Chan v Investigating Authority into the Placer Pacific Ltd Share Issue [1988-89] PNGLR 43 (29 April 1988)

Papua New Guinea Law Reports - 1988-89

[1988] PNGLR 43 - Sir Julius Chan v Investigating Authority into the Placer Pacific Ltd Share Issue 

[1988] PNGLR 43

SC350

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

SIR JULIUS CHAN

V

INVESTIGATING AUTHORITY INTO THE PLACER PACIFIC LIMITED SHARE ISSUE (MAKENA GENO AND JUSTICE KUBULAN LOS)

Waigani

Kapi DCJ Cory Hinchliffe JJ

28-29 April 1988

STATE SERVICES - Ombudsman Commission - Other investigating authority - Powers of - Ombudsman Commission unable to conduct investigation - Appointment of investigating authority - Power to refer prosecution matter to Public Prosecutor - Constitution, ss 28(1)(f), 29(1) - Organic Law on Duties and Responsibilities of Leadership (Ch No 1), ss 19(1)(2), 20(4).

CONSTITUTIONAL LAW - Organic Laws - Construction - Ombudsman Commission unable to conduct investigation - Appointment of investigating authority - Power to refer prosecution matter to Public Prosecutor - Constitution, ss 28(1)(f), 29(1) - Organic Law on Duties and Responsibilities of Leadership (Ch No 1), ss 19(1)(2), 20(4).

Section 28(1)(f) of the Constitution provides that an Organic Law should provide for:

“investigation by the Ombudsman Commission or other authority of cases of alleged or suspected misconduct in office, and confer on the Commission or other authority any powers that are necessary or convenient for that purpose”.

Section 29(1) provides that where the “Ombudsman Commission or other authority” referred to in s 28(1)(f) is satisfied of a prima facie case of misconduct in office it shall refer the matter to the Public Prosecutor for prosecution.

The Organic Law on Duties and Responsibilities of Leadership (Ch No 1), s 19(1), (the Organic Law) provides that where the Ombudsman Commission is itself unable for any reason to conduct an examination or investigation it may appoint one or more constitutional office holders to do so. Section 19(2) provides that an “investigating authority appointed under s 19(1)” has all the powers of the Commission, and s 20(4) provides that if, after an investigation, the Commission is of the opinion that there is evidence of misconduct in office it shall refer the matter to Public Prosecutor for prosecution by him.

On a reference under s 18(2) of the Constitution:

Held

(1)      An investigating authority appointed under s 19(1) of the Organic Law on Duties and Responsibilities of Leadership has power both under s 20(4) of the Organic Law and under s 29(1) of the Constitution to refer relevant matters to the Public Prosecutor for prosecution by him before the relevant tribunal.

(2)      The Investigating Authority into the Placer Pacific Ltd Share Issue, being an investigating authority appointed under s 19(1) of the Organic Law had power to refer for prosecution a matter being an alleged breach of s 6 of the Organic Law relating to conflict of duty and interest.

Reference

This was a reference by the National Court of questions relating to the interpretation or application of a Constitutional law, namely the Organic Law on Duties and Responsibilities of Leadership (Ch No 1), which arose in proceedings before it for a prosecution in breach of s 6 thereof.

Editor’s Note

For further proceedings see Ref by Public Prosecutor; Re Chan at 260 infra.

Counsel

P Menzies and S Golledge, for the plaintiff.

B O Emos and D Hauka, for the respondents.

Cur adv vult

29 April 1988

KAPI DCJ: Placer Pacific Ltd, a foreign company, floated shares for sale in Papua New Guinea in 1986. Under the Organic Law on the Duties and Responsibilities of Leadership (Ch No 1), (hereinafter the Organic Law) leaders are prohibited from purchasing shares from foreign companies unless they obtain prior approval from the Ombudsman Commission.

Many leaders in Papua New Guinea bought shares from this company without the approval of the Commission. Included amongst the leaders who allegedly purchased shares were the Chief Ombudsman and another Commissioner. Because of the conflict of interest, the Ombudsman Commission appointed an Investigating Authority under s 19(1) of the Organic Law to investigate all breaches of the Leadership Code.

At the completion of the investigation, amongst other things, the Investigating Authority referred Sir Julius Chan to the Public Prosecutor for prosecution under s 6 of the Organic Law. The authority charged:

“that on or about the months of July and August 1986, associates of yours, to wit, your wife, Lady Stella Chan, and your companies JST Pty Ltd, Chin Pak & Co Pty Ltd, Misimuk Distributors Pty Ltd, Vanmak Taby Pty Ltd and Island Helicopter Services Pty Ltd, in which you have a complete or substantially controlling sharehold, had an interest in a matter with which you had to deal in your official capacity, namely the allocation of shares to Papua New Guinea by the underwriters of the Placer Pacific Limited share float, the interest being the application for and purchase of shares in Placer Pacific Limited, and that you did in fact deal with the matter by:

(a)      as the Minister responsible being directly in charge of the decision-making and policy implementation generally relating to the allocation of Placer Pacific Limited shares to Papua New Guinea and specifically:

(i)       in obtaining from the underwriters a greater allocation of shares to PNG than they would otherwise have given, and

(ii)      directing the Governor of the Bank of Papua New Guinea to relax the foreign exchange control rules to allow a greater transfer of funds out of PNG for the purpose of purchasing shares in Placer Pacific Limited, and

(b)      determining and implementing policy in respect of the priority list for the allocation of shares amongst competing PNG applicants, and that you did not previously declare your, or your associates’ interest, to NEC or Parliament as required, and thereby you breached s 6 of the Organic Law on the Duties and Responsibilities of Leadership, being guilty of a conflict of duty and interest.”

Sir Julius Chan sought a judicial review of the decision of the Investigating Authority in the National Court for Orders:

(a)      in the nature of certiorari quashing the decision by the Authority to refer to the Public Solicitor.

(b)      in the nature of a mandamus directing the Authority to consider the matter according to law.

It was out of these proceedings that the National Court referred the questions to this Court. We heard arguments on 28 April and gave our answers to the questions on 29 April 1988 with reasons to be published later. This we now do.

POWER TO REFER TO PROSECUTOR FOR PROSECUTION

The integrity of our leaders is a matter of great significance and is protected by s 27 of the Constitution. The main purpose of this provision is:

(a)      to prevent a leader putting himself in a conflict of interest or compromise;

(b)      not to demean the office;

(c)      not to allow his integrity to be called into question; and

(d)      not to endanger and diminish the regard and confidence in the integrity of the government of Papua New Guinea.

In a morally corrupt society we need to protect the leadership of our nation. For this purpose s 28 of the Constitution provides that an Organic Law should amongst other things provide “for investigation by the Ombudsman Commission or some other authority of cases of alleged or suspected, misconduct in office, and confer on the Commission or other authority any powers that are necessary or convenient for that purpose” (s 28(1)(f)).

This provision is of itself not self-executing. One has to go to the Organic Law. Under the Organic Law on the Duties and Responsibilities of Leadership (Ch No 1) the provisions set out the functions of the Ombudsman Commission in relation to leadership responsibilities.

Primarily, it is the function of the Ombudsman Commission to investigate alleged misconduct in office and refer such matters to the Public Prosecutor under s 17 of the Organic Law. The Organic Law also provides for “other authority” to perform these functions when the Ombudsman Commission is unable to perform those functions. Such provisions in the Organic Law, in fact, implement s 28(1)(a) of the Constitution. I reject the submission that “other authority” referred to in s 28 is yet to be implemented. In fact, the Organic Law uses the same terminology as is used in the Constitution: see s 21 — “the Commission or other authority”, s 22, s 23 and s 21(1)(3). Section 21 expressly refers to “other authority” under the Organic Law, that is, reference to the Investigating Authority appointed under s 19 of the Organic Law.

Section 19 sets out the circumstances under which the authority may be appointed. It is worded “where it is unable for any reason to conduct an examination or investigation referred to in s 17”. The reasons for which the Ombudsman Commission may not conduct, examine or investigate, are many. In the present case, the members of the Commission itself would be subject to investigation. Where the Commission has decided to appoint an authority under this provision, it cannot be involved in the examination or investigation of such a matter including the question of referral to the Public Prosecutor under s 17(d) of the Organic Law. It cannot be argued that the authority would do the investigation and refer the matter to the Ombudsman Commission to consider the question of referral to the Public Prosecutor. Such a construction within the facts of this case would violate the principles, of fairness under s 60, and impartiality under s 37 of the Constitution.

The Investigating Authority is provided to avoid the situation which has occurred in this case. Section 19(2) of the Organic Law puts the matter beyond doubt. It gives the powers to “hear or obtain information” and to “make whatsoever enquiries” under s 20 and power to require production of documents under s 21 of the Organic Law. Those powers are given by the words “... all the powers of the Commission necessary to enable it to carry out the examination or conduct the investigation ...” in s 19(2).

But the provision goes further than that. It goes on to say “including in the case of an investigation the powers referred to in s 20 ...”. The power to refer is a necessary part of the investigation. If such power is not given, the Investigating Authority is meaningless. The second part of s 19(2) relates to the power of referral under s 20(4) of the Organic Law. If this power was not intended to be given to the Investigating Authority, the provisions would have said so quite clearly.

In essence, where the Commission is unable to act under s 19(1) of the Organic Law, it can no longer play any further role in the matter and the Investigating Authority has the carriage of the matter up to the point of referral to the Public Prosecutor. This construction is in harmony with s 19(1) of the Organic Law. After the Authority has completed its investigation and in the case where it has made referrals to the Public Prosecutor, it would simply provide a report to the Ombudsman Commission. The Organic Law makes no further provision as to this report. The reason is clear, that is, that the Commission cannot take any further action. The Ombudsman Commission simply receives the report so as to be informed of what is happening in the matter.

The construction given to the provisions of the Organic Law is supported by s 29(1) of the Constitution. This provision makes reference to the Commission or other authority. As I have pointed out earlier, under the Organic Law, the reference to “other authority” is the Investigating Authority established under s 19(1) of the Organic Law. Section 29(1) of the Constitution gives the Commission and the Investigating Authority power to refer.

CORY J: I have had the benefit of reading the draft judgment of the Deputy Chief Justice and I agree with the facts and background which he has set out leading up to this Reference.

The questions referred are:

1.       Does Section 19 subsection (2) of the Organic Law on Duties and Responsibilities of Leadership confer on the Investigating Authority the power of the Ombudsman Commission under section 20 subsection (4) of the Organic Law to refer matters to the Public Prosecutor for prosecution by him before the appropriate tribunal?

Power to set up an Investigating Authority is derived from s 28 of the Constitution by means of an Organic Law and provides as follows:

“28(1) For the purposes of this Division, an Organic Law ...

(f)      shall provide for the investigation by the Ombudsman Commission or some other authority of cases of alleged or suspected misconduct in office, and confer on the Commission or authority any powers that are necessary or convenient for that purpose.”

The Organic Law which authorises the “other authority” to investigate alleged misconduct in office, referred to in s 28(1)(f) of the Constitution above, is s 19 of the Organic Law on the Duties and Responsibilities of Leadership, s 19 of which provides:

“19(1) The Ombudsman Commission may, where it is itself unable for any reason to conduct an examination or investigation referred to in Section 17, appoint one or more constitutional office-holders to carry out the examination or conduct the investigation and to report to it on the results of the examination or investigation.

(2)      An examining or investigating authority (my emphasis) appointed under Subsection (1) has, for the purposes of carrying out any examination or investigation in respect of which it is appointed all the powers of the Commission necessary to enable it to carry out the examination or conduct the investigation including in the case of an investigation the powers referred to in Sections 20, 21 and 22.”

In the present case the Ombudsman Commission was “unable to conduct the investigation” because the Chief Ombudsman and another Commissioner had themselves purchased shares in Placer Pacific Ltd. The powers invested in the “Investigating Authority” are all the powers of the Ombudsman Commission so as to enable it to conduct the investigation including the power under s 20(4) which provides as follows:

“20(4) If, after an investigation, the Commission is of the opinion that there is evidence of misconduct in office by a person to whom this Law applies, it shall refer the matter to the Public Prosecutor for prosecution by him before the appropriate tribunal.”

The plaintiff contends that the Investigating Authority is not invested with the power under s 20(4) above, to refer the matter to the Public Prosecutor for prosecution after an investigation. I reject this contention, if this were the case one would expect s 19(2) instead of reading “all the powers ... referred to in s 20” to provide either “all the powers under s 20(1)(2) and (3)” or “all the powers ... under s 20 except s 20(4)”. Moreover if the Investigating Authority had to refer the results of its investigation back to the Ombudsman Commission and the Ombudsman Commission then had to determine whether the matter should be referred to the Public Prosecutor for prosecution, then the legislation would be creating the very difficulty which it seeks to avoid, namely the suggestion that the Ombudsman Commission may not act impartially in determining whether the misconduct in office should be referred to the Public Prosecutor.

I would therefore answer question 1 — Yes.

Question 2 is as follows:

2.       Does s 29(1) of the Constitution give the Investigating Authority the power to refer a matter to the Public Prosecutor for prosecution before a tribunal appointed under s 28(1)(g) of the Constitution, if it is satisfied that there is a prima facie case that a person has been guilty of misconduct in office?

Section 29(1) of the Constitution provides as follows:

“Prosecution of Misconduct in Office

(1)      Where the Ombudsman Commission or other authority [my emphasis] referred to in Section 29(1)(f) (further provisions) is satisfied that there is a prima facie case that a person has been guilty of misconduct in office, it shall refer the matter to the Public Prosecutor for prosecution before a tribunal established under Section 29(1)(g) (further provisions).”

The “other authority” here referred to is the same “other authority” referred to in the previous section, s 28(1)(f) of the Constitution and hence is referring to the same “Investigating Authority” referred to in s 19(2) of the Organic Law. Section 29(1) of the Constitution therefore supports the interpretation mentioned earlier that the Investigating Authority is invested with the power of referring misconduct in office to the Public Prosecutor for prosecution.

I would answer question 2 — Yes.

Question 3—

In light of the answers to questions 1 and 2, this question does not arise.

Question 4 is as follows:

4.       What is the essence of s 6 of the Organic Law on the Duties and Responsibilities of Leadership?

I decline to answer this question, it is in effect seeking an advisory opinion in relation to the said s 6.

HINCHLIFFE J: I have had the advantage of reading the draft judgment of the Deputy Chief Justice. I agree with his Honour and I have nothing to add.

The answers given by the Court are as follows:

Question 1.    Yes.

Question 2.    Yes.

Question 3.    As the answer to question 1 is in the affirmative, this question does not arise.

Question 4.    We decline to answer this question.

Lawyers for the plaintiff: Kirkes.

Lawyers for the respondents: Billy Oscar Emos.

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