N8478

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO.  171 OF 2020

BETWEEN:
JACOB MARAGAU (COUNCILLOR WARD 5) of the Lae Urban Local Level Government
Plaintiff

AND:
LAE CITY AUTHORITY
First Defendant

AND:
HON. PILA NININGI as Minister for Provincial and Local Level Government Affairs
Second Defendant

Lae: Dowa AJ
2020:  25th June &10th July

PRACTICE AND PROCEDURE – ruling on motions filed by both plaintiff and Second defendant – plaintiffs motion seeks interim restraining orders – second defendants motion seeks dismissal of plaintiff’ s proceedings for failing to disclose a reasonable cause of action -  defendants application determined first – the issues include whether the proceedings are valid and competent for judicial consideration - whether the Plaintiff has disclosed a reasonable cause of action - Order 12 rule 1 of the National Court Rule is sufficiently invoked and no issues dealing with the application - current proceedings are unlikely to succeed, even if allowed to trial - reliefs sought cannot be granted in the light of over whelming evidence supporting the current administrative arrangement of running the municipal services - Plaintiff’s proceedings are therefore frivolous and untenable - proceeding be dismissed now to avoid further costs.

Cases Cited:

Andakelka Ltd v Petronas (2004) N3976

Counsel:

K. Naru, for the Plaintiff
S. Garap, for the First Defendant
N. David, for the Second Defendant

RULING
10thJuly,2020

1.	DOWA AJ:	This is a ruling in relation to two competing motions filed by the parties.  The Plaintiff by Notice of Motion filed 16th June 2020 is seeking certain interim restraining orders.  The Defendants have also filed a motion seeking dismissal of the proceedings for disclosing no reasonable cause of action.

Facts

2.	The Plaintiff a local Government councillor, of Lae Urban Local Level Government (“LULLG”), filed an Originating Summons seeking various declarations and restraining orders against, Lae City Authority and the Minister for Inter Government Relations, Hon. Pila Niningi.

3.	The Plaintiff alleges amongst other things, that the first Defendant, Lae City Authority, has assumed and taken over the functions of revenue collection without a valid memorandum of understanding as required under section 4 of the Lae City Authority Act 2015.  The Plaintiff alleges, that the Defendant has been relying on a Ministerial directive, which they allege is in breach of Section 4 of the Lae City Authority Act.  The Plaintiff therefore seeks declarations that such action by the Defendants be declared unlawful.

4.	Pending determination of the substantive matter, the Plaintiff is seeking various interim restraining orders by Notice of Motion filed 16th June 2020.

5.	The Defendants opposed the application for restraining orders.  They have also filed a Notice of Motion seeking dismissal of the substantive matter for disclosing no cause of action, for frivolity, and on competency issues. I will deal with the Defendants applications first, and if successful, that will be the end of the proceedings.

Issues

6.	The issues for consideration are:

a)	Whether the proceedings are valid and competent for judicial consideration.

b)	Whether the Plaintiff has disclosed a reasonable cause of action.

Competency of The Proceedings

7.	Firstly, Ms David, Counsel for the Defendant’s submits, the Second Defendant’s Ministerial portfolio cited as “Minister for Provincial and Local Level Government Affairs” does not exist, therefore the proceedings are incompetent.  She submits that the correct portfolio is Minister for Inter-government Relation.”  In my view, incorrect citation of the Ministerial portfolio of the Second Defendant does not make the proceedings incompetent.  The Minister responsible for Local Level Government, is correctly cited.

8.	Secondly, Ms David submits that, the Originating Summons were amended without leave, and thus incompetent.  I note the original Originating Summons was filed on 11th June 2020.  All parties were served, and the parties were heard initially on 17th and later 25th June 2020.  Ms David relied on the case of Andakelka Ltd v Petronas (2004) N3976 in support of her contention.  However, that case can be distinguished from the present proceedings.  In Andakelka’s case, the amendment was filed after 5 years, and it added a substantially new cause of action at the trial stage.  In the present case, the proceedings are at infant stage, and no prejudice is caused to the defendant, especially, when the Rules allow for amendment at any stage of the proceedings.
	
9.	Thirdly, Ms David, submits that the Court’s jurisdiction was not properly invoked, contrary to Order 4 rule 49(8) of the National Court Rules.  However, I am of the view that Order 12 rule 1 of the National Court Rule is sufficiently invoked and I have no issues dealing with the application.

No Reasonable Cause of Action

10.	The Second leg of the Defendants motion is an allegation that Plaintiff has no reasonable cause of action.  

The relevant Rule under Order 12 Rule 40 (1) of the National Court Rules, is set out below:

Frivolity, etc. (13/5)

“(1)	Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings-

(a)	No reasonable cause of action is disclosed; or
(b)	The proceedings are frivolous or vexatious; or
(c)	The proceedings are an abuse of the process of the Court,

The Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.

(2)	The Court may receive evidence on the hearing of an application for an order under Sub-rule (1).

The law on Order 12 Rule 40 of the National Court Rules is well settled in the Supreme Court in Mt Hagen Urban Local level Government v Sek No.15 SC 1007 in paragraphs 27-30. 

“27.	The terms “vexatious”, “frivolous”, “abuse of the process of the court” and “reasonable cause of action” under O.12 r.40 of the National Court Rules have been judicially considered, defined and expounded in a number of decisions in both the National and Supreme Courts.  These cases include Ronny Wabia v. BP Exploration Co. Limited & 2 Others [1998] PNGLR 8 (N1697); PNG Forest Products Pty Ltd and Another v. The State and Genia [1992] PNGLR 85; Gabriel Apio Irafawe v. Yauwe Riyong (1996) N1915; Eliakim Laki and 167 Others v. Maurice Alulaku and Others (2002) N2001; Kiee Toap v. The Independent State of Papua New Guinea & Another (2004) N2766; Kerry Lerro trading as Hulu Hara Investments Limited v. Phillip Stagg, Valentine Kambori& The State (2006) N3050; Phillip Takori& Others v. Simon Yagari& 2 Others (2008) SC 905.  These cases say the same thing.

28.	The law with regard to an application for dismissal of proceedings based on O.12 R.40 is settled in our jurisdiction.  We note that the principles are succinctly set out in Kerry Lerro’s case (supra) and which has more recently been approved and applied by the Supreme Court in Phillip Takori’s case (supra).

29.	The phrase ‘disclosing a reasonable cause of action’ consists of two parts; cause of action and form of action.  A cause of action is defined as a legal right or form of action known to law whereby a plaintiff in a statement of claim must plead all necessary facts and legal elements or ingredients to establish or prove his claim.  The principles stated by these cases can be summarized as follows:

(i)	A plaintiff or claimant should not be driven from the judgment seat in a summary manner and that the Court should be cautious and slow in exercising its discretionary power.

(ii)	The Court has an inherent jurisdiction to protect and safeguard its processes from abuse.

(iii)	The purpose of O.12 r.40 is to give the court power to terminate actions or claims which are plainly frivolous or vexatious or untenable.

(iv)	A frivolous claim is one that is characterized as a claim that is plainly and obviously untenable, that cannot possibly succeed and bound to fail if it proceeds to trial.

(v)	A vexatious claim is on that is said to be a sham and cannot succeed where it seeks to merely harass the opposing party and put that party to unnecessary trouble and expense is defending or proving the claim.

30.	In an application under O.12 R.40 of the NCR, the Court may dismiss a proceeding or action where it is satisfied that the pleading in the statement of claim is seriously wanting where a necessary fact or legal element has not been pleaded.”

11.	The Plaintiff is seeking declarations of statutory breaches by the Defendants in respect of the following:

1)	An announcement on 24th February 2020, by the First Defendant in the Post Courier, directing residents and business houses to pay the Land Tax, License fees, Sanitation and Garbage fees, to the First Defendant is in breach of Section 44 of the Organic Law on Provincial and Local Level Government and Section 38 of the Local Level Government Administration Act.

2)	The announcement of 24th February 2020 referred to above, made in the absence of a Memorandum of Understanding is in direct breach of Section 4 of the Lae city Authority Act 2015.

3)	A Ministerial direction by the Second Defendant to the First Defendant to run the affairs, especially to collect revenue on behalf of the Lae Urban Local Level Government the First Defendant is in breach of Section 4(1) of the Lae City Authority Act 2015, and Section 44 of the Organic Law on Provincial and Local Level Government and Section 38 of the Local Level Government Administration Act.

12.	In my view, the most relevant piece of legislation is Section 4 of the Lae City Authority Act 2015.  Section 4 of the Lae City Authority Act 2015 is and I quote:

“FUNCTIONS OF THE AUTHORITY.

(1) 	The Authority is primarily responsible for providing municipal services in the Lae area in
accordance with a memorandum of understanding entered into by the Authority with the Lae Urban Locallevel
Govemment and the Rural Local-level Governments in the Province.

(2) 	Municipal services include, but are not limited to -
(a) 	the collection of rubbish; and
(b)	the management of the municipal dump; and
(c)	the cleaning and lighting of roads, streets and paths; and
(d) 	the maintenanceof public parks and recreation areas; and
(e) 	the control of cats, dogs and other domesticated animals.

(3)	Without limiting the generality of this section, the Authority shall –

(a) 	perform service delivery functions and call out service delivery responsibilitiesspecified in the Ministerial determination made under Subsection (4); and

(b) 	develop, build, repair, improve and maintain roads and other~ infrastructure; and

(c) 	approve the disbursement of district support grants and other grants; and

(d)	oversee, co-ordinate and make recommendations as to the overall district planning, including budget priorities, for consideration by the Provincial Government and theNational Government; and

(e) 	ddetermine and control the budget allocation priorities for the Local-levelGovernments in the district; and
f)	approve the Local-level Government budgets for presentation to the Local-levelGovernment and to make recommendations concerning them; and

(g) 	draw up a rolling five-year development plan and annual estimates for the district;and

(h) 	conduct annual reviews of the rolling five-year development plan; and

(i) 	carry out such other functions as are prescribed by the regulations.”

Submissions of Parties

13.	The gist of the Plaintiff’s application is that the Lae City authority has assumed the municipal functions of Lae city without a Memorandum of Understanding with Lae Urban Local Level Government as required under Section 4 of the Lae City Authority Act 2015.  This appears to raise genuine statutory non-compliance issues and a cause for possible action and interpretation of Statute.  Section 4 of the Lae City Authority Act, appears to remove their traditional municipal function from Lae Urban Local Level Government functions over to Lae City Authority.   

14.	On the other hand, the Defendants allege the Plaintiff does not have a reasonable cause of action.  The Lae Urban Local Level Government was mismanaged for a long while, and it owes Internal Revenue Commission substantial amount of money in tax.  Since the establishment of Lae City AuthorityAct, parties were not able to agree on the terms of Memorandum of Understanding, for the purposes of Section 4 of the Lae City Authority Act 2015.

15.	By a ministerial direction given 18th March 2019, the First Defendant was given the approval to collect taxes and rates in the absence of a Memorandum of Understanding as required under section 4 of the Lae City Authority Act.There is no Memorandum of Understanding in place due to a failure by the parties to reach agreement on certain terms.

16.	By resolution of all Councillors on 19th November 2019, the Lae City Authority is now authorised to collect all revenue and manage the affairs of Lae Urban Local Level Government for a term of one year. The Lae City Authority is only doing what has been resolved, and is not in breach of any statute, or provision of law. Therefore, the Defendant submits, the Plaintiff does not have a cause of action.

Reasons for Decision

17.	I have studied the Originating Summons, and the various affidavits filed by both parties.  The Lae City Authority was established under Lae City Authority Act 2015. Pursuant to Section 4 of the Lae City Authority Act, the First Defendant is responsible for running municipal services in Lae with a Memorandum of Understanding with Lae Urban Local Level Government. Lae City Authority and Lae Urban Local Level Government have yet to sign a Memorandum of Understanding.

18.	On 18th March 2019, the then National Minister for Inter Government Relations, Honourable Kevin Isifu, issued Ministerial directions for Lae City Authority to perform the functions of Lae Urban Local Level Government under Section 4 of the Lae City Authority Act in the absence of the Memorandum of Understanding.  The Ministerial direction was given under Section 20 of the Lae City Authority Act;

19.	On 19th November 2019, all Councillors including the Plaintiff, resolved that the Lae City Authority would carry out the functions under section 4 of the Lae City Authority Act in the absence of a Memorandum of Understanding, for one year.  Interestingly, I find from the minutes of the meeting, the Plaintiff, Jacob Maragau was amongst those, who suggested for Lae City Authority to collect revenue and run the affairs of Lae Urban Local Level Government for a term of one year commencing 19th November 2019.

20.	The announcements made in the Post Courier on 24th February 2020, were issued only after the Council Resolution of 19th November 2019, and the Ministerial directions of 18th March 2019.

21.	It appears the Ministers direction was necessary in the circumstances where the parties failed to reach agreement.  I note there was no time period given.  It is now more than 15 months.  It is open to argument that the unspecified period is unreasonable and an hindrance to executing a Memorandum of understanding under Section 4 of the Lae City Authority Act.

22.	I note the resolution by the Councillors on 19th November 2019, somewhat eased any tension and ill feelings between the councillors of Lae Urban Local Level Government and Lae City Authority Board, and the Minister’s Directions.

23.	However, the current proceedings appear to dissect from the current status quo.  It clearly indicates the emergence of discord and confusion between and amongst the Councillors themselves.  This may be attributed to, by the fact that, the Mayor of Lae City, the head of Lae Urban Local Level Government is also and more conveniently the Chairman of the Lae City Authority now.  One can be forgiven in thinking that this contributes to the delay in signing the Memorandum of Understanding.

24.	Despite the feelings of animosity between personnel, both the Lae Urban Local Level Government and the Lae City Authority have one common statutory purpose, and that is to serve the people of Lae City.

25.	By resolution of Councillors on 19th November 2019 they have mandated and allowed for Lae City Authority to run the municipal services without a Memorandum of Understanding for a period of one year.  It is clear the Lae City Authority has a few more months to operate without a Memorandum of Understanding as required under Section 4 of Lae City Authority Act. The parties can use this time to reflect and consider their respective positions.

26.	After all, the people of Lae City look up to the Councillors of Lae Urban Local Level Government and the Board of Lae city Authority to resolve all outstanding issues and reach agreement for the common good.

27.	For these reasons, I am of the view that the current proceedings are unlikely to succeed, even if allowed to trial. The reliefs sought cannot be granted in the light of over whelming evidence supporting the current administrative arrangement of running the municipal services in Lae. The Plaintiff’s proceedings are therefore frivolous and untenable, and the proceeding be dismissed now to avoid further costs.

Orders

28.	The court orders:

1.	The entire proceedings be dismissed for being frivolous.
2.	The Plaintiff pay the cost of the proceedings.

Kelly Naru Lawyers	: Lawyers for the Plaintiff
In House Lawyer		: Lawyers for the Defendant