N5642

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (JR) No. 383 OF 2014

BETWEEN:

THE HONOURABLE PETER O'NEIL,
Prime Minister of Papua New Guinea
First Plaintiff

AND:

MR DAIRI VELE
Acting Secretary of the Department of Treasury
Second Plaintiff

AND:

OMBUDSMAN COMMISSION OF PAPUA NEW GUINEA & ORS
First Respondent

AND:

RIGO A. LUA - Chief Ombudsman
Second Respondent

AND:

PHOEBE SANGETARI, Ombudsman
Third Defendant

AND:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Defendant

Waigani: Gavara-Nanu, J
2014: 10 & 11 June

JUDICIAL REVIEW - Practice Procedure - Application to stay - National Court Rules; Order 16 r 3 (8) - Application for stay made after grant of leave for judicial review - Issue of whether there is a serious issue to be tried already settled at leave stage - Other principles relating to stay discussed - Stay granted.

Cases cited

Gabriel Yer, Secretary for Department of Finance & Or v. Peter Yama SC990
Gary Mchardy v. Protect Security & Communication Pty [2000] PNGLR 279
Thaddeus Kamburi v. NEC (2006) N3064 

Counsel

I. Molly with L. David, for the first plaintiff
T. Nonggorr, for the second plaintiff
M. Efi, for the first, second and third respondents
T. Tanuwasa, for the fourth respondent 

11th June, 2014

1.	GAVARA-NANU J: This is an application for stay by the plaintiffs. The application is made under Order 16 r 3 (8) of the National Court Rules and is made pursuant to the Notice of Motion filed on 6 June, 2014. Leave for judicial review was granted on 10 June, 2014.

 2.	The applicants are seeking the relief sought in paragraphs 3 and 4 of the Notice of Motion. Relief sought in paragraph 3 is to stay the decision and direction of the Ombudsman Commission contained in the direction dated 14 April, 2014 addressed to the plaintiffs and others. Relief sought in paragraph 4 is to restrain the Ombudsman Commission, its servants and agents from taking any actions that may obstruct or jeopardize compliance with State's obligation under a loan transaction with Union Bank of Switzerland AG (UBS).

3.	The issues before the Court arise from the NEC decision on 6 March, 2014 to approve borrowing of USD$1.249 Billion to purchase 149.39 million shares in Oil Search Ltd. The State subsequently entered into a loan agreement with UBS. The loan transaction including share purchase was concluded on 12 March, 2014. On 14 March, 2014, the Ombudsman Commission issued the above direction to various people and institutions including the plaintiffs to immediately stop all further transactions relating to the loan. The interest component of the loan is AUD$2,490,161.67, which has to be paid on the 16th day of every month. The interest for this month is due for payment on 16th June, 2014. This application is to stay the Ombudsman Commission's direction as it relates to the loan interest payment and such other activities relating to the loan.

4.	Following matters should be noted; the State has not opposed the leave application, and in regard to the application to stay, the State through its lawyer Mr Tanuwasa told the Court that the State would not oppose the application because stay is in the best interest of PNG. He told the Court that if stay is not granted, the people of PNG will suffer great financial loss.

5.	The principles governing stay are well settled in this jurisdiction. A long line of cases have adopted and applied these principles: Gary McHardy v. Protect Security & Communication Ltd [2000] PNGLR 279; Gabriel Yer, Secretary for Department of Finance & Or v. Peter Yama SC990 and Thaddeus Kamburi v. NEC (2006) N3064, just to name a few. Having regard to the principles enunciated in these cases, following questions arise for consideration:

i.	Is there a serious question to be tried? This question however does not arise because the Court has already found when deciding to grant leave for judicial review that there is or are serious issues to be tried. 	The main issue being whether the Ombudsman Commission acted ultra vires in issuing the direction. 

ii.	Whether the balance of convenience favours the grant of stay so as to maintain the status quo. After careful consideration of all the issues and materials before the Court, I find that the balance of convenience does favour the grant of stay, for if stay is not granted, the people and the nation of PNG will suffer catastrophic financial losses. If the State defaulted under the loan agreement the amount of compensation PNG has to pay to the bank will be even more than the amount borrowed. PNG's image with overseas financial institutions is also likely to be severely tarnished and damaged. Grant of stay is therefore in the interest of the people of PNG.

iii.	Who will be prejudiced if stay is not granted? Quite plainly, it is the people of PNG because they will end up paying more to UBS, bearing in mind that the loan is with the State. On this point it is important to note that the Ombudsman Commission has conceded that it will not suffer prejudice if stay is granted.

iv.	Is it in the interest of justice to grant stay? The answer is plainly yes, because stay will protect the people of PNG from suffering any loss, prejudice and injustice resulting from possible catastrophic financial losses.

 6.	That said, the Ombudsman Commission as noted has through its lawyer conceded that stay will not prejudice the Ombudsman Commission and its investigations into the loan. The Ombudsman Commission will continue to carry out its task in investigating the loan. There will not be any interference in the investigation. This is a fundamental determinative factor which the Court has taken into account when considering whether to grant stay viz; the Court has noted that stay will not interfere with or impede the work of the Ombudsman Commission in investigating the loan. 

7.	In stating the above I also note that there is uncontested evidence that Ombudsman Commission's direction was issued two days after the loan was arranged and concluded with the purchase of 149.39 million Oil Search Ltd shares for the State on 12 March, 2014. The Ombudsman Commission issued its direction on 14 March, 2014; the effect of this is that, if the Ombudsman Commission is concerned about offences being committed by individuals or institutions, especially offences under the Leadership Code by individuals, the concern really has no basis because such individuals would have committed such offences by 12 March, 2014, when the loan was concluded and shares were purchased. Thus, stay should have no adverse consequences on the result or outcome of the Ombudsman Commission's investigations. I also note that applicants have filed an Undertaking as to Damages, which is a requirement for grant of stay.

8.	For the foregoing reasons application for stay is granted.

9.	The Orders of the Court are as follows:

1.	The direction of the first, second and third respondents constituting the Ombudsman Commission, given on 14 March, 2014, in so far as it relates to the State's obligations under the loan agreement with UBS is stayed until the determination of the application for judicial review herein or until further orders.
 
 2.	 Costs to be in the cause.
 
__________________________________________________________________
Pacific Legal Group Lawyers: Lawyers for the First & Second Plaintiffs
Ombudsman Commission Lawyers: Lawyers for the First, Second & Third Respondents
Solicitor General: Lawyers for the Fourth Respondent