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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
OS. (JR) NO. 751 OF 2011
BETWEEN:
NATIONAL CAPITAL LIMITED
Plaintiff
AND:
LOI M BAKANI, GOVERNOR, BANK OF PAPUA NEW GUINEA
First Defendant
BANK OF PAPUA NEW GUINEA
Second Defendant
AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Defendant
Waigani: Yagi J
2011: 10th & 18th November
ADMINISTRATIVE LAW – Judicial Review – application for leave – National Court Rules, Order 16 Rule 3(1) – principles considered and applied – sufficient interest – exhaustion of statutory or administrative remedies – delay – arguable case – revocation of licence – Superannuation (Special Provisions) Act 2000, s. 20(1), investment manager licence – breach of conditions - whether arguable case exits – grounds other than recognized grounds not proper grounds – ultra vires and natural justice – grounds of – grounds must be clear - no arguable case - leave refused.
Cases Cited:
Ila Geno v State [1993] PNGLR 22
Paul Asakusa v Kumbakor, Minister for Housing (2008) N3303
Kekedo v Burns Philp (PNG) Ltd & Others [1988-89] PNGLR 122
Leto Darius v The Commissioner of Police & The State (2001) N2046
Application of Demas Gigimat [1992] PNGLR 322
Counsel:
Mr. R. J. Webb SC, with Mr. G. Geroro, for the Plaintiff
Mr. I. R. Molloy, with Mr. A. Mana, for the Third Defendant
RULING
18th November, 2011
1. YAGI J: This is an application by National Capital Limited (NCL) for leave to apply for judicial review. The application is opposed by the State.
2. Bank of Papua New Guinea (BPNG) is the central bank established by the State. One of its functions is to regulate banking, credit and other financial services as empowered or authorized under a law.
3. NCL is a foreign company carrying on business in Papua New Guinea in the area of funds management and corporate advisory. It is incorporated in Papua New Guinea and has appropriate certifications and approvals to operate in the country. NCL was also licensed by the BPNG to operate as an investment manager of superannuation funds under the provisions of the Superannuation (General Provisions) Act 2000 (the Act). The license was issued on 28th January 2009 and is subject to certain conditions.
Facts
4. The relevant facts for the purposes of this application appear not in dispute. They are clearly set out in paragraphs 3.1 to 3.20 of the Statement in Support filed by NCL.
5. In brief, NCL was engaged by National Superannuation Fund Limited (Nasfund) as its investment manager in relation to special Treasury Bills issued by the State.
6. In March 2010 the State issued the special Treasury Bills amounting to K125 million for specific infrastructure development projects in the country. The Treasury Bills are described as Papua New Guinea Sovereign Community Infrastructure Treasury Bills.
7. As the investment manager, NCL provided certain advice and recommendation to Nasfund to invest in the Sovereign Community Infrastructure Treasury Bills.
8. On 21 June 2011, the BPNG gave to NCL a written preliminary notice of its intention to revoke the investment licence held by NCL.
9. The notice is quite detail and contained four specific allegations with the particulars enumerated. The allegations relate to:
(a) Failure to demonstrate integrity and professional skill
(b) Failure to conduct business in a prudent manner
(c) Providing false, misleading or materially inaccurate information
(d) Putting financial interest of Nasfund members at risk
10. NCL accordingly responded to the allegations. The response was conveyed in a letter dated 18 July 2011. In its response, NCL denied the allegations. The response was in detail with supporting documents.
11. On 24 August 2011, BPNG notified NCL that it had revoked NCL's licence. The main reasons for revoking the licence were that:
(a) NCL had demonstrated lack of integrity and professional skills
(b) NCL failed to conduct business in a prudent manner
(c) NCL had put at risk the financial interests of Nasfund members
12. NCL is aggrieved by the decision of BPNG to revoke its licence and now seeks leave to review the decision.
Grounds for review
13. The grounds for review are set out in paragraphs 4.1 to 4.8 of the statement in support. They are many but can be summarized into seven (7) broad categories:
(a) failure to take into account relevant consideration (paragraphs 4.1(a), (b), (c), (d), (e), (f), 4.2 (c), 4.3 (b), (d), (e), 4.5 (b), (c) and (d)).
(b) error of law (paragraphs 4.1(g), (h), (i), 4.2 (b), (d), (e), (h), 4.5 (g) and 4.5 (e)).
(c) error of fact (paragraph 4.1 (a), 4.2 (a), 4.3 (a), 4.4 (a) and 4.6)
(d) breach of natural justice (paragraphs 4.2 (i), 4.3 (f), 4.4 (b), 4.5 (h)).
(e) taking into account irrelevant consideration (paragraphs 4.3 (c) and 4.5 (f)).
(f) taking into account extraneous or improper matters (paragraph 4.7 (a), (b), (c), (d) and (e)).
(g) ultra vires (paragraph 4.8)
Issue
14. The issue is whether leave should be granted to NCL to apply for review.
Law
15. The legal principles pertaining to exercise of the Court's power to grant leave under Order 16 of the National Court Rules is well established.
The principles have been stated and restated in many judgments of the Supreme and National Courts. see Ila Geno v State [1993] PNGLR 22 and Paul Asakusa v Kumbakor, Minister for Housing (2008) N3303. Essentially the applicant for leave has to satisfy five requirements:
5. There is no delay in bringing the proceedings.
16. The Court's power is discretionary. The Court's jurisdiction in review matters is restricted. In Kekedo v Burns Philp (PNG) Ltd & Others [1988-89] PNGLR 122, Kapi DCJ (as he then was) in discussing the relevant principles said:
"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. It is not the function of the Court at the leave stage to consider the issue of arguable case in detail. All that the Court is required to do is take a quick perusal and decide whether there exits an arguable case. I accept the submission by Mr. Webb that this principle was approved by the Supreme Court in Ila Geno (supra).
Should leave be granted to NCL?
18. Mr. Molloy for the State does not raise any issue with respect to 4 of the requirements, that is, whether the decision was made by a public body or authority; whether NCL has standing; whether alternative statutory or administrative remedies have been exhausted and whether there was any delay. The only argument raised is whether NCL has an arguable case.
19. In respect to these 4 uncontested requirements I am satisfied that NCL has satisfied these requirements based on the materials provided.
20. As regards the issue of arguable case, it is submitted on behalf of NCL that the decision of the BPNG was wrong because the Bank:
(a) Acted ultra vires its power under s. 20 of the Act.
(b) Breached the requirements of natural justice
(c) Took into account irrelevant considerations
(d) Failed to take into account relevant considerations
(e) Made the decision for extraneous or improper purpose
21. Mr. Molloy submits that the combined effect of ss. 9, 11, 12 and 16 of the Act under which the licence was issued demonstrate a fairly strict system of control and vetting in respect to licensing. NCL was accorded natural justice in terms of the issuance of a preliminary notice and it exercised a right to be heard in terms of providing a response to the preliminary notice. Counsel further submitted that the grounds relied upon by NCL are not proper issues for judicial review for two reasons, firstly, the grounds have not been verified, and secondly, they do not show where and how the decision was wrong. Moreover, the BPNG took into account all the matters which NCL had to say in its response and therefore it could not be argued that there was a failure to take into account. Counsel submits further that in cases of judicial review the Court is not concerned with the decision itself but the process of making the decision. Reliance was placed on a decision of his Honour Kandakasi J in Leto Darius v The Commissioner of Police & The State (2001) N2046 where his Honour adopted the following statement by Woods J in Application of Demas Gigimat [1992] PNGLR 322:
"The established principles in seeking leave for judicial review emphasise that an applicant must show that he has an arguable case. The Court in considering leave to review is not necessarily concerned with the merits of the decision in respect of which the review is sought but rather the decision making process itself. It is important to remember that the purpose of judicial review is to ensure that the individual is given fair treatment by the authority to which it has been subjected. But it is not the purpose of the review to substitute the opinion of the judiciary or the individual judge for that of the authority constituted by law to decide the matter in question. A review court is not a court of appeal."
22. It is therefore submitted on behalf of the State that NCL has no arguable case.
23. Mr. Webb SC, for NCL submits that the purpose of the Act under s. 7 is to provide a mechanism for the control of superannuation licenses. Therefore the Bank's power to revoke the licence must be exercised for that purpose. In this case, it is submitted, the Bank's decision to revoke NCL's licence was not made for that purpose and therefore the decision is liable to be quashed. It is further submitted that grounds for review relied upon in the statement in support are proper grounds for review.
Considerations & decision
24. There are essentially two arguments put forward by the State. As regards the first, the State's submission is that the statement in support has not been verified. This submission is rejected. NCL has filed an affidavit verifying the statement in support pursuant to Order 16 Rule 3(2)(b) of the National Court Rules. This affidavit was deposed to by Benjamin Terence O'Dwyer, the Managing Director of NCL on 22nd September and filed on 23rd September 2011. That affidavit is document number 4 in the court file.
25. The second argument is in two parts. First, it is argued that there are no proper grounds for review. I have earlier referred to the grounds of review. In my considered opinion, out of the grounds raised, only three are proper grounds for review. The others are not proper grounds. I say this because in my view a proper ground for review must clearly allege an error of law, a breach of natural justice principle, unreasonableness in the decision based on the Wednesbury principle, want or excess of jurisdiction or abuse of power. A statement in support must clearly plead these grounds. In my view it is not sufficient to merely state the grounds in terms other than the clearly recognized grounds because the Court is not required to have a closer and in-depth analysis of the grounds in order to determine whether there is an arguable case. The Court must be able to form an immediate view upon a cursory look. The onus is on the applicant for leave to demonstrate that an arguable ground exist upon a quick perusal. In my view a ground based on error of fact, irrelevant consideration or extraneous or improper purpose are not proper grounds for review. These grounds appear to be grounds of appeal rather than for review. As Kandakasi J stated in Leto Darius (supra), "a reviewing court is not a court of appeal".
26. Secondly, the State argues that the grounds for review do not show where and how it is alleged the BPNG was wrong. It is submitted that the BPNG had taken into account the response made by NCL and it cannot be said that the BPNG had failed to take into account these matters. The three grounds which I consider to be proper grounds relate to issues of error of law, ultra vires and natural justice.
27. As to ultra vires as a ground, the relevant paragraph is 4.8 which states:
"All of the foregoing reasons a decision was ultra vires and consequently invalid, null and void and of no effect."
28. This ground, in my considered opinion, is too general. I agree with the State in its submission that it does not show how and why the BPNG is said to have acted ultra vires. Although reference is made to all of the preceding paragraphs, it is nevertheless too general because "all the foregoing" relate to a mixture or combination of all other grounds and one cannot be clear as to what specific facts or matters it is referring to, thus creating confusion and uncertainty. I am not satisfied that there is a clear arguable ground.
29. As to the alleged breach of natural justice, these grounds are found in paragraphs 4.2 (i), 4.3 (f), 4.4 (b) and 4.5 (h). The question is does these grounds present an arguable case. I have perused and considered all these grounds. They relate to failure to provide particulars, failure to make submissions and failure to present evidence.
30. In my opinion, all these grounds do not have merit. The evidence showed that NCL had been provided with all relevant and material particulars in the preliminary notice. If NCL took the view that these were inadequate or lacking, it should have requested for such particulars. NCL did not do that, the inference is that such particulars were adequate. The same can be said to making submissions and providing evidence. Just because the decision is unfavourable, NCL now complains. In my view this could not tantamount to a breach of natural justice. As I alluded, judicial review is not concerned about the decision itself but the process. In this case, it is my respectful view that there is nothing wrong with the process.
31. As regards questions of error of law, NCL says the decision made was not serving the purpose of s. 7 under the Act. Section 7 falls under Part II which deals with the powers and functions of the Bank and states:
"7. Functions and powers.
(1) The principal function of the Central Bank under this Act is to promote the general stability, regulation and supervision of the superannuation industry for the protection of the rights and interests of members.
(2) The functions of the Central Bank under this Act include—
(a) licensing of trustees, investment managers and fund administrators; and
(b) authorising ASFs to accept employer and employee contributions made under this Act; and
(c) supervising compliance with the provisions of this Act and any prudential standards; and
(d) collecting and analysing information in respect of prudential matters relating to superannuation funds and licence holders; and
(e) promoting, encouraging and enforcing proper standards of conduct and sound and prudent business practices in the superannuation industry including the issue of prudential standards; and
(f) evaluating the effectiveness of carrying out those practices; and
(g) suppressing or aiding in the suppression of illegal or improper practices within the superannuation industry."
32. NCL says that the power given to BPNG is for the purpose of ensuring that a investment manager, and that includes NCL, is appropriately skilled and possess appropriate prudential standard. It is therefore argued that the power of the BPNG to revoke the licence must necessarily correspond and used for that purpose. In this case, NCL argues that the decision to revoke its licence was not made for the purpose intended by law, and hence an error of law was committed.
33. In my view, this argument does not appear to be strong. The purpose of the Act is clearly provided under s. 2. It states:
"2. Purpose of this Act.
The purpose of this Act is to—
(a) make provision for and promote compulsory savings for retirement through mandatory or voluntary contributions to superannuation funds by employers and employees; and
(b) make provision for the licensing and regulation of the superannuation industry in Papua New Guinea in a manner consistent with the continued development of a viable and competitive industry; and
(c) make provision of the prudent management of superannuation funds and licence holders; and
(d) provide for the protection of the interests of members of superannuation funds; and
(e) for related purposes."
34. In my view, s. 7 of the Act gives BPNG the power to act in accordance with the functions set by the Act. The primary function of the legislation, amongst others, is to provide a system of:
(a) Licensing and regulation of the superannuation industry
(b) Prudential management of superannuation funds and licence holders
(c) Protection to the interest of the members of the superannuation fund
35. The power to revoke the licence is provided under s. 20(1) of the Act. Under that provision the Bank has the power to revoke a licence held by an investment manager where it appears to the Bank that the licence holder has failed, amongst others, to:
(a) Meet the fit and proper person criteria under schedule 2
(b) Comply with any obligations under the law
(c) comply with the conditions of the licence
(e) Provide to the Bank true, correct and materially accurate information
(f) Conduct its affairs in a manner that is in the interest of the members of the superannuation fund
36. In this case, the BPNG exercised its power to revoke the licence on the basis that:
(a) NCL had demonstrated lack of integrity and professional skills
(b) NCL failed to conduct business in a prudent manner
(c) NCL had put at risk the financial interests of Nasfund members
37. In my view, these reasons or grounds for revocation of licence are consistent with the primary functions provided under the Act.
38. For all these reasons, I refuse to grant leave. I award costs to the State.
____________________________________________________________
Leahy Lewin Nutley Sullivan Lawyers: Lawyers for the Plaintiff
Allen Arthur Robinson Lawyers: Lawyers for the Defendants
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