Chan v Schnaubelt [2018] PGSC 54; SC1700 (31 August 2018)

SC1700

PAPUA NEW GUINEA
[IN THE SUPREME COURT JUSTICE]

SCA NO. 178 OF 2017

BETWEEN:
SIR JULIUS CHAN as GOVERNOR FOR
NEW IRELAND PROVINCIAL GOVERNMENT
First Appellant

AND:
LAMILLER PAWUT as ACTING PROVINCIAL ADMINISTRATOR,
NEW IRELAND PROVINCE
Second Appellant

AND:
HON. WALTER D SCHNAUBELT in his capacity as
MEMBER FOR NAMATANAI OPEN ELECTORATE
First Respondent

AND:
HON. IAN LING-STUCKEY in his capacity as
MEMBER FOR KAVIENG OPEN ELECTORATE
Second Respondent

Waigani : Injia CJ, Logan & Pitpit JJ.
2018: 28^th & 31^st August

PRACTICE AND PROCEDURE - Declaratory orders - Locus standi - Standing of Members of Parliament to claim declaratory orders in relation to agreement between National Government, a Provincial Government, a Local-level Government and an incorporated mining area landowners association under s 99 of the Organic Law on Provincial Governments and Local-level Governments – Members of Parliament not parties to agreement

Cases Cited:
Papua New Guinea Cases

Re Petition of Somare [1981] PNGLR 265
Re Geno [2015] PGSC 51; SC1455
Mamum Investments Pty Ltd v Ponda (Mt Hagen YMCA Case) [1995] PGSC 15; [1995] PNGLR PNG Air Pilots Association v Director of Civil Aviation [1983] PNGLR 1

Overseas Cases

Australian Conservation Foundation Inc v Commonwealth of Australia (1980) 146 CLR 493

Legislation:

Constitution: s 18
Organic Law on Provincial Governments and Local-level Governments: ss 6, 99

Counsel:

Mr J. Kuwimib, for the Appellants
Mr M. Kipa, for the Respondents

31^st August, 2018

1. BY THE COURT: By a revised memorandum of agreement (MoA) in writing made on 2 May 2007, the State, the New Ireland Provincial Government, the Nimamar Rural-Level Local Government and the Lihir Mining Area Landowners Association Inc made provision between themselves with respect to the end distribution of a royalty stream derived by the State from a mining operation being conducted on Lihir Island in the New Ireland Province.

2. Amongst other things, the MoA, provided, by clause 6(c), that the National Government would pay 50% of the royalties to the Provincial Government, which would, in turn, distribute that 50% in the following way:

(i) 20% to the Namatanai District for infrastructure projects and programs pursuant to its District and Provincial Development plans;
(ii) 20% to the Kavieng District for infrastructure projects and programs pursuant to its District and Provincial Development plans;
(iii) 10% for the general administration of MoA obligations.

3. In affirmation of clause 6(c) but directed in its focus to the Provincial Government rather than to the National Government, clause 23 of the MoA contained a like specification to clause 6(c) as to how the Provincial Government was to distribute the 50% royalties which it received.
4. In October 2017, the Managing Director of the Mineral Resources Authority (MRA), by a letter dated 20 October 2017, purported to direct Newcrest Mining Limited (Newcrest – inferentially a parent company of the mine operator) to pay royalties directly to each of the two districts specified in clauses 6(c) and 23 of the MoA. It is apparent on the face of this letter that it was responsive to concerns voiced by the members of the National Parliament for Namatanai and Kavieng Districts that the Provincial Government was not disturbing royalties which it received from the National Government in accordance with the terms of the MoA.

5. The letter of 20 October 2017 was copied to the Honourable Sir Julius Chan, Governor of the New Ireland Province, the Honourable Walter Schnaubelt, described as Member for Namatanai, the Honourable Ian Ling-Stuckey, described as Member for Kavieng and to the Acting District Administrators of the Namatanai and Kavieng Districts respectively.

6. In a reply to the MRA of 26 October 2017, the Administrator of the Provincial Government took issue with the lawful ability of the MRA to give such a direction to Newcrest and also with the accuracy of the premise that the Provincial Government was not complying with its distribution obligation under the MoA. The Administrator also pointed out that the Districts were not parties to the MoA. On 6 November 2017, the Minister for Mining also wrote to the MRA. The Minister expressed dissatisfaction with the absence of prior consultation by the MRA with him and directed the withdrawal of the direction contained in the MRA’s letter of 20 October 2017.

7. It was against this background that the two Members of Parliament as plaintiffs commenced proceedings in the National Court against Sir Julius Chan “as the Governor for the New Ireland Provincial Government, the Acting Administrator of that Provincial Government, the Minister for Mining, the MRA, Newcrest and the State. In that proceeding, the plaintiffs sought:

• a declaration that the MoA was “not genuinely mutual or was manifestly unfair to the plaintiffs” within the meaning of s 5(1) of the Fairness of Transactions Act 1993 (PNG);
• an order permanently restraining each of the named defendants “from making decisions and taking actions other than paying royalties due and owing to each of the Namatanai and Kavieng Districts respectively”;
• a declaration that the MRA’s direction of 20 October 2017 was a “valid and proper direction within the meaning of s 8(6) of the Mineral Resources Authority Act 2005 (PNG);
• an order that an account be taken of the monies owing to the Namatanai and Kavieng Districts under the MoA.

8. Later in November 2017, Sir Julius Chan, in his capacity as Provincial Governor and named first defendant and the Acting Provincial Administrator as the named second defendant applied to the National Court for the summary dismissal of the proceeding, the main ground being that they were not the parties to the MoA and thereby lacked the necessary standing to bring the proceedings. On 4 December 2017, after a hearing that concluded in the late afternoon that same day, the National Court dismissed that application with costs.

9. Sir Julius Chan and the Acting Provincial Administrator have now appealed against the dismissal of their application.

10. The basis upon which her Honour dismissed the appellants’ application is tolerably clear. Her Honour was “of the view that the parties, Namatanai and Kavieng Districts are beneficiaries under the [MoA and entitled to come to court with what they regard as a branch of those two clauses [clauses 6 and 23]”. It is obvious from this statement of her view that her Honour considered that the two Members of Parliament, now the present respondents, had standing to seek the relief claimed in the National Court.

11. At the forefront of the appellants’ submission on the appeal was the proposition that neither the respondents as Members of Parliament nor for that matter the two districts were parties to the MoA. For this reason, it was submitted that they lacked standing to claim the relief sought. Further, it was submitted that each district was but a geographic subdivision within the Province. It was the Province as a body politic that was, unlike a district within a Province, an entity capable of suing and being sued. As to the status of a Province as a legal entity, the appellants referred to s 6 of the Organic Law on Provincial Governments and Local-level Governments.

12. The respondent Members of Parliament sought to uphold the reasoning of the learned primary judge.

13. As an initial observation, it is just a fact that neither Sir Julius Chan nor the Acting administrator was a party to the MoA. For that matter, save for the State, none of the other named defendants in the National Court proceeding was a party to the MoA. It was the Provincial Government, not either Sir Julius Chan or the Acting Administrator, which was one party to the MoA.

14. Even if, by amendment, both Sir Julius Chan and the Acting Administrator were removed as parties and the Provincial Government made a defendant, the question would remain by what right may the two Members of Parliament claim the relief sought?

15. The was not a case in which a citizen, political office-holder or otherwise, sought to invoke the powers of the Supreme Court under s. 18(1) of the Constitution to claim relief in respect of an asserted violation of a requirement found in the Constitution. In that type of circumstance, the more liberal approach to standing, evident in Re Petition of Somare [1981] PNGLR 265 and Re Geno [2015] PGSC 51; SC1455, might well confer on a Member of Parliament as a citizen, a right to claim declaratory relief in respect of that asserted violation. Nor was it a case where some adverse action of government had directly affected the office which each of the respondents held. In that circumstance also they would have standing to seek relief in the National Court’s judicial review jurisdiction by way of a declaration that the adverse action was contrary to law.

16. In Mamum Investments Pty Ltd v Ponda (Mt Hagen YMCA Case) [1995] PGSC 15; [1995] PNGLR 1, Kapi DCJ and Injia J (as they then were), as had Andrew J in PNG Air Pilots Association v Director of Civil Aviation [1983] PNGLR 1 at 3, cited with approval an observation in relation to standing made by Mason J (as his Honour then was) in Australian Conservation Foundation Inc v Commonwealth of Australia (1980) 146 CLR 493 at 547 to the effect that, depending on the nature of the relief sought, a plaintiff will in general have standing when he can show an actual or apprehended injury or damage to his personal or property rights, to his business or economic interests and perhaps to his social or political interests.

17. Inferentially, as Members of Parliament for electorates, the boundaries of which include the districts referred to in clause 6(c) and 23 of the MoA, the respondents perceive some political interest in the securing of the relief claimed. But the tentative allowance in the cases cited in the preceding paragraph that standing might perhaps be found in a political interest does not mean that, whenever such an interest may be discerned, a plaintiff with no more than such an interest will have standing. That type of interest will more readily ground standing where the validity of an Act of Parliament or some other alleged violation of the Constitution is the subject of the claim for relief.

18. As it is, the MoA is an agreement of a kind contemplated by s 99 of the Organic Law on Provincial Governments and Local-level Governments between bodies politic at national, provincial and local government levels and a named incorporated landowners association. It is the parties to that agreement which have the interest in the adherence to its terms sufficient to seek declaratory and related ancillary relief in respect of an alleged breach of that agreement. The two Members of Parliament may well have a political interest, arising from representations made by their electorate’s constituents, in whether there is adherence to the MoA by a particular government party to that agreement. But that type of interest does not confer standing upon them to bring a proceeding for the relief pleaded before the judicial branch of government. Rather, that interest is one for assertion before the political branch of government; in other words for raising as an issue in the Provincial Assembly or in the National Parliament. One sequel to the raising of the assertion before the National Parliament is that the National Government might have been persuaded to investigate the merits of any such assertion. In turn, that might have meant that the State, which was a party to the MoA came to claim as against the Province relief of the kind sought by the respondents.

19. The learned primary judge ought to have concluded that neither of the respondent Members of Parliament had standing to claim the relief sought. The proceeding ought to have been dismissed accordingly.

20. For completeness, we should record that the appellants also alternatively relied on the presence of an arbitration clause (cl 43) in the MoA as a basis upon which the proceeding ought to have been dismissed. But the respondents were not parties to the MoA and so were not bound by that clause. Further, the clause was permissive in relation to a referral to arbitration. It did not make arbitration a condition precedent to any litigation concerning the MoA. However, that the parties to the MoA contemplated that, as between them, there might be arbitration in relation to any dispute as to adherence to its terms underscores why it is that a non-party such as the respondents ought not to be regarded as having standing to institute a judicial proceeding in respect of an asserted breach. To concede standing to them would be to subject the parties to the MoA to litigation which, as between themselves, they contemplated might be resolved by arbitration in the event that one of them considered that there was a breach.

21. For these reasons, the following orders should be made:

1. The appeal be allowed.
2. The orders made by the National Court on 4 December 2017 is set aside.
3. In lieu thereof, it be ordered:
   • (a) the proceeding be dismissed;
   • (b) the first and second plaintiffs (respondents to the appeal) pay the first and second defendants’ (appellants in the appeal) costs of and incidental to the proceeding, to be taxed if not agreed.
4. The respondents pay the appellants’ costs of and incidental to the appeal, to be taxed if not agreed.

______________________________________________________________
Legal Services Unit, New Ireland Provincial Administration: Lawyers for the Appellants
Fairfax Legal/PLN: Lawyers for the Respondents