister is an officer of a governmental body. Therefore his administrative conduct can be investigated by the Ombudsman Commission under Section 219(1)(a) of the Constitution, in relation to the alleged improper borrowing of AU$1.239 billion from the UBS AG by the Government to purchase 149,309,244 shares in Oil Search Ltd and improper tender and procurement of consultants in relation to the borrowing.

56. No, the Ombudsman Commission does not lack jurisdiction to investigate conduct of the Prime Minister under Section 219(1)(a) of the Constitution.

57. Before moving to the next question, we comment on the use of the word “lack” in question 2. The kernel of the question was whether the Ombudsman Commission will “lack” jurisdiction to conduct an investigation of the Prime Minister’s conduct if he does not come within the description of “member”, “officer”, “employee” or “person” under Section 219(1)(a) of the Constitution. The word “lack” is used in a similar way in questions 4, 5 and 6 to pose the question whether the Ombudsman Commission will lack jurisdiction if a certain state of affairs exists.

58. We respectfully suggest that in those questions a better word to use in place of “lack” would have been “exceed”. The questions would more correctly have asked whether the Ombudsman Commission will exceed its jurisdiction if a certain state of affairs exists. The distinction between the notions of excess of jurisdiction and lack of jurisdiction was drawn by the Supreme Court in Denis Donohoe v Ombudsman Commission [1985] PNGLR 348. The Court (Pratt J, Amet J, Woods J) noted that the term ‘lack of jurisdiction’ is used in Section 24 (proceedings not to be questioned or to be subject to review) of the Organic Law on the Ombudsman Commission, which states:

No proceeding of the Commission shall be held bad for want of form, and, except on the ground of lack of jurisdiction, no proceeding or decision of the Commission shall be challenged, reviewed, quashed or called into question in any court.

59. By contrast, Section 217(6) (the Ombudsman Commission) of the Constitution refers to the notion of ‘excess of jurisdiction’. It states:

The proceedings of the Commission are not subject to review in any way, except by the Supreme Court or the National Court on the ground that it has exceeded its jurisdiction.

In rejecting an argument by the Ombudsman Commission that its proceedings could only be subject to review on the ground of ‘lack’, as distinct from ‘excess’, of jurisdiction, the Court held that Section 24 (proceedings not to be questioned or to be subject to review) of the Organic Law on the Ombudsman Commission was inconsistent with Section 217(6) (the Ombudsman Commission) of the Constitution. The result was that by virtue of Section 10 (construction of written laws) of the Constitution, Section 24 of the Organic Law was to the extent of the inconsistency held to be invalid and unconstitutional.

60. For the purposes of this Reference, nothing turns on use of the term ‘lack of jurisdiction’, rather than ‘excess of jurisdiction’. However, it is a significant distinction that should be drawn and maintained in any proceedings in the National Court or the Supreme Court involving review of proceedings of the Ombudsman Commission.

Question 3: Whether, on the proper interpretation or application of Section 13 of the Organic Law on the Ombudsman Commission, the Prime Minister of the Independent State of Papua New Guinea does not come within the description of any “member”, “officer” or “employee” under Section 13 of the Organic Law on the Ombudsman Commission.

Restated, the question is: does the Prime Minister not come within the description of “member”, “officer” or “employee” under Section 13 of the Organic Law on the Ombudsman Commission?

This question concerns the Organic Law on the Ombudsman Commission, which is an Organic Law made under Section 219(7) (functions of the Commission) of the Constitution, which states:

An Organic Law shall make provision in respect of the powers and procedures of the Commission, and in particular—

(a) shall, subject to paragraph (b), make provision for the Commission to have access to all available relevant information; and

(b) may impose reasonable restrictions on the availability of information; and

(c) shall make provision to ensure the secrecy or confidentiality of secret or confidential information made available to the Commission or to a member of the Commission or of its staff; and

(d) may limit or restrict to a reasonable extent and in a reasonable manner the jurisdiction of the Commission in relation to any matters or class of matters, and in particular in relation to national security; and

(e) shall make provision for and in respect of publicity for the proceedings, reports and recommendations of the Commission.

62. The Organic Law on the Ombudsman Commission supplements Section 219(1)(a) of the Constitution (the provision the subject of question 1). Section 219(1)(a) provides that one of the functions of the Ombudsman Commission is to investigate conduct on the part of certain services and bodies and members, officers, employees and persons “specified by under an Organic Law”.

63. The Organic Law on the Ombudsman Commission is the Organic Law that specifies the actual services and bodies and members, officers, employees and persons that fall within the jurisdiction of the Ombudsman Commission under Section 219(1)(a). It does so by Section 13 (functions of the Commission), which states:

For the purposes of Section 219(1)(a) (functions of the Commission) of the Constitution the functions of the Commission, in addition to the functions specified in Section 219(1)(b), (c), (d) and (e) (functions of the Commission) of the Constitution, are to investigate, on its own initiative or on complaint by a person affected, any conduct on the part of—

(b) any governmental body, or an officer or employee of a governmental body; or

(c) any other service or body referred to in Section 219(a)(functions of the Commission) of the Constitution that the Head of State, acting with, and in accordance with, the advice of the National Executive Council, by notice in the National Gazette, declares to be a service or body for the purposes of this section.

64. Question 3 asks a similar question in relation to Section 13 that question 1 asked in relation to Section 219(1)(a) of the Constitution: Does the Prime Minister not come within the description of “member”, “officer” or “employee”? It must be determined in the same way as question 1: the Prime Minister comes within the description of “officer”. He is an officer of a governmental body. He falls within the administrative jurisdiction of the Ombudsman Commission under Section 13(b) of the Organic Law on the Ombudsman Commission.

65. The answer to the question ‘does the Prime Minister not come within the description of any “member”, “officer” or “employee” under Section 13 of the Organic Law on the Ombudsman Commission’, is no.

Question 4: If the answer to question (3) above is yes, does the Ombudsman Commission therefore lack jurisdiction to investigate any conduct on the part of the Prime Minister of the Independent State of Papua New Guinea under Section 13 of the Organic Law on the Ombudsman Commission into the alleged improper borrowing of AU$1.239 billion loan from the UBS AG by the Government to purchase 149,390,244 shares in Oil Search Ltd and improper tender and procurement of consultants in relation to the borrowing.

Restated, the question is: Does the Ombudsman Commission lack jurisdiction to investigate conduct of the Prime Minister under Section 13 of the Organic Law on the Ombudsman Commission?

We answer this question in the same way we determined question 2. As it is prefaced by the qualifier that question 3 is answered yes, and question 3 was answered no, it is strictly speaking unnecessary to answer it. However as it raises the general issue of whether the Ombudsman Commission lacks jurisdiction to investigate conduct of the Prime Minister under Section 13 of the Organic Law on the Ombudsman Commission, we reiterate our opinion that the Prime Minister is an officer of a governmental body.

67. Therefore his administrative conduct can be investigated by the Ombudsman Commission under Section 13 of the Organic Law on the Ombudsman Commission, in relation to the alleged improper borrowing of AU$1.239 billion from the UBS AG by the Government to purchase 149,309,244 shares in Oil Search Ltd and improper tender and procurement of consultants in relation to the borrowing. The answer to question 4 is no.

68. No, the Ombudsman Commission does not lack jurisdiction to investigate conduct of the Prime Minister under Section 13 of the Organic Law on the Ombudsman Commission.

Question 5: Whether, on the proper interpretation or application of Section 219(1)(a) of the Constitution and Section 13 of the Organic Law on the Ombudsman Commission, the Ombudsman Commission lacks jurisdiction to publish the results of any investigation carried out by it, whether by forwarding a copy of its conclusions, recommendations and suggestions to the persons holding the positions described in Section 23(1) of the Organic Law on the Ombudsman Commission or otherwise, in relation to any conduct on the part of the Prime Minister of the Independent State of Papua New Guinea into the alleged improper borrowing of AU$1.239 billion loan from the UBS AG by the Government to purchase 149,390,244 shares in Oil Search Ltd and improper tender and procurement of consultants in relation to the borrowing.

69. Restated, the question is: Does the Ombudsman Commission lack jurisdiction to publish, under Section 23(1) of the Organic Law on the Ombudsman Commission or in any other way, the results of any investigation carried out by it regarding conduct of the Prime Minister?

This question concerns Section 23 (publication of results of investigations)of the Organic Law on the Ombudsman Commission, which states:

(1) The Commission may, in its discretion, publish the results of any investigation carried out by it by forwarding a copy of its conclusions, recommendations and suggestions to—

(d) the Speaker, who shall present it to the Parliament within eight sitting days of the Parliament; and

(j) any other person holding an official position as the Commission considers appropriate,

(2) The Commission shall, unless in its deliberate judgement, it considers that to do so may prejudice the security, defence or international relations of Papua New Guinea (including Papua New Guinea's relations with the Government of any other country or with any international organization), forward a copy of its conclusions, recommendations and suggestions to the person on whose complaint the investigation was carried out.

(3) Where the Commission publishes an opinion that is adverse to or derogatory of any service, body or person, it shall, unless it has obtained the consent of the responsible person to do otherwise, include in the document published the substance of any statement the responsible person may have made in explanation of past difficulties, or present rejection of the Commission's recommendations.

71. Specifically the question asks whether the Ombudsman Commission cannot under Section 23(1) or in any other way publish the results of its investigation in relation to the conduct of the Prime Minister regarding the UBS loan.

72. The Prime Minister and the Attorney-General argue that yes, the Ombudsman Commission cannot publish the results of its investigation into the UBS loan in so far as the conduct of the Prime Minister is concerned.

73. However, their argument depends on acceptance of their propositions regarding questions 1 to 4: that the Ombudsman Commission lacks jurisdiction to investigate the conduct of the Prime Minister under 219(1)(a) of the Constitution and Section 13 of the Organic Law on the Ombudsman Commission. Those propositions have been rejected. It follows that their argument in respect to this question must be rejected.

74. We have determined (in answer to questions 2 and 4) that the Prime Minister’s administrative conduct can be investigated by the Ombudsman Commission under Section 219(1)(a) of the Constitution and Section 13 of the Organic Law on the Ombudsman Commission, in relation to the alleged improper borrowing of AU$1.239 billion from the UBS AG by the Government to purchase 149,309,244 shares in Oil Search Ltd and the allegedly improper tender and procurement of consultants in relation to the borrowing. It follows that the Commission may in its discretion publish the results of its investigation by forwarding a copy of its conclusions, recommendations and suggestions to any of the persons holding the positions described in Section 23(1) or in any other lawful way.

75. No, the Ombudsman Commission does not lack jurisdiction to publish the results of its investigation regarding conduct of the Prime Minister regarding the UBS loan.

Question 6: Whether, on the proper implementation or application of Section 17 of the Organic Law on the Ombudsman Commission, if the Ombudsman Commission has not informed the responsible person, in this case the plaintiff [ie the Prime Minister], of its intention to make the investigation, it lacks jurisdiction to investigate and publish the results under Section 23 of the Organic Law on the Ombudsman Commission of any such investigation carried out by it, whether by forwarding a copy of its conclusions, recommendations and suggestions to the persons holding the positions described in Section 23(1) of the Organic Law on the Ombudsman Commission or otherwise, in relation to any conduct on the part of the Prime Minister of the Independent State of Papua New Guinea into the alleged improper borrowing of AU$1.239 billion loan from the UBS AG by the Government to purchase 149,390,244 shares in Oil Search Ltd and improper tender and procurement of consultants in relation to the borrowing.

76. Restated, the question is: Does the Ombudsman Commission lack jurisdiction to investigate and publish under Section 23(1) of the Organic Law on the Ombudsman Commission the results of an investigation, if it has not informed the responsible person under Section 17 of the Organic Law on the Ombudsman Commission, of its intention to make the investigation?

This question concerns Section 17 (proceedings of the Commission)of the Organic Law on the Ombudsman Commission, which states:

(1) Before investigating any matter within its jurisdiction, the Commission shall inform the responsible person of its intention to make the investigation.

(2) Every investigation by the Commission under this Law shall be conducted in private.

(3) The Commission may hear or obtain information from any person who the Commission considers can assist and may make whatever inquiries it thinks fit.

(4) Nothing in this Law compels the Commission to hold any hearing and no person is entitled as of right to be heard by the Commission except that—

(a) where a report of the Commission may affect a State Service, provincial government body or statutory body, the Commission shall provide reasonable opportunity for the Permanent Head of that service or the statutory head of that body, as the case may be, to comment on the subject of the investigation; and

(b) the Commission shall not make any comment in its report that is adverse to or derogatory of any person without—

(5) The Commission shall, in its discretion, at any time, during or after any investigation, consult any Minister who is concerned in the matter of the investigation.

(6) On the request of any Minister in relation to any investigation, or in any case where any investigation relates to any recommendation made to a Minister, the Commission shall consult that Minister after making the investigation and before forming a final opinion on the matter it has investigated.

(7) If, during or after an investigation, the Commission is, after considering any defence lodged by or on behalf of the officer or employee concerned, of the opinion that there has been a breach of duty or misconduct on the part of any officer or employee of any State Service, provincial government body, local government body or statutory body, it shall refer the matter, together with its report on the matter, to the Permanent Head of that service or the statutory head of that body, as the case requires, and shall send a copy of its report and any defence lodged to the responsible Minister.

Before investigating any matter within its jurisdiction, the Commission shall inform the responsible person of its intention to make the investigation.

79. The Prime Minister and the Attorney-General advance the following propositions to support the argument that question 6 should be answered yes:

80. We uphold proposition (a). Section 17(1) is expressed in affirmative terms. It imposes an obligation on the Ombudsman Commission before investigating a matter within its jurisdiction under Section 219(1)(a) of the Constitution and Section 13 of the Organic Law on the Ombudsman Commission to “inform the responsible person of its intention to make the investigation”.

81. There is no such obligation imposed on the Ombudsman Commission before investigating a matter within its jurisdiction under Division III.2 (leadership code) of the Constitution and the Organic Law on the Duties and Responsibilities of Leadership (see John Mua Nilkare v Ombudsman Commission [1999] PNGLR 333, which overturned, on this point, Albert Karo v Ombudsman Commission [1995] PNGLR 547).

82. It is necessary to refer to the definition of “responsible person” in Section 2 (definitions) of the Organic Law on the Ombudsman Commission, which states:

(a) in the case of any State Service, provincial service or other governmental body—the Permanent Head of that service or body; and

(c) in the case of any statutory body—the statutory head of that body; and

(d) in the case of any local government body—the President or Chairman of that body.

83. We uphold the submission of the Ombudsman Commission that in any particular case there might be more than one responsible person who needs to be informed under Section 17(1). Further, to ascertain who is a responsible person for the purposes of a particular investigation, it is necessary to identify the “matter”, ie the subject matter, of the proposed investigation.

84. If the subject matter is the conduct of a State Service, provincial service or other governmental body or a statutory body, the responsible person, who must be informed of the intention to make the investigation, is the permanent head or statutory head of the service or body. Only if the subject matter of the investigation is the conduct of a particular natural person will it be necessary to notify that particular person of the intention to make the investigation.

85. In the present case we presume from the facts determined by the National Court for the purposes of the reference that the subject matter or target of the investigation was not the conduct of any particular member, officer or employee of a State Service or governmental body or any other particular natural person. We were not provided with the terms of the Section 17(1) notice that on 22 May 2014 was given to 11 permanent heads of various government departments or other governmental bodies. However, we presume that the intention expressed by the Ombudsman Commission was, in general terms, along the lines of the subject matter stated in the title of its provisional report of 8 December 2014: to investigate the alleged improper borrowing of AUD1.239 billion loan from the UBS loan AG by the Government to purchase 149,390,244 shares in Oil Search Ltd and the allegedly improper tender and procurement of consultants in relation to the borrowing.

86. The “matter” of the investigation was the conduct of the National Government generally and various departments and other governmental bodies and their officers and employees. The “matter” was not the conduct of any particular natural person, such as the Prime Minister.

87. We conclude, on the basis of those presumed facts, that in the case of the investigation into the UBS loan and the tender and procurement of consultants, the Prime Minister was not a “responsible person”. It was not necessary for the Ombudsman Commission to inform him of its intention to make the investigation. We reject proposition (b).

88. We accept proposition (c), which is an uncontentious fact: the Ombudsman Commission did not inform the Prime Minister under Section 17(1) of the Organic Law on the Ombudsman Commission of its intention to make the investigation.

89. We reject this proposition. By not informing the Prime Minister of its intention to make the investigation, the Ombudsman Commission was not in breach of its obligation under Section 17(1) to inform the responsible persons of its intention to make the investigation.

90. We reject this proposition. The Ombudsman Commission did not lack jurisdiction to conduct the investigation in relation to conduct on the part of the Prime Minister, and to publish the results of any investigation in relation to conduct on the part of the Prime Minister.

91. As this opinion has been based on presumed facts, we add this rider. If we were satisfied that in fact the “matter” of the investigation was the conduct of the Prime Minister, as a particular natural person, and he was a “responsible person” and that the Ombudsman Commission breached its obligation under Section 17(1) by not informing him of its intention to make the investigation, what would be the consequence? It would not necessarily follow that the Ombudsman Commission would exceed its jurisdiction by investigating the conduct of the Prime Minister or publishing the results of its investigation in relation to the conduct of the Prime Minister.

92. None of the parties made detailed submissions on this issue but they were given the opportunity to do so through questions from the bench, and we have sufficient material before us to resolve it.

93. Section 17(1) is properly regarded as imposing a directory, as distinct from a mandatory, procedural requirement. Though the provision imposes an obligation, breach of it does not necessarily nullify all that is done after the breach. If there has been substantial compliance with the obligation that will be sufficient compliance.

94. We have formed this view, having regard to the principles on distinguishing mandatory from procedural provisions endorsed by the Supreme Court in cases such as Re Moresby Northeast Election Petition; Patterson Lowa v Goasa Damena [1977] PNGLR 429, Madang Timbers Ltd v Valentine Kambori (2009) SC1000, Reference by East Sepik Provincial Executive [2011] 2 PNGLR 126 and James Kond v National Development Bank Ltd (2015) SC1432. The following are relevant considerations:

the Commission shall not make any comment in its report that is adverse to or derogatory of any person without—

(i) providing him with reasonable opportunity of being heard; and
(ii) fairly setting out his defence in its report.

95. In summary if the Prime Minister were a responsible person, the failure to give him notice under Section 17(1) of the Organic Law on the Ombudsman Commission would not deprive the Commission of jurisdiction to investigate his conduct or to publish the results of its investigation.

96. A further consideration supporting this conclusion is that any person aggrieved by a proposed adverse finding or comment which he or she considers ill-founded may seek declaratory relief in the National Court.

97. In M^cGregor & Pearce v The Hon John Gallop & the Attorney-General of the ACT [2002] ACTSC 45, an application was made to quash adverse findings emanating from a report of a Board of Inquiry. The grounds for challenge included denial of national justice, not applicable in this matter in view of the mandated right of reply before the final report can be issued. However, an objection that the adverse comments failed the reasonableness test in the Wednesbury Corporation case (Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223) was also raised though not determined. Nevertheless the Board itself had adopted a principle, as set out at [18]:

The Inquiry was exercising an investigative jurisdiction. In such a task, it took the rules governing its approach to be the following. First, the person making a finding in the exercise of such a jurisdiction must base the decision upon evidence that has some probative value. This means that findings should be based upon some material that tends logically to show the existence of facts consistent with the finding and that the reasoning supportive of the finding is not logically self-contradictory.

98. A failure to comply with those principles would, at least arguably, fail the reasonableness test.

99. A similar issue was addressed by Higgins CJ (as he then was) in considering an application to quash adverse comments in a Coroner’s Report, S v DPP and Others [2007] ACTSC 100. An adverse comment [108-110] was set aside as being devoid of any rational basis. Another [114-115] was quashed on the basis that it was contrary to undisputed evidence. Other adverse comments were not quashed although the criticism conveyed was subject to reasonable explanation on the part of the applicant. That is, the comment could not be characterised as lacking any rational foundation. See also Lucas-Smith & Ors v Coroner’s Court of the ACT & Ors [2009] ACTSC 40.

100. The answer is no, the Ombudsman Commission did not lack jurisdiction to investigate the conduct of the Prime Minister regarding the UBS loan and publish under Section 23(1) of the Organic Law on the Ombudsman Commission the results its investigation, due to its not informing him under Section 17(1) of the Organic Law on the Ombudsman Commission of its intention to undertake the investigation.

Question 7: Whether the Ombudsman Commission is and was required to comply with Section 17(1) of the Organic Law on the Ombudsman Commission, and in particular, inform the Prime Minister of its intention to make an investigation relating to conduct on the part of the Prime Minister:

101. Restated, the question is: Was the Ombudsman Commission required by Section 17(1) of the Organic Law on the Ombudsman Commission to inform the Prime Minister of its intention to make an investigation relating to his conduct regarding the UBS loan:

The answer is driven by our reasons for answering question 6 in the negative. The answer is no, the Ombudsman Commission is and was not required by Section 17(1) of the Organic Law on the Ombudsman Commission to inform the Prime Minister of its intention to make an investigation relating to his conduct regarding the UBS loan:

103. The answer to Question 7(c) is subject only to the requirement that the ‘further report’ is not a “report”. If a provisional report did not, but a final report does, contain adverse and/or derogatory comments concerning a person (including, of course, the Prime Minister) it cannot lawfully be published until or unless Section 17(4)(b) of the Organic Law on the Ombudsman Commission has been complied with.

104. It should be noted that Section 17(4)(b) does not, in terms, refer to a ‘final’ report, merely a “report”. In context, this refers to a report that is published by it to a relevant authority or to the public generally.

Question 8: If the answer to question (7)(a) is yes, is any investigation conducted without so informing the Prime Minister ultra vires the power of the Ombudsman Commission?

Restated, the question is: Is an investigation conducted without informing the Prime Minister beyond the power of the Ombudsman Commission?

If our answer to question 7(a) had been yes, we would have decided that the Ombudsman Commission was required by Section 17(1) of the Organic Law on the Ombudsman Commission to inform the Prime Minister of its intention to make the investigation relating to his conduct regarding the UBS loan, before investigating him.

106. As we explained in our determination of question 6, it would not follow from a failure to comply with that requirement, that the investigation relating to the Prime Minister’s conduct regarding the UBS loan was beyond the power of the Ombudsman Commission. Section 17(1) imposes a directory requirement. In this case there was substantial compliance with that requirement.

107. No, the investigation conducted without first informing the Prime Minister, was not beyond the power of the Ombudsman Commission.

Question 9: If the answer to question (7)(b) above is yes, is the issuing or publication of the tiled, “Provisional Report” – “Investigation into the alleged improper borrowing of AU$1.239 billion loan from the Union Bank of Switzerland, Aktiengesellschaft (Australian Branch) to purchase 149,390,244 shares in Oil Search Limited and improper tender and procurement of consultants in relation to the borrowing” ultra vires the power of the Ombudsman Commission?

Restated, the question is: Is publication of the Ombudsman Commission’s provisional report re the UBS loan beyond the power of the Ombudsman Commission?

If our answer to question 7(b) had been yes, we would have decided that the Ombudsman Commission was required by Section 17(1) of the Organic Law on the Ombudsman Commission to inform the Prime Minister of its intention to make the investigation relating to his conduct regarding the UBS loan, before publishing a provisional report, making comments adverse to or derogatory of him.

109. As we explained in our determination of question 6, it would not follow from a failure to comply with that requirement, that publishing a provisional report, making comments adverse to or derogatory of the Prime Minister’s conduct regarding the UBS loan was beyond the power of the Ombudsman Commission. Section 17(1) imposes a directory requirement. In this case there was substantial compliance with that requirement.

110. No, publication of the provisional report of the results of the investigation relating to the Prime Minister’s conduct regarding the UBS loan (the purpose of which was to give the Prime Minister and others a right to be heard on the provisional results of the investigation), without the Ombudsman Commission first informing the Prime Minister of its intention to make the investigation, was not beyond the power of the Ombudsman Commission.

Question 10: If the answer to question (7)(c) above is yes, is any issuance or publication of any further or other report “into the alleged improper borrowing of AU$1.239 billion loan from the Union Bank of Switzerland, Aktiengesellschaft (Australian Branch) to purchase 149,390,244 shares in Oil Search Limited and improper tender and procurement of consultants in relation to the borrowing” ultra vires the power of the Ombudsman Commission?

Restated, the question is: Is publication of any further report re the UBS loan beyond the power of the Ombudsman Commission?

If our answer to question 7(c) had been yes, we would have decided that the Ombudsman Commission was required by Section 17(1) of the Organic Law on the Ombudsman Commission to inform the Prime Minister of its intention to make the investigation relating to his conduct regarding the UBS loan, before publishing any further report, other than the provisional report, making comments adverse to or derogatory of him.

112. As we explained in our determination of question 6, it would not follow from a failure to comply with that requirement, that publishing a further report including a final report on the results of the investigation, making comments adverse to or derogatory of the Prime Minister’s conduct regarding the UBS loan was beyond the power of the Ombudsman Commission. Section 17(1) imposes a directory requirement. In this case there was substantial compliance with that requirement.

113. No, publication of any further report, other than the provisional report, of the results of the investigation relating to the Prime Minister’s conduct regarding the UBS loan, without the Ombudsman Commission first informing the Prime Minister of its intention to make the investigation, will not be beyond the power of the Ombudsman Commission.

Question 11: Whether the Ombudsman Commission has lawful authority, power or jurisdiction to make any comments in any report distributed or published by it (whether provisional, final or otherwise), which are adverse to or derogatory of the Prime Minister, if such comments require, before they can be properly made, an interpretation or application of provisions of Constitutional Laws by the Ombudsman Commission.

Restated, the question is: Can the Ombudsman Commission make comments in a report it distributes or publishes, if the comments require interpretation or application of provisions of Constitutional Laws?

The focus of this question is Subdivision II.2.C of the Constitution, consisting of Sections 18 and 19.

Section 18 (original interpretative jurisdiction of the Supreme Court) states:

(1) Subject to this Constitution, the Supreme Court has original jurisdiction, to the exclusion of other courts, as to any question relating to the interpretation or application of any provision of a Constitutional Law.

(2) Subject to this Constitution, where any question relating to the interpretation or application of any provision of a Constitutional Law arises in any court or tribunal, other than the Supreme Court, the court or tribunal shall, unless the question is trivial, vexatious or irrelevant, refer the matter to the Supreme Court, and take whatever other action (including the adjournment of proceedings) is appropriate.

(1) Subject to Subsection (4), the Supreme Court shall, on application by an authority referred to in Subsection (3), give its opinion on any question relating to the interpretation or application of any provision of a Constitutional Law, including (but without limiting the generality of that expression) any question as to the validity of a law or proposed law.

(2) An opinion given under Subsection (1) has the same binding effect as any other decision of the Supreme Court.

(3) The following authorities only are entitled to make application under Subsection (1):—

(b) the Head of State, acting with, and in accordance with, the advice of the National Executive Council; and

(ec) a body established by a Constitutional Law or an Act of the Parliament specifically for the settlement of disputes between the National Government and Provincial Governments or Local-level Governments, or between Provincial Governments, or between Provincial Governments and Local-level Governments, or Local-level Governments; and

(4) Subject to any Act of the Parliament, the Rules of Court of the Supreme Court may make provision in respect of matters relating to the jurisdiction of the Supreme Court under this section, and in particular as to—

(b) the provision of counsel adequate to enable full argument before the Court of any question; and

(c) cases and circumstances in which the Court may decline to give an opinion.

(5) In this section, "proposed law" means a law that has been formally placed before the relevant law-making body.

115. The key provision is Section 18(1), which generally provides that the Supreme Court has original jurisdiction as to any question relating to the interpretation or application of any provision of a Constitutional Law.

116. The Prime Minister and the Attorney-General argue that this means that the Supreme Court has exclusive jurisdiction to authoritatively interpret and apply provisions of the Constitutional Laws; and that the Ombudsman Commission cannot make any comments in any report it distributes or publishes, including comments which are adverse to or derogatory of the Prime Minister, if such comments require, before they can be properly made, an interpretation or application of provisions of Constitutional Laws.

117. We reject this argument. Section 18(1) is not intended to, and does not on its terms, prohibit all persons or institutions – least of all a constitutional institution such as the Ombudsman Commission – from interpreting or applying provisions of Constitutional Laws. The purpose of Section 18(1) is to ensure that in the exercise of judicial power the Supreme Court has original jurisdiction, to the exclusion of other courts, as to any question relating to the interpretation or application of any provision of a Constitutional Law (SCR No 3 of 1982, In re the Commissioner of Correctional Services [1982] PNGLR 405; SCR No 5 of 1982, Berghuser v J Aoae [1982] PNGLR 379).

118. Section 18(1) is a restriction on the exercise of judicial power. It does not prevent other constitutional institutions such as the Ombudsman Commission from interpreting or applying Constitutional Laws when performing their functions, which are not judicial in nature, provided, of course, they do not purport to differ from Supreme Court authority.

119. When it makes comments in the report of an investigation the Commission will inevitably make comments requiring interpretation or application of provisions of Constitutional Laws. For example, when the Commission conducts an investigation in its administrative jurisdiction, such as its investigation into the UBS loan, it will invariably form an opinion on whether the “conduct”, the subject of the investigation, was “wrong”. It is authorised and required to do so by Section 219(1)(a) of the Constitution and Section 22(1) of the Organic Law on the Ombudsman Commission.

120. It cannot properly form an opinion on whether “conduct” is “wrong” without interpreting and applying provisions of Constitutional Laws, especially Sections 219(2), (3), (4), (5) and (8), which state:

(2) Subject to Subsections (3), (4) and (5), and without otherwise limiting the generality of the expression, for the purposes of Subsection (1)(a) conduct is wrong if it is—

(b) unreasonable, unjust, oppressive or improperly discriminatory, whether or not it is in accordance with law or practice; or

(c) based wholly or partly on improper motives, irrelevant grounds or irrelevant considerations; or

whether or not the act was supposed to be done in the exercise of deliberate judgement within the meaning of Section 62 (decisions in "deliberate judgment").

(3) The Commission shall not inquire into the justifiability of a policy of the National Government or a Minister or a provincial government or a member of a provincial executive, except insofar as the policy may be contrary to law or to the National Goals and Directive Principles, the Basic Rights or the Basic Social Obligations, or of any Act of the Parliament.

(4) The Commission shall not inquire into the exercise of a rule-making power by a local government body.

(5) The Commission shall not inquire into a decision by a court, except insofar as the decision may show an apparent defect in law or administrative practice to which Subsection (1)(b) would apply. ...

121. It will be observed that in forming an opinion as to whether conduct is wrong, or whether a policy of the National Government is justifiable, the Commission is permitted (by Sections 219(2)(a) and 219(3)) to form an opinion on whether it is “contrary to law”. This includes provisions of the Constitutional Laws.

122. When it forms such opinions and records them in reports of its investigations, the Ombudsman Commission is not exercising judicial power. It is not making an authoritative and final determination of any person’s legal rights and obligations. The Ombudsman Commission is not a court. It is not prohibited from interpreting or applying provisions of Constitutional Laws so long as the interpretation is reasonably open to it. If the Ombudsman Commission errs in law any aggrieved party can apply to correct that error.

123. Yes, the Ombudsman Commission can make comments in a report it distributes or publishes, which involve interpretation or application of provisions of Constitutional Laws.

No	Question	Answer
1	Does the Prime Minister not come within the description of any “member”, “officer”, “employee” or “person” under Section 219(1)(a) of the Constitution?	No
2	Does the Ombudsman Commission lack jurisdiction to investigate conduct of the Prime Minister under Section 219(1)(a) of the Constitution?	No
3	Does the Prime Minister not come within the description of “member”, “officer” or “employee” under Section 13 of the Organic Law on the Ombudsman Commission?	No
4	Does the Ombudsman Commission lack jurisdiction to investigate conduct of the Prime Minister under Section 13 of the Organic Law on the Ombudsman Commission?	No
5	Does the Ombudsman Commission lack jurisdiction to publish under Section 23(1) of the Organic Law on the Ombudsman Commissionor in any other way the results of any investigation carried out by it regarding conduct of the Prime Minister?	No
6	Does the Ombudsman Commission lack jurisdiction to investigate and publish under Section 23(1) of the Organic Law on the Ombudsman Commission the results of an investigation, if it has not informed the responsible person under Section 17 of the Organic Law on the Ombudsman Commission, of its intention to make the investigation?	No
7	Was the Ombudsman Commission required by Section 17(1) of the Organic Law on the Ombudsman Commission to inform the Prime Minister of its intention to make an investigation relating to his conduct regarding the UBS loan: (a) before investigating him? (b) before publishing a provisional report, making comments adverse to or derogatory of him? (c) before publishing any further report making comments adverse to or derogatory of him?	No No No
8	Is an investigation conducted without informing the Prime Minister beyond the power of the Ombudsman Commission?	No
9	Is publication of the Ombudsman Commission’s provisional report re the UBS loan beyond the power of the Ombudsman Commission?	No
10	Is publication of the Ombudsman Commission’s provisional report re the UBS loan beyond the power of the Ombudsman Commission?	No
11	Can the Ombudsman Commission make comments in a report it distributes, if the comments require interpretation or application of provisions of Constitutional Laws?	Yes

125. Our resolution of the four central issues identified earlier is summarised in the following table.

No	Issue	Resolution
1	Whether the Commission can investigate the conduct of the Prime Minister under the Organic Law on the Ombudsman Commission.	Yes
2	Whether conduct of the Prime Minister can be the subject of comment or findings when the Commission publishes the results of an investigation under that Organic Law.	Yes
3	Whether the Commission is obliged, before investigating conduct of the Prime Minister under the Organic Law on the Ombudsman Commission, to inform him of its intention to make the investigation.	No
4	Whether the Commission can in any report published by it under the Organic Law on the Ombudsman Commission make comments involving interpretation or application of Constitutional Laws.	Yes

126. The Supreme Court can in appropriate cases make an order for costs in constitutional reference proceedings (Reference by Morobe Provincial Executive (2012) SC1202). In the present case, even though the Prime Minister and the Attorney-General have engaged private counsel, we presume that their legal costs will be met by the State. This would properly be the case as both interveners have taken part in the proceedings in their official capacity. In these circumstances it is appropriate that the parties bear their own costs of the entire proceedings.

_______________________________________________________________
Counsel to the Commission: Lawyer for the 1^st, 2^nd& 3^rd Interveners
Young & Williams Lawyers: Lawyers for the 4^th Intervener
Manase & Co Lawyers: Lawyers for the 5^th Intervener

Ombudsman Commission (1^st, 2^nd& 3^rd interveners)	Prime Minister (4^th intervener)	Attorney-General (5^th intervener)
No	Yes	Yes

Supreme Court of Papua New Guinea

Alleged Improper Borrowing of AUD1.239 Billion Loan, In re [2017] PGSC 8; SC1580 (30 March 2017)