Arran Energy (Elavala) Ltd v Kua [2024] PGSC 54; SC2585 (31 May 2024)

SC2585

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCM NO. 17 OF 2023 (IECMS)

BETWEEN:
ARRAN ENERGY (ELAVALA) LIMITED on its own behalf and as an Operator of PRL21, ARRAN ENERGY (NUIGINI) LIMITED, ARRAN ENERGY (JG) PTY LIMITED, KINA PETROLEUM (PRL21) LIMITED
First Appellant

AND:
ARRAN ENERGY (UBUNTU) LIMITED on its own behalf and as an Operator of PRL28, ARRAN ENERGY (NUIGINI) LIMITED, MEGA FORTUNE INTERNATIONAL LIMITED
Second Appellant

AND:
ARRAN ENERGY (UBUNTU) LIMITED on its own behalf and as an Operator of PPL574, ARRAN ENERGY (JG) E&P PTY LIMITED, ARRAN ENERGY (KETU) LIMITED, MEGA FORTUNE INTERNATIONAL LIMITED
Third Appellant

AND:
Hon. KERENGA KUA, OL., MP Minister for Petroleum
First Respondent

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Respondent

AND:
DAVID MANAU as Chairman and, KONEY SAMUEL, ANDREW OEAKA, JOSEPH WARUS, JIMMY HAUMU, RONALD MEKETA, and CLARENCE HOOT as a members of the PETROLEUM ADVISORY BOARD
Third Respondent

AND:
DAVID MANAU as SECRETARY OF THE DEPARTMENT OF PETROLEUM & ENERGY and as a DIRCETOR OF PETROLEUM
Fourth Respondent

Waigani: David, Dowa & Eliakim JJ
2023: 30^th November
2024: 31^st May

APPEAL – Equity – Certiorari – Judicial review of Ministerial powers – Equitable jurisdiction of Court to quash ministerial exercise of discretion to revoke refusal notice under Oil and Gas Act and issue of replacement refusal notice-Whether Minister had the powers to retract his earlier refusal decision-whether the principes of functus officio apply-whether section 35 of the Interpretation Act applies-Held: trial judge correctly found the doctrine of functus officio did not apply to Oil and Gas Act and by virtue of section 35 of Interpretation Act Minister had implied power to change his decision-Appeal dismissed.

Cases Cited
Kekedo v Burns Philip (PNG) Ltd [1988-1989] PNGLR 122
Mao Zeming v Hinchiffe (2006) N2998
Tau Mavaru Kamuta v David Sode (2006) N3067
Sabako v Commissioner for Police (2006) N2975
Ombudsman Commission v Yama (2004) SC747
Application by National Capital District Interim Commission [1987] PNGLR 339
Bougainville Copper Foundation v Minister for Trade and Industry [1988-89] PNGLR 110
Gegeyo v. Minister for Lands and Physical Planning [1987] PNGLR 331
Yanta Development Association v Piu Land Group Inc (2005) SC798

Counsel
E. Enderson, for the Appellants
J Holingu, for the First & Fourth Respondents
R Uware, for the Second Respondent
J Wohuinangu, for the Second Respondent

JUDGMENT

1. BY THE COURT: This is an appeal arising out of a decision by Kandakasi DCJ, given on 15^th May 2023 dismissing the National Court proceedings-OS(JR)No 18 of 2022(IECMS); Arran Energy (Elevala) Limited & Others v Hon. Kerenga Kua &Others.
   
2. The decision concerns the consideration and application of the principle of functus officio to administrative acts/decisions and the application of Section 35 of the Interpretation Act 1975.
   

Background Facts

3. The facts are not disputed. The Appellants were the applicants for a Petroleum Development License 12 (APDL 12) over Ketu Elevala Gas Fields in Western Province. On 03^rd February 2022, the first Respondent issued a Notice under Section 57 of the Oil and Gas Act 1998 refusing the Appellants’ amended application for Petroleum Development License (APDL12). The decision is referred to as the Refusal Notice.
   
4. On 9^th March 2022, the Appellants commenced judicial review proceedings in OS(JR) No. 18 of 2022 (IECMS), challenging the first Respondent’s Refusal Notice/decision and sought amongst other things, an order in Mandamus for the fourth Respondent to inform them of the information he requires within 30 days including invoking the process under the relevant provisions of the Oil and Gas Act 1998.
   
5. On 4^th May 2022, the first Respondent gave notice of his intention to refuse to grant the APDL12 to the Appellants in accordance with Section 56B of the Oil and Gas Act (hereinafter referred as “Section 56B Notice”). The Appellants were given 30 days to respond to the Section 56B Notice.
   
6. On 5^th May 2022, His Honour Kandakasi DCJ, made orders granting leave for judicial review and stayed the decisions under review. On the afternoon of the same day, 05^th May 2022, the first Respondent wrote to the Appellants advising them that he had altered his Refusal Decision and instead issued a Section 56B Notice. The second decision is referred to as the Retraction Notice. The new Section 56B Notice stated that the Minister intends to refuse the Appellants application, APDL12 for the same 10 grounds/reasons set out in the earlier Refusal Notice of 3^rd February 2022. The Appellants were given 30 days to respond.
   
7. On 22^nd May 2022, the Respondents filed an application for the dismissal of proceedings for abuse of the process and for disclosing no reasonable cause of action.
   
8. On 23^rd May 2022, the Appellants then instituted proceedings styled OS (JR) NO 56 of 2023 (IECMS), seeking judicial review of the first Respondent’s exercise of power to alter his Refusal Notice and the issuance of Section 56B Notice, amongst other decisions for review.
   
9. On 03^rd June 2022, Her Honour, Tamade AJ, granted leave for judicial review of the decisions and stayed the decisions under review. The stay orders were further extended by her Honour on 09^th June 2022, until the determination of the matter. On 22^nd July 2022, Tamade AJ, ordered that the proceedings -OS (JR) NO 18 of 2022 and OS (JR) NO 56 of 2022 be consolidated.
   
10. When the matter returned before Kandakasi DCJ, His Honour directed the parties to discuss settlement. After the parties failed to reach settlement as per earlier directions, His Honour ordered that the matter be heard on the preliminary issue on the doctrine of functus officio and the application of Section 35 of the Interpretation Act to determine whether the first Respondent having made the Refusal Decision was functus officio or he had the power to retract his Refusal Notice and issue the Section 56B Notice instead. The matter was heard on 5^th April 2023 and decision reserved until 15^th May 2023.
    
11. On 15^th May 2023, his Honour, Kandakasi DCJ, delivered his decision holding that:
    
    1. The doctrine of functus officio does not apply to the Oil and Gas Act.
    2. The principles of functus officio promulgated in South Seas Tuna case are not binding.
    3. Section 35 of the Interpretation Act applies to the Oil & Gas Act, that is, the Minister has the power to retract the Refusal Notice and issue Section 56B Notice.
    4. The Minister’s second decision resolved OS (JR) 18 of 2022 so the Plaintiffs (Appellants) do not have a right to maintain the proceedings after having filed OS (JR) 56 of 2022 challenging the Minister’s second decision.
    5. The Plaintiffs (Appellants) having failed to withdraw or discontinue the OS(JR) 18 of 2022, resulting in the dismissal for abuse of process.
       
12. On 07^th August 2023, the Appellants filed this appeal by way of a Notice of Motion under Order 10 Rule 1 of the Supreme Court Rules, appealing the decision of Kandakasi DCJ.
    

Grounds of Appeal

13. The grounds of appeal, as paraphrased, are:
    
    1. The primary judge in the National Court erred in law and in mixed fact and law when he decided that the doctrine of functus officio does not apply and ordered that OS (JR) 18 of 2022 be dismissed.
       
    2. The primary judge erred in law in deciding he was not bound by the Supreme Court decision in South Seas Tuna Corporation Ltd-v-Betty Palaso (2019 SC 1761 (South Sea Tuna Case) on the basis that the Supreme Court determination of the existence and bounds of the doctrine of functus officio as it relates to administrative decisions in PNG was obiter dictum.
       
    100. The primary judge erred in law in holding as the most important consideration [para 27] that the appellants breached the hierarchy of laws provision in section 9 of the Constitution of PNG, by asserting that the decision of South Sea Tuna overrides the Interpretation Act, in particular Section 35.
         
    4. The primary judge erred in law and mixed facts in failing to find that even if Section 35 of Interpretation Act (in its application to the facts in this particular case) means that the power existed to alter the decision which is exercisable in the same manner and subject to the same conditions as the original decision it was not so exercised as the PAB had not considered and reported to the Minister, that the Minister should alter his original decision.
       
    5. The primary judge erred in holding that the desire and drive of Morden judiciaries to have parties resolve their disputes outside of Court through alternative dispute resolution requires the rejections of the doctrine of functus officio, failing to take into account the Appellants submission [Appellants written submission of para 2 and 25-57] that if the Minister is functus officio and the parties agree to that then (subject to the specific status in the question) it does not preclude parties agreeing to resolve the matter through alternative dispute resolution.

Issue

14. In our view, the main issue for consideration raised by the grounds of appeal is whether the trial judge erred in holding that the doctrine of functus officio does not apply to the Oil and Gas Act by invoking Section 35 of the Interpretation Act.
    

The Law on Judicial Review

15. Under Section 6 of the Supreme Court Act, this Court has the jurisdiction not only to review the decision of the lower Court but also to exercise the powers of the National Court when determining this appeal. The appeal arises out of a decision made in a judicial review application under Order 16 of the National Court Rules. The law on judicial review is settled. The question of whether the first Respondent’s decision ought to be quashed by way of judicial review of certiorari for non-compliance of procedures, breach of natural justice or errors of law is discretionary. See: Kekedo v Burns Philip (PNG) Ltd [1988-1989] PNGLR 122, Mao Zeming v Hinchiffe (2006) N2998, Tau Mavaru Kamuta v David Sode (2006) N3067. Sabako v Commissioner for Police (2006) N2975, and Ombudsman Commission v Yama (2004) SC747.
    
16. In Kekedo v Burns Philip (supra) the Supreme Court stated that:
    

“The circumstances under which judicial review may be available are where the decision-making authority exceeds its powers, commits an error of law, commits a breach of natural justice, reaches a decision which no reasonable tribunal could have reached or abuses its powers”.

17. The primary issue raised in the lower Court proceedings of whether the first Respondent erred in law in his decision in retracting his Refusal Notice and issuing Section 56B Notice is now subsumed in the main issue raised by the grounds of appeal.
    

Submissions of Counsel

18. The Appellants submit that the trial judge erred in mixed fact and law in holding that the doctrine of functus officio does not apply arguing that:
    
    1. The decision in South Seas Tuna has settled the law on functus officio in this jurisdiction that the doctrine of functus officio applies to and presumes all administrative decisions to be final and determinative except for nullity and the context of the terms of the particular Act suggesting otherwise.
    2. The first Respondent’s Refusal Notice issued 4th February 2022 was final and conclusive and determinative of the Appellants’ rights.
    3. Nothing in the text, context and purpose of the Oil and Gas Act suggests otherwise than the application of the functus officio to the Oil and Gas Act rendering the first Respondent’s Refusal Notice a final decision.
    4. The Respondents escaped the binding decision of South Seas Tuna case by invoking Section 35 of the Interpretation Act.
       
    5. Section 35 of the Interpretation Act is not applicable as the Oil and Gas Act leaves no room for the first Respondent to exercise the power to retract a decision to which he had no power.
       
19. In response, the Respondents submit that the trial judge made no error in deciding that the doctrine of functus officio do not apply, arguing that:
    
    1. The principles of the doctrine of functus officio promulgated by the Supreme Court in South Seas Tuna case was a general observation and is obiter dicta. Although it may be used as persuasive authority, it was not binding on his Honour.
       
    2. Where the Oil and Gas Act makes no provision to alter or amend its decisions, it is appropriate to apply Section 35 of the Interpretation Act. The text and context of the Oil and Gas Act did not preclude the application of Section 35 of the Interpretation Act.
       
    3. The decision is consistent with judicial pronouncements by the National and Supreme Courts in this jurisdiction that Section 35 is applicable to all administrative decisions where there is no specific provision made in a particular Statute to alter or amend a decision.
       
    4. The application of Section 35 of the Interpretation Act takes precedence over judicial pronouncements and the principles of common law which are placed at the lower end of the hierarchy of laws pursuant to Section 9 of the Constitution.
       
    5. The first Respondent was therefore entitled to alter or retract his Refusal Notice and issue a second Section 56B Notice.
       

Consideration

19. We begin with the question, what is functus officio. Functus officio is a Latin term meaning an officer or official body having performed his or her office, that officer or official body has no further authority or legal competence because the duties and functions of the original commission have been fully accomplished. That is, the original act or decision has reached finality, and anything done thereafter is without authority or legal competence.
    
20. The Appellants rely on the decision in South Seas Tuna in the lower Court and again in this Court to advance their arguments that the doctrine of functus officio applies to all administrative decisions in Papua New Guinea and accordingly the Refusal Notice of the first Respondent dated 4th February 2022 has become functus officio, rendering the Retraction Notice dated 5th May 2022 void and of no effect. His Honour held that the issue of functus officio was not before that Court for determination and the observations made by the Court (per Collier J) are obiter dicta and not binding. His honour reasoned that Section 35 of the Interpretation Act applied to the Oil and Gas Act to give an implied power to the first Respondent to issue the Retraction Notice and replace the Refusal Decision with the Section 56B Notice.
    
21. In the South Seas Tuna case, the Supreme Court, after a study of the evolution and application of the doctrine of functus officio in the United Kingdom and other common law jurisdictions including the Pacific summarised the principles or test to be applied at paragraph 77 of the judgment with a statement that they are applicable to all administrative decisions in PNG.
    
22. It is our view that, while the principles of functus officio enunciated in the South Seas Tuna are sound insofar as they apply to other common law jurisdictions, it is not a determination that is binding on all administrative decisions in this country.
    
23. This is because the application of the doctrine of functus officio was not an issue for determination before that Court. This is clear from paragraphs 23 and 24 of the judgment (South Seas Tuna case).
    

“23. At the hearing of this appeal during submissions, Counsel for the respondents made the specific concession that the respondents accepted that, once the amended GST assessment was made on 24 June 2016, the decision of the Commissioner was functus officio in respect of that assessment. To that extent, it appeared that, by the conclusion of submissions, the only legal dispute between the parties concerned the point at which an assessment was made – the appellant claims that an assessment was made by journal entries in January 2016.

24. The effect of this concession on the part of the respondents is that, to the extent the appeal concerns the decision of the primary Judge in respect of the application of the principle of functus officio, the respondents appear to agree that his Honour erred at [13] of the primary judgment in his statement of relevant legal principles. However, so far as I am aware, there have been no authorities in Papua New Guinea considering the broader relevance of the principle of functus officio to administrative decisions and the more specific issue concerning the application of the principle to decisions of the Commissioner under the GST Act. Accordingly, and notwithstanding the apparent common ground of the parties in respect of the application of the legal principle of functus officio to an assessment of the Commissioner, it is appropriate for the Court to consider this issue and make relevant observations.”

24. The principles of functus officio summarised by the Court are general observations and remain obiter dicta. While they are of persuasive authority, they are not binding as correctly held by the trial judge.
    
25. We note Section 35 of the Interpretation Act was not featured in the South Seas Tuna decision. Section 35 reads:
    

“35. IMPLIED POWER TO ALTER.

Where a statutory provision confers a power to make an instrument or decision (other than a decision of a court), the power includes power, exercisable in the same manner and subject to the same conditions (if any) to alter the instrument or decision.’

26. Section 35 is an important statutory provision that gives implied powers to a decision-maker to alter or change an administrative decision in this jurisdiction. It is arguable that a consideration of Section 35 of the Interpretation Act could have changed the position taken in South Seas Tuna case insofar as the application of the principles of functus officio in administrative decisions is concerned, although counsel for the Appellants argues otherwise.
    
27. Section 35 of the Interpretation Act applies to give implied power to a decision-maker to alter or amend its instrument or decision where the Statute makes no provision. In this case, the Oil and Gas Act makes no provision for the first Respondent to retract his Refusal Notice and issue a second nor does it preclude him from altering his decisions. In the circumstances, the trial judge correctly held that Section 35 applied to fill the gap in the Act, so to speak, to validate the decision to retract the Refusal Decision. There is nothing, in the text, context or purpose of Oil and Gas Act that expressly precludes the application of Section 35 of the Interpretation Act.
    

28. We note further that South Seas Tuna did not consider other judicial pronouncements in this jurisdiction which dealt with the application of Section 35 of the Interpretation Act. There is a plethora of judicial pronouncements by the National and Supreme Courts in this jurisdiction which go to support the proposition of law that Section 35 is applicable to administrative decisions where there is no specific provision made in a particular Statute to alter or amend a decision.

Refer: Application by National Capital District Interim Commission [1987] PNGLR 339. Bougainville Copper Foundation v Minister for Trade and Industry [1988-89] PNGLR 110. Gegeyo v. Minister for Lands and Physical Planning [1987] PNGLR 331.Yanta Development Association v Piu Land Group Inc ( 2005) SC798

29. In Yanta Development Association, the Supreme Court stated the law at paragraph 20:

“The law has been already settled since the decision of In the Application of the National Capital District Interim Commission [1987] PNGLR 339. In that case the court held that section 35 of Interpretation Act applied to section 25 of the Land Act to give meaning to that provision that empowered the relevant Minister to act accordingly, either to revoke, alter or vary a grant made under section 25 of the Land Act, such power to be exercised for good and justifiable reasons consistent with the public interest and public welfare. It is also common sense that if power is given to someone to do an act, it is only logical that he also has the power to undo his act if need be. As to how and why the Land Act is not precise in this message is unclear. Be that as it may, had there been due diligence and proper research made, the matter should not have been allowed to come this far as the First Respondent really did not have a case.”

30. Following the decisions in these cases, the trial judge correctly concluded at paragraph 34 of the judgment that the doctrine of functus officio discussed and applied in South Seas Tuna does not apply and that the first Respondent did have the powers by virtue of Section 35 of the Interpretation Act to change his decision and replace it with the second decision.

31. Furthermore, the contention by the Appellants that Section 35 of the Interpretation Act is of general application while the South Seas Tuna has explicitly settled the law that the doctrine of functus officio applies to all administrative decisions goes against the hierarchy of laws stated in the Constitution. Section 9 of the Constitution provides that the Acts of Parliament and subordinate rules made thereunder take precedence over overseas case authorities and common law doctrines forming part of the underlying law. The trial judge correctly stated the law at paragraph 27 of the Judgment:

“Sixthly, and most importantly, the position taken by the appellant in the South Seas Tuna case went against the clear dictate of s. 9 of the Constitution as to the hierarchy of laws in the country. Pursuant to that provision, the supreme law of the land, the Constitution has ordered in clear terms that, Acts of Parliament are superior to and they take priority over rules of the underlying law, which includes the common law doctrines and principles as adopted and applicable in our country pursuant to s. 20 of the Constitution[6] and the Underlying Law Act 2000. Such laws are at the very bottom of the list of laws that are applicable in PNG. Hence, any common law doctrine such as the doctrine of functus officio or any judicial pronouncement in PNG, do not and cannot be allowed to override the clear and expressed provisions of any legislation such as the GST Act or the provisions of the Interpretations Act.”

32. Even if the doctrine of functus officio were to apply, which we say is not, the decision of the first Respondent falls within the exception to the doctrine of functus officio for being a nullity. This is because the first Respondent’s Refusal Notice was incorrectly issued under Section 57 of the Oil and Gas Act. Realising the mistake, the first Respondent revoked the Refusal Notice and replaced it with the Section 56B Notice, issued under the correct provision of the Act.

Conclusion

33. In the end, we have reached a conclusion that the trial judge made no identifiable errors in his decision. The appeal shall be dismissed with costs.

Order

34. The Court orders that:

1. The appeal is dismissed.
2. The decision of the trial judge is affirmed.
3. The matter is remitted to the National Court to deal with the remaining matter OS(JR) 56 of 2022.
4. The Appellants shall pay the costs of the appeal.
5. Time be abridged.

________________________________________________________________
Dentons PNG: Lawyers for the Appellants
Holingu Lawyers: Lawyers for the First and Fourth Respondents
Solicitor General: Lawyers for the Second Respondent
Gileng & Co. Lawyers: Lawyers for the Third Respondent