Home | Databases | WorldLII | Search | Feedback National Court of Papua New Guinea

Kapal v Independent State of Papua New Guinea [1987] PGNC 8; N616 (11 September 1987)

N616

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

PHILLIP KAPAL on behalf of himself and for and on behalf of the other suspended members of the Western Highlands Provincial Government and for ad on behalf of the Western Highlands Provincial Government in suspension.

v

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

Waigani: Hinchliffe J.
Rabaul:

15^th June, 17^th & 18^th August 1987
11th September, 1987

Provincial Government – Provisional Suspension by National Executive Council – Declaration sought.

The National Executive Council provisionally suspended the Western Highlands Provincial Government because there had been gross mismanagement of the province and that the matter could only be put right by suspension, pursuant to Section 187 (E) (1) (b) of the Constitution and Section 91A (d) of the organic Law on Provincial Government. The Premier of the Western Highlands Provincial government, Mr. P. Kapal commenced proceedings on the grounds that: suspension, pursuant to Constitution and Section Provincial Government. Provincial government, Mr. P. Kapal commenced proceedings on the grounds that:

1 The suspension was not the only way to put the matter correct.

2. The Minister responsible, for the administration of the Organic Law on Provincial Government recommended against the suspension.

3. The requirements prescribed under Section 91A of the Organic Law on Provincial Government were not complied with.

A Declaration was sought that the decision of the National Executive Council was void and of no effect.

Held: (1) Declaration granted.

(2) The National Executive Council was entitled, on the information it had before it, to be of the opinion that there had been gross mismanagement of the financial affairs of the province.

(3) The matter could have been put right without suspension.

Cases Cited:

The following case is cited in the judgement:

Supreme Court Review No. 3 of 1986 (Unreported).

ORIGINATING SUMMONS

The Plaintiff and others sought a Declaration that a decision of the National Executive Council suspending the Western Highlands Provincial Government, was void and of no effect.

Mr. P. Kopunye for the plaintiff at Waigani and
Mr. S Tidor for the plaintiff at Rabaul.
Ms. P. Young and Mr. A Tedabe for the defendant at
Waigani Mr. A Robinson for the defendant at Rabaul.

Cur. adv. vult.

11th September, 1987.

HINCHLIFFE, J:- The plaintiff's action is for and on behalf of himself and the other suspended members of the Western Highlands Provincial Government AND for and on behalf of the Western Highlands Provincial Government in suspension.

A Declaration is sought that the suspension of the Western Highlands Provincial Government by the National Executive Council on or about the 19th March, 1987, is void and of no effect.

The grounds of the application as follows:

"1. The suspension was not the only way to put the matter correct.

2. The Minister responsible for the administration of the Organic Law on Provincial Government recommended against the suspension.

3. The requirements prescribed under Section 91A of the Organic Law on Provincial Government were not complied with."

Section 187 (E)(1) and (2) of the Constitution provides:

"1. Where -

(a) there is widespread corruption in the administration of the Province; or

(b) there has been gross mismanagement of the financial affairs of the province; or

(c) there has been a break down in the administration of the province; or

(d) there has been deliberate and persistent frustration of, or failure to comply with, lawful directions of the National Government; or

(e) the provincial government has deliberately and persistently disobeyed applicable laws, including the National Constitution, an Organic Law, the Provincial Constitution or any national legislation applicable to the province,

the National Executive Council may provisionally suspend the Provincial Government concerned, subject to confirmation by a simple majority vote of the Parliament.

(2) Our Organic Law may make provision for and in respect of the procedures to be followed in the exercise of the powers under Subsection (1)."

Section 89, 90, 91A of the Organic Law on Provincial Government provides:

"89. Grounds of Suspension

A provincial government may be suspended only on a ground set out in Section 187E (l) of the National Constitution.

90. Powers of minister where he is of the opinion that a ground for suspension may exist

Where the Minister is of the opinion that a ground or grounds for suspension of a provincial government exist or may exist, he may -

(a) require the head of the Provincial Executive Council to appear before him and give an explanation of any matters which have comer to the attention of the Minister.

(b) report to the National Executive Council on any matters which appear to constitute a ground or grounds for suspension of the provincial government.

91. Duties of National Executive Council on Submission of Report, etc.

The National Executive Council shall consider any report and comments submitted under Section 90(b) and may -

(a) cause the Minister to make further enquiries; and

(b) require the head of then Provincial Executive Council concerned to attend before it and make explanations.

91A. National Executive Council may suspend a Provincial Government

Where, after considering -

(a) the report and comments submitted under Section 90(b); and

(b) any further report or explanation which it may have required under section 91, the National Executive Council is of the opinion that -

(c) a ground for suspension exists; and

(d) the matter can only be put right by suspension,

the National Executive Council may be notice in the National Gazette provisionally suspend a provincial government."

On the 19th March 1987 the then Minister for Provincial Affairs, Glaime Warena reported to the National Executive Council pursuant to Section 90(b) of the Organic Law as follows:-

"1. On the 23rd February 1967, the Auditor-General delivered a report of the audit examination of the accounts of the Western Highlands Provincial Government and the Department of Western Highlands Province.

2. The report of the Auditor-General is annexed to this report.

3. Having considered the report of the Auditor-General, I am of the opinion that a ground for suspension of the Western Highlands Provincial Government exists in that pursuant to Section 187E(1)(b) of the Constitution there has been gross mismanagement of the Financial affairs of the Western Highlands Province."

The said Audit - General's report is dated the 23rd February 1987 and over 5 pages it refers to major unsatisfactory matters. Much of the report deals with matters that in fact were unsatisfactory during the years prior to Mr. Kapal's government but some matters did refer to Mr. Kapal's government. In particular the purchase of motor vehicles by Ministers and also some housing matters.

But it seems to me that the Auditor-General's report was incomplete in that on the 19th February, 1987, the Auditor-General wrote a lengthy eight page letter to the Secretary of the Western Highlands Provincial Government asking for comments, explanations and remedial action taken or proposed to be taken. That letter was referred to in the said Auditor-General's report and presented to the National Executive Council. At page 4 it says: "These matters were referred in a Management letter to the Provincial Government for explanations and remedial action – vide copy attached for your perusal."

It is reasonable to infer that the National Executive Council never saw the said letter of the 19th February because in his affidavit of the 11th June, 1987, the Minister for Provincial Affairs says: "The annexure marked with the letter "A" is a copy of the report to the National Executive Council pursuant to Section 910 (B) of the Organic Law that I presented to the National Executive Council in the matter of the provisional suspension of the Western Highlands Provincial Government."

It is clear that the annexure "A" referred to is the said Auditor-General's report of the 23rd February, 1987.

At page 5 of this said Auditor-General's report of the 23rd February, he said in the final paragraph:

"These matters bear evidence that the monies and properties of the Provincial Government are not properly controlled and managed over a period of years and that the existing accounting practices are not conclusive to proper financial management. In order to prevent any further losses that may arise, this office recommends that proper financial controls and management be introduced, the accounting system be streamlined remedying the existing deficiencies and the investment and management of funds in the business arms are rationalised on the basis of economic viability."

It seems to me that he Auditor-General was making a recommendation that indeed did not make it necessary to suspend the provincial government. And that was a recommendation that was open to variation because the Auditor-General had not at that time received answers to his queries in the said letter of the 19th February, 1987. On receipt of those answers I would have thought that the Auditor-General's recommendations would not need to be so extensive.

It surprises me somewhat that the said Minister in his report pursuant to Section 90(b) of the Organic Law was of the opinion that a ground for suspension "existed" rather than may have existed" in light of the fact that the said reply from the Secretary of the Western Highlands Provincial Government had not yet been received. He seems to have ignored the fact that a reply was coming in response to the Auditor-General's queries.

Needless to say the National Executive Council has before it on the 19th March, 1987, the Provincial Minister's Report of the 23rd February which according to the said Minister in his said affidavit of the 11th June 1987 was in effect the said Auditor-General's Report of the 23rd February.

In his affidavit of the 9th June 1987, Peter Eka, the Secretary of the National Executive Council annexed a copy of the National Executive Council Decision No. 46/87 made on the 19th March 1987. In part it says : "On 19th March, 1987 the Council:-

1. approved the provisional suspension of the Western Highlands Provincial Government, after considering a report from the Minister for Provincial Affairs, and having formed an opinion that a ground for suspension exists, namely that, there has been gross mismanagement of the financial affairs of the province, can only be put right by suspension.

2. The suspension by notice in the National Gazette will be effective as from 4.00 p.m. on the 20th March, 1987."

It seems to me that after considering the said Auditor-General's report of 23rd February the National Executive Council was quiet entitled to be of the opinion that a ground for suspension existed. That is that there had been gross mismanagement of the financial affairs of the Western Highlands Province.

As referred to previously I am of the view that it was unfortunate that the National Executive Council did not at least delay the decision until the Western Highlands Provincial Government Secretary's letter was received because it indicated many wrongs that were being put right and it also cleared up some matters that appeared wrong to the Auditor-General but in fact that was not the case. The letter also set out rectification plans for the future. It is clear that there was an enormous amount of work to be done because more than anything else, it appears that the financial mismanagement that existed in the several years prior to the Kapal government was quiet staggering. If the National Executive Council had had the opportunity to peruse the provincial government Secretary's reply then I am of the mind that it may not have come to the conclusion that it did.

As I have stated the National Executive Council, on the facts before it, was quite entitled to be of the opinion that a ground for suspension existed. The next question is, "could the matter only be put right by suspension?" There is not doubt that a large amount of thought and consideration should be undertaken before a provincial government is suspended:-

In the Supreme Court Review No. 3 of 1986, Barnett, J. said at page 44:- "The National Government's "reserve" power to suspend are set out in Section 187E and they can only be exercised in carefully defined circumstances, including various types of what could be called "Bad Government" set out in Section 187E(1) .......

Amet, J. in the same case, said referring to the Constitutional Planning Committee: "that provincial governments should be suspended only in the most serious of circumstances, and even then as a last resort." And at page 29 Amet, J. said: " The spirit of these provisions is that once it was found necessary to suspend a provincial government, which power is to be exercised as a very last resort measures ............."

The Constitutional Planning Committee report at Chapter 10 page 23 paragraph 198 to 204 refers to the suspension of the Provincial Government. The said paragraphs are reproduced at pages 404 and 405 of "The Annoted Constitution of Papua New Guinea". Paragraphs 199, 203 and 204 provide:

"199. The committee believes that provincial government should be suspended only in the most serious of circumstances and even then as a last resort. The suspension of a provincial government would represent at least a temporary breakdown in the system of government recommended in this Chapter. Care should be taken to see that it also provides an opportunity for a fresh start to be made in any province in which the provincial Government has been suspended.

203. The Committee believes that provincial governments should be suspended only in the most serious of circumstances. But, the national government should exercise its power before the orderly development and constitutional government of the country as a whole are imperiled.

204. The national government should do all that it can to prevent circumstances requiring the suspension of a government from arising. Every effort should be made to restore a province in which the government has been suspended to normal as soon as possible."

I am satisfied that the National Executive Council was wrong in law when it said that "the matter can only be put right by suspension". In view of what the Auditor-General said in the final paragraph of his said report of the 23rd February, 1987, and also the matters that should be considered as seen in S.C.R. No. 3 of 1986 and the thoughts of the Constitutional Planning Committee I am quite satisfied that the National Executive Council was wrong to the extent that a Declaration should be made by this Court in the terms requested by the Plaintiff.

In the light of what I have just said it is of some interest to note Annexure "E" to the affidavit of Peter C. Kopunye, Lawyer, dated 29th April, 1987. It is described as "the information paper presented to the National Executive Council by the Minister responsible Glaime Warena, C.M.G., M.P., which was not signed by him." I was told where the information came from, that it was an information paper presented to the National Executive Council. Needless to say it is an Annexure to an undisputed affidavit. It is exhibit 4. In part it says:

"4. Premier Kapal is not responsible for most of the financial mismanagement in the 1982 and 1983 Auditor-General's reports. Parliament only referred these two audit reports to its public accounts committee.

Both audit reports complained about things public servants were not doing or had given wrong advice. Since 1982 and 1983 there has been a general election. A change of provincial government leadership and change of Secretary. Also, the ex Premier N. Mara went to jail and was then released on appeal – he is in opposition group and supports the opposition who made most of the errors criticised by the Auditor-General.

5. Premier Kapal had had most problems with his motor vehicle deal for his Ministers. He has not done this in secret but has provided full details. He asked approval of the Ombudsman Commission and the Parliamentary Salaries Tribunal – verbally to him they were favourable but nothing came out in writing. My Department reported on the deal to the Auditor – General and Ombudsman – but the report wasn't even acknowledgment by that statutory office.

8. To suspend now will be to reward those opposition people who made bad mistakes in 1982/1983 and punish people who have tried to do the right things."

I am of the view that it is only proper that I should mention and comment on the allegations of "bad faith" on the part of the Prime Minister, Mr. Wingti. There was a considerable amount of evidence on this point during the course of the trial.

There was argument that because the point of "bad faith" was not one of the grounds of the application then it should not be considered. I am inclined to agree with that but because of its importance I propose to mention it anyway. What I now have to say it will not alter my decision to make a Declaration.

Basically the allegation made by the Plaintiff was that the Western Highlands Provincial Government was suspended because the third vote of no confidence in Mr. Kapal was unsuccessful. It was alleged therefore that the said suspension was on political grounds more than mismanagement of financial affairs.

A number of Ministers in the suspended government gave evidence that shortly prior to the third vote of no confidence they were asked to go to the home of Mr. Koroka, the former Premier and the then leader of the Opposition of the provincial government. The request to attend was made by the Prime Minister who was also present. It was then alleged that the Prime Minister said to them that it they do not vote with Mr. Koroka and change the government then he would suspend the Western Highlands Provincial Government.

As it so happened the vote of no confidence was unsuccessful and the government was suspended about ten years later.

The Prime Minister, in his affidavit of the 14th May 1987 admits attending a meeting at Mr. Koroka's residence but he denies the allegation that he would suspend the government if the said Ministers did not vote with the Opposition to change the government.

I do not believe it is necessary to make findings as to whether the Prime Minister in fact did or did not make the statement regarding suspension because it is quite clearly a National Executive Council decision, to suspend. The Prime Minister is in fact Chairman of the said Council but he is only one of its members . Even if personally, the Prime Minister wished to see the end of the Western Highlands Provincial Government it is not he alone that make that decision. It is clear in the annexures to the affidavit of Peter Eka of the 9^th June, 1987, that the document signed by the Prime Minister as Chairman is a decision of the whole of the National Executive Council. There is certainly no evidence before me to convince me that the Prime Minister alone influenced the National Executive Council to the extent that it just went along with his suggestion to suspend the provincial government. It was not a decision of a single person. Further there is no evidence before me to suggest that the National Executive Council acted in "bad faith". I am therefore not satisfied that the allegation of "bad faith" has been proved.

As previously stated I am satisfied that the Declaration should be made and I therefore declare that the suspension of the Western Highlands Provincial Government by the National Executive Council on or about the 19th March 1987 is void and of no effect.

I order that the defendant pay the plaintiffs taxed costs.

Lawyer of Plaintiff: Mr. P. Kopunye
Lawyer for Defendant: Tomarum Konilio Secretary for Justice