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Hitron Ltd v Independent Consumer and Competition Commission [2011] PGNC 271; N5278 (8 November 2011)

N5278

PAPUA NEW GUINEA
IN THE NATIONAL COURT OF JUSTICE

OS (JR) NO. 365 OF 2011

BETWEEN:

HITRON LIMITED
Plaintiff

AND:

THE INDEPENDENT CONSUMER AND COMPETITION COMMISSION
Defendant

Waigani: Yagi J
2011: 2nd & 8th November

PRACTICE AND PROCEDURE – inter parte hearing – whether order obtained ex parte should be discharged – principles discussed and applied – stay of investigation – nature of investigation administrative – no strong arguable case – overall interest of justice against stay – stay order discharged.

Cases Cited:

Green & Co Pty Ltd (Receiver Appointed) v Green [1976] PNGLR 73
Barker v The Government of Papua New Guinea, Davis and Bux [1976] PNGLR 340.
Leo Hannet & Anor v ANZ Banking Group (PNG) Ltd (1996) SC505
Pastor Johnson Pyawa v CR Andake Nunwa (2010) N4143
Pinggah v Elias (2005) N2850
Sausau v Kumgal and PNG Harbours Board (2006) N3253
National Executive Council and Luke Lucas v. Public Employees Association [1993] PNGLR 264
Rimbink Pato v Anthony Manjin & Others (1999) SC 622
Zachary Gelu & 2 Others v Sir Michael Somare & 2 Others (2008) N3526
Royale Thompson v Sylvester Kalaut & 5 Others (2011) N4265
Hon. Patrick Pruaitch MP v Chronox Manek (2010) N4149

Counsel

F. Griffin, for the Plaintiff
E. Anderson, for the Defendant

RULING

8th November, 2011

1. YAGI J: This is a ruling on the question whether the interim injunctions issued by the Court on 5th July 2011 should be extended or discharged. The injunctive orders were made ex parte and therefore an order was made for an inter parte hearing.

2. The substantive proceeding concerns an application for a review of certain decisions by way of directions issued by the Independent Consumer and Competition Commission (ICCC) to Hitron Limited (Hitron). It is commenced under Order 16 of the National Court Rules.

3. Hitron is a private company involved in the supply of television programmes through wireless technology commonly known as Multi-channel Multi-point Distribution Service or MMDS.

4. ICCC is a statutory body whose primary function and responsibility, amongst others, is to regulate certain goods, services and industries in the country. It also has the power to investigate complaints and enforce compliance with the laws relating to market conduct.

5. On 30th June 2011, Hitron commenced proceedings against ICCC seeking a number of orders in the nature of certiorari and prohibition to prevent ICCC to carry out its statutory function and responsibility.

6. On 5th July 2011 Hitron successfully applied and was granted leave for review by the Court. Upon grant of leave Hitron also successfully obtained a number of interim injunctive orders from the Court. In effect these orders restrained ICCC its servants, agents and officers from enforcing the directions issued to Hitron by ICCC, the subject of this proceeding.

7. When the Court granted the interim orders, it also ordered Hitron to serve all documents on ICCC. An order was also made for both parties to appear before the Court on 14th July 2011 at 9.30 am for an inter parte hearing. The hearing has been adjourned on a number of occasions and eventually it came before me. I heard both parties through their respective legal representatives and reserved.

Facts

8. On 21st February 2010, ICCC received a complaint of improper market conduct against Hitron. The complaint was made by Community Colour Television (CCTV), a private company also involved in the supply of television programmes. The complaint was in writing in the form of a letter. The complaint was generally in relation to alleged undue pressure exerted by Hitron on distributors of overseas television programmes resulting in CCTV sustaining loss to its supply of television programmes and hence business.

9. On the basis of the complaint, ICCC instituted an inquiry or investigation into the complaint under s. 6(e) of the Independent Consumer and Competition Commission Act 2002 (the Act). On 26th March 2010 ICCC wrote and requested Hitron to provide certain information and documents concerning the complaint.

10. On 21st April 2010, ICCC received further information and supporting documents from CCTV in relation to the complaint.

11. A meeting was convened on 27th May 2010 between Hitron and ICCC as part of the investigation process. Although the deliberations were in respect to the complaint generally, some of the specific matters requested by ICCC in its letter of 26th March 2010 was not addressed or discussed in the meeting.

12. ICCC continued in its efforts to follow up on these outstanding requests by email and correspondence. These were made on 31st May 2010 and 4th June 2010. It appears Hitron's position is that it is unable to fully comply with these requests until further and better particulars or specifics are provided by ICCC.

13. By a letter dated 7th June 2010, Hitron through its lawyer, Young & Williams Lawyers, advised ICCC that the information it provided to ICCC are confidential and therefore must be treated as such within the meaning of s. 131 of the Act. This position was reiterated by Hitron's lawyer in another letter to ICCC dated 14th June 2010.

14. On 14th December 2010 ICCC wrote to Hitron's lawyer giving assurance that all information and documents supplied by Hitron would be treated as confidential and where disclosure is necessary and in the public interest Hitron will be given an opportunity to make representation prior to the release of such information and documents. In the same letter ICCC also asserted its powers under s. 128 of the Act and directed that Hitron produce a number of documents and information not later than 4.00 pm on 10th January 2011. The time line was later extended to 4th February 2011 at Hitron's request.

15. On 27th January 2011 Hitron's lawyer wrote to ICCC and amongst other things complained about the failure by ICCC to furnish a copy of the complaint and provide a response to the specific matters it requested.

16. Between February and June 2011, disagreements developed between Hitron and ICCC concerning the provision of the letter of complaint and other information and documents.

17. Hitron therefore commenced this action.

Issues

18. I deduce from the arguments presented that the following issues arise for determination:

1. Whether the order of 5th July 2011 should be extended or discharged.

2. Whether the order of 5th July 2011 was irregularly obtained.

19. The second issue is a procedural issue and is raised by ICCC.

Law

20. The law relating to setting aside an order that has been irregular obtained is clear. Where an order has been irregularly obtained, it must be set aside as a matter of course. see Green & Co Pty Ltd (Receiver Appointed) v Green [1976] PNGLR 73 and Barker v The Government of Papua New Guinea, Davis and Bux [1976] PNGLR 340.

21. The principle was reaffirmed by the Supreme Court in Leo Hannet & Anor v ANZ Banking Group (PNG) Ltd (1996) SC505 where the Court stated that:

"The Courts in Papua New Guinea have quoted authorities from England as well as Australian States on this issue. The most often quoted authority on this issue is Anlaby v Praetorius [1888] UKLawRpKQB 55; (1888) 20 QBD 764 which stands for the proposition that if a judgment is entered irregularly, the defendant is entitled to set it aside ex debito justitiae (as required in the interests of justice). This principle was approved in Green & Company Pty Ltd v Green [1976] PNGLR 73; Smeeton v Davara House Pty Ltd [1979] PNGLR 324; Page P/L v Malipu Balakau [1982] PNGLR 140. This authority is also referred to in Bank of South Pacific v Spencer [1983] PNGLR 239."

22. With regard to the law on injunctions this is also settled. Injunction is an equitable relief and therefore the Court's power to grant such a relief is discretionary. The purpose of an injunction is essentially to prevent occurrence of a certain act or event so that status quo is maintained or preserved until the substantive dispute between the parties is determined by the Court.

23. A leading case authority on the point in this jurisdiction is Robinson -v- National Airlines Commission [1983] PNGLR 476. The Court in Robinson case in discussing the principles adopted and applied the common law principles enunciated in a leading decision of the House of Lords in American Cyanide Company v. Ethicon Limited (1975) 1 All ER 594. The principles in the Robinson case has been cited with approval by the Supreme Court in a number of cases: see Craftworks Nuigini Pty Ltd v. Allan Mott (1997) SC 525 and Chief Collector of Taxes v. Bougainville Copper Ltd (2007) SC853.

24. It has been stated that no hard and fast rules can be laid down when dealing with interlocutory injunctions. In Pastor Johnson Pyawa v CR Andake Nunwa (2010) – N4143 Makail J made the following statement:

"In Robinson -v- National Airlines Commission [1983] PNGLR 476, Andrew, J observed that interlocutory injunctions are discretionary, and there are no real principles that can be laid down as to when they should or should not be granted except that they are granted in circumstances where it is "just or convenient" and what is "just and convenient" is dependent on the facts of each case. His Honour quoted a passage from Lord Denning MR in Hubbard -v- Vosper [1972] 2 WLR 389 at 396 which I find relevant here and respectfully quote:

"In considering whether to grant an interlocutory injunction, the right course for a judge is to look at the whole case. He must have regard not only to the strength of claim but also the strength of the defence and then decide what is best to be done. Sometimes it is best to grant an injunction so as to maintain the status quo until the trial. At other times, it is best not to impose a restraint upon the defendant but leave him free to go ahead. The remedy by interlocutory injunction is so useful that it should be kept flexible and discretionary. It must not be made the subject of strict rules."

25. However, the relevant considerations, in short, are:

(a) Whether there are serious questions to be tried

(b) Balance of convenience

(c) Whether damages would be an adequate remedy

(d) Undertaking as to damages

(e) The overall interests of justice

Are there serious questions to be tried?

26. The case brought by Hitron against ICCC is based on three principal grounds. Firstly, Hitron says that ICCC acted unlawfully in breach of the principles of natural justice and the requirements of procedural fairness under s. 59 of the Constitution in failing or refusing to provide to Hitron a copy of the complaint it received from CCTV. Secondly, Hitron says that the directions issued by ICCC is either harsh and oppressive or not warranted or is disproportionate to the circumstances of the case or is not reasonably justifiable in a democratic society and is therefore unlawful within the meaning of s. 41 of the Constitution. Thirdly, that failure or refusal to provide a copy of the complaint is irrational and unreasonable under the Wednesbury principle.

27. On the face of it, these arguments raise serious questions of law. Two of the grounds relates to alleged breaches of the provisions of ss. 41 (proscribes acts) and 59 (principles of natural justice) of the Constitution. The third ground is based on the common law principle which has been adopted and applied in this jurisdiction.

28. I note that in so far as the questions relates to alleged breaches of the Constitution, there appears to be some divergence in opinion in the National Court as to whether issues of constitutional breaches are proper grounds for judicial review under Order 16 of the National Court Rules. One view was expressed by the Chief Justice Sir Salamo Injia where his Honour held that some of the Constitutional breaches, particularly ss. 37, 41 and 58 are not proper grounds for judicial review: see In Pinggah v Elias (2005) N2850 and Sausau v Kumgal and PNG Harbours Board (2006) N3253. In Sausau case (supra), his Honour stated that grounds of review that allege breaches of the Constitution "are not the sort of grounds upon which the common law discretionary procedure of judicial review would lie". The contrary view, at least it appears presently to be the majority view, is that the allegations of breaches of the Constitution can be a ground for review under Order 16. See Zachery Gelu v Sir Michael Somare MP (2008) N3524 (Cannings J) and Hon. Patrick Pruaitch MP v Chronox Manek (2010) N4149 (Kariko J). The contrary view is based on the argument that the jurisdiction of the National Court is expressly provided under ss. 22, 23 and 57 of the Constitution whereas the opposite view is a procedural argument based on the need for a proper pleading in respect to alleged breaches of the Constitution.

29. As for myself, I find favour with the views expressed by their Honours Cannings J and Kariko J. I agree that the National Court is vested with the expressed powers under the provisions of the Constitution. The plaintiff has a choice in terms of the mode of commencement of proceedings: see National Executive Council and Luke Lucas v. Public Employees Association [1993] PNGLR 264. If the choice is incorrect, then appropriate application may be made to dismiss the proceedings. Moreover, I fail to see any good reason for depriving a party from obtaining a relief on the grounds of constitutional breaches under Order 16.

30. But whether the alleged constitutional breaches are valid grounds must be considered in the proper context of the facts of the case and in particular in the context of the powers and functions given to ICCC under its enabling legislation. As its name suggests, ICCC was established as an independent government body vested with the primarily function to regulate issues relating to consumer affairs and protection on goods and services and monitor and enforce competition and market conduct by suppliers of services. Its objectives are clearly provided under s. 5 of the Act. To carry out its statutory mandate independently and effectively the Act vested in ICCC certain powers and functions. Under s. 7 of the Act, ICCC has very wide powers "to do all things necessary or convenient to be done for or in connection with or otherwise incidental to the performance of its functions and to enable it to achieve its objectives."

31. One of the functions of ICCC is "to investigate complaints concerning market conduct and to enforce compliance with laws relating to market conduct in Papua New Guinea". This is provided for under s. 6(e) of the Act. The power to carry out this function is provided under s. 128 of the Act. Section 128 falls under Division 1 of Part IX which deals with the general powers of ICCC. The general power relates to summoning of witness (s. 127), obtaining general information (s. 128) and entry and search (s. 129). It therefore seems that ICCC has very wide powers to undertake investigations into complaints under its responsibility. In this case, ICCC was exercising its power under s. 128. It was seeking information and documents to determine the merit of the complaint. Under s. 128 ICCC is expressly empowered to obtaining information and documents from any person, including Hitron, whom it reasonably believes may assist in its investigation. At this stage ICCC has not made any decision whether a prima facie case exist against Hitron and neither has ICCC made any allegation of improper conduct nor has Hitron being charged with any offences under the Act.

32. It seems from the scheme of arrangement under the provisions of the Act that there is no legal obligation or requirement to furnish a copy of the complaint to Hitron. The investigation is not of a criminal nature. It is merely a fact finding exercise to establish whether there is any substance in the complaint. If a preliminary inquiry results in the complaint being unsubstantiated then the complaint would be dismissed. However, where information and evidence indicate there is substance in the complaint then prosecution under ss. 132 and 133 of the Act may be brought against Hitron. Where ICCC decides to charge Hitron for any offence under the Act, ICCC will be legally obliged to provide sufficient particulars of the allegations including a copy of the complaint, if requested. I accept the submission by ICCC that the investigation at this stage is only administrative in nature. There is no legal obligation to provide a copy of the complaint. In any case, there is evidence in my view that ICCC has sufficiently and adequately provided details or particulars of the complaint to Hitron.

33. Case authorities say that in an application to stay an investigation conducted by a proper authority under the law, the applicant must show a strong arguable case: see Rimbink Pato v Anthony Manjin & Others (1999) SC 622, Zachary Gelu & 2 Others v Sir Michael Somare & 2 Others (2008) N3526 and Royale Thompson v Sylvester Kalaut & 5 Others (2011) N4265.

34. In this case, Hitron says that ICCC acted contrary to the principles of natural justice and particularly in terms of procedural fairness when it refused to provide a copy of the letter of complaint. As I said the investigation is only preliminary and administrative in nature.

35. There is no charge against Hitron at this stage, which refusal would result in denial of natural justice and have the effect prejudicing its defence or position and consequently lead to Hitron suffering a penalty or sanction of criminal nature. That stage has yet to be implemented under s. 132.

36. Hitron's counsel referred to a statement found in an extract on 'Disclosure of Documentary Evidence' found at page 167, paragraph 12.31 of the textbook entitled Justice in Tribunals by J R S Forbes and submitted that Hitron is entitled by law to be provided a copy of the complaint. The statement reads "An opportunity to see full copies is then part of the right to be heard." I reject this contention. Firstly, that right which the learned author referred to applies to proceedings before a tribunal. In this case, there is no tribunal hearing. Secondly, when the whole paragraph is considered in its entirety, it is apparent that the principle is applicable where a charge has been preferred against a party in proceedings before a tribunal. In this case, there is no charge made against Hitron. I am not persuaded that there is a strong arguable case.

37. Hitron also argues that the refusal to provide a copy of the complaint and particulars of complaint is in breach of s. 41 of the Constitution. With respect I fail to see any real substance in this argument. Again I am not convinced that there is a strong arguable case.

38. As regards the contention that the refusal is irrational and unreasonable under the Wednesbury sense, I am also not convinced that a strong arguable case exits.

39. I have also considered the other grounds of review in the statement in support and am not persuaded that these too present a strong arguable case.

40. In considering the strength of the case presented by Hitrion, I remind myself that it not the function of this Court to consider the merits or demerits of the issues at this stage of the proceedings. All that is required is to determine whether a strong arguable case has been raised by Hitron in the proceeding. Whether these grounds will survive the ultimate test is a matter for trial. However, for the present purposes, I am not convinced that the grounds are strong arguable grounds.

Has Hitron given an undertaking as to damages?

41. Hitron has filed a usual undertaking as to damages. There is no dispute on this factor.

Where does the balance of convenience lie?

42. The question of balance of convenience is a factor that is usually measured by reference to the damage or prejudice that a party is likely to suffer most, in the long term, if injunction is not granted.

43. In this case, ICCC is pursuing an investigation into a complaint of improper conduct against Hitron. The investigation has not been concluded. It is still in the preliminary stage. ICCC require Hitron to provide certain documents and information to enable it to determine the complaint. Hitron wants to be provided with a copy of the complaint before the investigation continues. It says that it has a right to be given a copy of the complaint. It says it cannot properly and adequately respond to the allegations without knowing the full nature and extent of the allegation. If the investigation is to continue its rights will be seriously prejudiced.

44. I am unable to see any real prejudice that Hitron will suffer. If the stay is granted ICCC will not be able to exercise its statutory function and this may lead to continued breaches by Hitron based on the evidence before the Court. Based on the evidence before the Court, there appears to be some merit in the complaint against Hitron. The losses suffered by those affected in the industry will be substantial. This would have a direct bearing on the general interest of the consumers and suppliers in the industry. On the other hand I cannot see Hitron suffering any real damage or prejudice. If the stay remains it would have a wide ranging implication on the ICCC's investigative function and would send a wrong or mixed signal to the industry and the public at large.

45. I therefore conclude that the balance of convenience does not favour the grant of stay.

Are damages an adequate remedy?

46. The principal reliefs sought by Hitron in the proceeding are in the nature of certiorari and prohibitions. Hitron seeks that the directions issued by ICCC be quashed and furthermore the investigations against it be temporarily halted pending the outcome of the substantive proceeding. There is no specific claim for damages made by Hitron in the proceeding. It is therefore clear in my view, that damages would not be an adequate remedy in this case.

Will the overall interests of justice be served if stay is granted?

47. Based on what I have already said, in my view, the overall interest of justice lie in discharging the stay order made on 5th July 2011.

Whether the order was irregularly obtained

48. Given that I have concluded that the stay order should be discharged, it is unnecessary to consider this issue.

Order

49. The orders are:

1. The stay order made on 5th July 2011 is discharged forthwith.

2. Hitron shall pay ICCC's cost in the matter on party-party basis to be taxed, if not agreed.

3. The time for the entry of the order is abridged to the time of settlement by the Registrar which shall take place forthwith.
________________________________________________________________
Young & Williams Lawyers: Lawyer for the Plaintiff
Gadens Lawyers: Lawyer for the Defendant