Independent State of Papua New Guinea v Petroleum Resources Gobe Ltd [2019] PGSC 128; SC1900 (19 December 2019)

SC1900

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SC REV 83 OF 2018

BETWEEN:
THE INDEPENDENT STATE
OF PAPUA NEW GUINEA
Applicant

AND:
PETROLEUM RESOURCES
GOBE LIMITED
First Respondent

AND:
MINERAL RESOURCES DEVELOPMENT
COMPANY LIMITED
Second Respondent

Waigani: Hartshorn J,
2019: 20^th November & 19^th December

Application for leave to apply for review pursuant to s.155(2)(b) Constitution

Cases Cited:
Papua New Guinea Cases

Albright Ltd v. Mekeo Hinterland Holdings Ltd (2013) N5774
Duma v. Puk (2019) SC1754
Gigira Development Corporation Ltd v. Komo Umbrella Joint Venture Ltd (2016) N6785
Green & Co Pty Ltd (Receiver Appointed) v. Roger Britain Green [1976] PNGLR 73
Independent Public Business Corporation v. Motor Vehicles Insurance Limited (2017) N6664
K. A. Properties (PNG) Ltd v. Simatab (2017) N7070
Lawrence Kalinoe v. Philip Kereme (2017) SC1631
National Superannuation Fund Ltd v. National Capital Ltd (2017) N6952
Niugini Mining Ltd v. Bumbandy (2005) SC804
Southern Highlands Provincial Government v. Ronald Kalu (2016) SC1568
Totamu v. Small Business Development Corporation (2009) N3702

Overseas case:

Evans v. Bartlam [1937] AC 473; 2 All ER 646
Gardner v. Jay (1885) 29 Ch 50

Counsel:

Mr. M. Wangatau, for the Applicant
Mr. J. Mesa, for the Respondents

19^th December, 2019

1. HARTSHORN J: This is a decision on a contested application for leave to apply for a review under s. 155(2)(b) Constitution. The State seeks leave to apply for a review by the Supreme Court of a decision of the National Court dated 18^th of May 2018 which ordered amongst others, judgment against the State defendants in the sum of K180,253,886.90 for amongst others, unpaid royalties, loss of profits and business (Decision).

Background

2. The National Court proceeding was commenced in November 2014. An amended writ of summons and statement of claim was filed in November 2016 in which the two respondents claimed amongst others unpaid royalties for the period from 1999 to 2015 in respect of the Gobe Petroleum Project and loss of profits.

3. At a hearing in the National Court in which there was no representation on behalf of the State, the primary judge made the Decision sought to be reviewed. The orders in the Decision are stated as being made pursuant to Order 10 Rule 9A Listings Rule, 15(2)(b) and (c) National Court Rules. These Rules provide for the National Court to summarily dispose of a matter for amongst others, the failure to appear at a listings or directions hearing by a party or his lawyer and for non-compliance of any order or direction made at any of the listing processes.

4. The State did not appeal the Decision within the prescribed appeal period. It now makes application for leave to review under s. 155(2)(b) Constitution pursuant to Order 5 Rule 3 Supreme Court Rules.

Law

5. There are numerous cases which provide some guidelines on leave for review applications. In the recent case of Southern Highlands Provincial Government v. Ronald Kalu (2016) SC1568, Injia CJ (as he then was) said at [5]:

"The criteria for grant of leave for review is settled in various decisions of this Court: Lae Bottling Industries Ltd v Lae Rental Homes Ltd (2011) SC1120, State v Toka Enterprises Ltd (2013) SC1266, Luke Marano v Jack Nouari (2013) SC 1307. The applicant must have standing to bring the application. If the applicant is a party in the proceedings of the court below from which the judgment under review was given, the question of standing does not arise. The applicant must offer a reasonable explanation as to why an appeal against the judgment was not filed within time. The application for leave for review must not be delayed. If there has been a delay in lodging the application, a reasonable explanation must be given. The application must be prosecuted promptly. If there has been a delay in prosecuting the application, a reasonable explanation must be offered. If the court finds that there has been a delay and no reasonable explanation has been offered for the delay in lodging and prosecuting the application, the court may, nonetheless, grant leave for review if there are exceptional circumstances showing manifestation of substantial injustice that give rise to serious issues of facts or law that warrants a full review of the judgment. It is also necessary for the applicant to demonstrate that it is in the interest of justice to warrant a review of the judgment."

Preliminary

6. The respondents have raised various objections to the State's amended application. These objections are that the amended application fails to strictly comply with the mandatory procedures and requirements of the Supreme Court Rules. Following a consideration of the objections I am not satisfied that the respondents' have satisfactorily made out that this court's jurisdiction to hear the leave application has not been enlivened.

7. Further, the respondents submitted that the State failed to "strictly comply". As to any alleged breach of the Supreme Court Rules, I concur with the submission of the State that the overall purpose of the Supreme Court Rules is that they are not intended to be an end to themselves, but a means to achieving a just resolution of the dispute between the parties. They are intended to be construed and applied flexibly to ensure that they serve the interests of justice. I refer to [5] of 8, Niugini Mining Ltd v. Bumbandy (2005) SC804 in this regard. I also refer to the various authorities cited therein. Notwithstanding that the Supreme Court was referring to the National Court Rules, I am of the view that its comments are apposite to the Supreme Court Rules, apart from those Rules that concern Election Petition Reviews.

8. Consequently, the objections of the respondents are rejected.

Consideration

9. The State has standing to bring this application, it being a party to the National Court proceeding in which the Decision to be reviewed was made.

10. As to a reasonable explanation of why an appeal was not filed within time, the State submits that this was because the lawyer who had carriage of the file at the office of the Solicitor General was absent from work because of medical reasons.

11. This cannot in my view, be a reasonable explanation. The absence and sickness of one lawyer is not a reasonable explanation for not complying with a statutory time limit on behalf of the State. The reason for not complying with the statutory time limit to appeal and that this reason has been given by the State, raises serious questions concerning the administration of and the management within, the office of the Solicitor General. This includes the delegation of matters and how files are allocated, whether there is any supervision of lawyers, whether the conduct of files is regularly checked and audited including whether there are adequate systems in place to enable the monitoring and progression of files and whether there is any overall responsibility taken for the conduct and carriage of files. To miss a statutory deadline to file an appeal in a case in which judgment has been entered against the State for over K180 million with the reason being given that it was because a lawyer was absent from work for medical reasons is simply inexcusable and indefensible.

12. Whether there has been delay in making the application for leave for review is the next consideration. The application for leave to review was filed on 12th October 2018 and then with consent, the amended application was filed on 16^th April 2019. The initial application was filed about three months and 13 days after the appeal period expired. The reasons given for the delay are similar to the reasons given for not filing an appeal in time and that it took time to obtain instructions from the Department of Finance. The Department of Finance in turn experienced difficulty in obtaining information because of the planned destruction of aged records, the numerous changes of Trust Managers in 18 years and the financial reforms that have resulted in a change to the Government's accounting and management systems.

13. To my mind, although not acceptable as these reasons are of the State's making and are in the control of the State, the delay in filing the application for leave of over three months is not inordinate and the explanation given concerning the problems faced in obtaining information from the Department of Finance although not reasonable, is understandable.

14. Having found that a reasonable explanation for not filing an appeal within time has not been given and the reason for the delay in filing and prosecuting the application is not reasonable but understandable, as occurred in Kalu's case (supra), this court may nevertheless consider whether there, "are exceptional circumstances showing a manifestation of substantial injustice that gives rise to serious issues of fact or law that warrants a full review of a judgment": Kalu's case (supra) at [5]; and further, whether it is in the interests of justice that a review of the judgment is warranted.

15. The respondents submit that the evidence filed on behalf of the State does not demonstrate such an exceptional circumstance existing or that the case is of a special gravity warranting the grant of leave. The evidence is that the State through its lawyers has shown a lack of interest and a lack of attention to issues before the National Court. Further, there are no clear arguable issues warranting leave to review the Decision. Furthermore, it is not in the interests of justice that leave be granted.

16. The State submits that in the Decision, there is a miscarriage of justice as the National Court failed to consider that royalties between 1999 to 2002 were paid directly to landowners, that a 5% royalty withholding tax was payable, that royalties were paid for 2015, that some royalties were paid between 2003 to 2005 to landowner incorporated land groups and that the State raised a meritorious defence based on law and fact.

17. Further, the State submits that as to the interests of justice, amongst others, any delay in satisfaction of the judgment would entitle the respondents to interest and costs in the event that they are successful. Conversely, the interests of the State and the people of Papua New Guinea are to have the decision reviewed for the reasons given and especially given that the amount of the judgment is for over K180 million.

18. In regard to whether exceptional circumstances have been shown to exist as expressed in Kalu's case (supra), in my view the fact that the State failed to file an appeal within time against a judgment of over K180 million and then uses a lawyer's sickness as the reason, is in itself an exceptional circumstance. That the State, the people of Papua New Guinea, could potentially have to pay over K180 million because of the basic elementary failure of lawyers at the office of the Solicitor General, in itself constitutes not only an exceptional circumstance, in my view it is simply extraordinary.

19. I note also that notwithstanding the development of the case law concerning the grant of leave for review pursuant to s. 155(2)(b) Constitution, the present Supreme Court Rule, Order 5 Rule 3, merely provides that an application for leave for review shall be made before a judge. That a judge has the discretion to grant or refuse leave is implied. There is no indication as to how a judge should exercise that discretion.

20. I am reminded in this regard of the oft cited statement of Bowen LJ in Gardner v. Jay (1885) 29 Ch 50, at 59:

“When a tribunal is invested by Act of Parliament or by Rules with a discretion, without any indication in the Act or Rules of the grounds upon which the discretion is to be exercised, it is a mistake to lay down any rules with a view of indicating the particular grooves in which the discretion should run, for if the Act or the Rules did not fetter the discretion of the Judge why should the Court do so?”

21. This passage has been reproduced and approved in numerous cases including the House of Lord’s decision of Evans v. Bartlam [1937] AC 473; 2 All ER 646; Green & Co Pty Ltd (Receiver Appointed) v. Roger Britain Green [1976] PNGLR 73; Totamu v. Small Business Development Corporation (2009) N3702; Albright Ltd v. Mekeo Hinterland Holdings Ltd (2013) N5774; Independent Public Business Corporation v. Motor Vehicles Insurance Limited (2017) N6664; Gigira Development Corporation Ltd v. Komo Umbrella Joint Venture Ltd (2016) N6785; National Superannuation Fund Ltd v. National Capital Ltd (2017) N6952; K. A. Properties (PNG) Ltd v. Simatab (2017) N7070; Lawrence Kalinoe v. Philip Kereme (2017) SC1631and Duma v. Puk (2019) SC1754.

22. In considering the exercise of discretion to grant leave, I am satisfied that there are exceptional circumstances existing as mentioned. Further, the State has raised various matters, albeit belatedly, concerning liability and quantum. I also mention as an aside, that s. 12(3) Claims By and Against the State Act warrants consideration.

23. I am satisfied that given the exceptional circumstances to which I have referred which exist in this instance because of the failure of the Office of the Solicitor General to properly represent the State, that there are various matters of liability and quantum which warrant review and that the respondents may be compensated by interest and costs if they are ultimately successful, it is in the interests of justice that leave be granted as sought.

Orders

24. The Court orders that:

a) Leave is granted to the Applicant to apply for review as sought in paragraph 4.1 of the Amended Application of the Applicant filed 16^th April 2019;

b) The costs of and incidental to the said grant of leave shall be costs in the review.
__________________________________________________________________
Office of the Solicitor General: Lawyers for the Applicant
Corrs Chambers Westgarth: Lawyers for the Respondents