N10233
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (JR) NO. 326 OF 2019

STEVEN MAKEN In his capacity as Managing Director of Small and Medium Enterprises Corporation (SMEC) and a Member of the Board of SMEC
Plaintiff

V
HON. WERA MORI, M.P In his capacity as the Minister for Commerce and Industry
First Defendant

AND
PETRUS RALDA
Second Defendant

AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Defendant

Waigani: Miviri J
2023: 23rd & 24th March

PRACTICE & PROCEDURE – Judicial Review & appeals – Notice of motion –Order 22 Rule 62 & Order 16 Rule 13 (13) (1) NCR – Judicial Review – Judgment Certified Costs – Managing Director SMEC & Board –Failure by Minister to follow Procedure by Regulatory Statutory Authorities (Appointment to Certain Offices) Act 2004 & SMEC Act 2014 – Grant of Relief – Declaration & Certiorari – Discretionary – Error of Law – Bad faith ill motive – irrelevant consideration – breach of natural Justice – unreasonable – material relied sufficient – balance discharged – Judicial Review granted – cost follow event.

PRACTISE & PROCEEDURE – Judicial Review & appeals – Notice of motion –Order 22 Rule 62 & Order 16 Rule 13 (13) (1) NCR – Judicial Review – Judgment Certified Costs – No Review of Appeal Against – Judgement As of Right – No Distinction in Parties – Action Instituted in Capacity of MD of SMEC by Plaintiff – SMEC Liable As Party to Action Instituted – Legal Obligations Not Concealed by Corporate Veil – Action Intertwined By Small and Medium Enterprises Corporation Act 2014 Section 28 – SMEC Directly Involved in Action Parties to – State Entities Not Separate – Liable for Costs – Application Granted per Notice of Motion – Costs of Application as Pleaded following the Event.

Cases Cited:

Pololi v Wyborn [2013] PGNC 144; N5395 
Re Bouraga [1982] PNGLR 178
Golu v National Executive Council [2011] PGNC 134; N4425 
Limporo v Meabune [2020] PGNC 422; N8692
Carter Holdings Ltd v Sipison [2019] PGNC 25; N7725

Counsel:

L. Agdop, for Applicant
S. Sak in House Lawyer, for Second Defendant

RULING
 24th March, 2023
1.	MIVIRI, J: This is the ruling on the Applicant/Plaintiff’s Notice of Motion pursuant to Order 22 Rule 62 and Order 16 Rule 13 (13) (1) of the National Court Rules “the Rules” dated 16th November 2022, seeking Judgement to be entered against the Department of Commerce and Industry in the sum of K 43, 853. 75. And further pursuant to both orders and Rules above Judgment to be entered against the Small and Medium Enterprices Corporation in the sum of K 43, 853. 75. And both the Department of Commerce and Industry, and the Small and Medium Enterprise Corporation pay the cost of the application in the sum of K1000.

2.	The application is supported by the evidence of:

(i)	Affidavit of Benjamin Samiat sworn of the 07th November 2022 filed of the 16th November 2022.
(ii)	Affidavit of Service deposed to by Frank Silinju sworn of the 06th September 2022 and filed of the 08th September 2022.
(iii)	Affidavit of Service of one Nigel Wende sworn of the 02nd June 2021 filed of the 03rd June 2021.
(iv)	Yet another affidavit of Service of Frank Silinju sworn of and filed of the 19th August 2022.
(v)	Affidavit of Larry Agdop sworn and filed of the 30th November 2022.
(vi)	Supplementary affidavit of the same Larry Agdop of the 26th January 2023 filed of the 27th January 2023.
(vii)	Affidavit of the same said Larry Agdop of the 22nd March 2023 filed of the same date.

3.	Primarily this evidence establishes that costs has been entered in favour of the plaintiff/applicant who is yet to receive the taxed and certified costs in the sum of K87, 707.50. per the annexure “BS1” affidavit of Benjamin Samiat. Certification having been completed on the 2nd September 2022 and service of it on the office of both first and second defendants, affidavit of Frank Silinju sworn of 06th September 2022. And in this regard it will be necessary to gauge the primary facts leading up.

4.	This application for certified taxed costs is made by the applicant/plaintiff who had sought orders in the nature of a declaration that the decision of the First Defendant terminating all the Board Members of SMEC was an error in law, ultra vires, based on irrelevant considerations, made in bad faith null and void ab initio. Further that the decision or action of the First Defendant in suspending the Plaintiff as the Managing Director of SMEC by the letter dated the 05th April 2019 was in similar fashion an error in law, ultra vires, based on irrelevant considerations, made in bad faith null and void ab initio. He had on that basis sought Certiorari to remove into court those decisions, firstly of the termination of all board members by letter dated the 21st March 2019, and secondly, by letter dated the 05th April 2019 of his suspension as the Managing Director of SMEC and in his place appointing Mr. Petrus Ralda in his place to be quashed. And in so doing relied on section 155 (4) of the Constitution. 

5.	He was successful as the Small and Medium Enterprises Corporation Act 2014 (“SMEC Act 2014”) set up the Small and Medium Enterprises Corporation as a body corporate by section 4 and 5 of the Act. And the plaintiff/applicant was a staff employed as its Managing Director and Chief Executive Officer pursuant to section 28 of that Act which is as follows:

“PART V. - STAFF OF THE CORPORATION. 

28. MANAGING DIRECTOR. 
(1) There shall be a Managing Director of the Corporation whose manner of appointment, suspension and dismissal is under the Regulatory Statutory Authorities (Appointments to Certain Offices) Act 2004. 

(2) The Managing Director is – 

(a) the Chief Executive Officer of the Corporation; and 
(6) the Head of the staff of the Corporation; and 
(c) responsible to the Board for the efficient carrying out of the functions of the Board; and 
(d) responsible to the Minister for the efficient carrying out of the functions of the Corporation under the Act. 

(3) The Managing Director shall be appointed for a term of four years and, subject to the Salaries and Conditions Monitoring Committee Act 1988, on such terms and conditions as are determined by the Board, and is eligible for re-appointment. 
(4) The Managing Director shall be terminated or suspended if he – 
(a) becomes incapable for any reason of performing or non performance of his duties; or 
(b) other than the written consent of the Board, engages in any paid employment or carries on business outside the duties of his office; or 
(c) becomes bankrupt, applies to take the benefits of any law for the relief of bankrupt or insolvent debtors, compounds with his creditors or makes an assignment of his salary for their benefit; or 
(d) is convicted of an offence that is punishable under a law by imprisonment; or 
(e) commits a serious misconduct in office; or 
(f) ceases to be ordinarily resident in the country; or 
(g) commits an offence against this Act. 

(5) Any contract, arrangement or understanding under which the Managing Director would, but for this subsection, be entitled to any compensation or payment in respect of the termination of his appointment other than as provided in Subsection (4) is void ab initio and of no force or effect.”

6.	Plaintiff was appointed by the head of State through the Public Service Merit based appointment process for (4) years commencing from the 25th September 2015 to 24th September 2019. Which was published in the National Gazette G635 dated Thursday 1st October 2015. He signed his contract of employment on the 24th July 2019. Hence his removal would have been no doubt in-accordance with that process. His successful judicial review motion meant that part of the orders was for Costs to be awarded in his favour to be paid by the defendants then now respondents.

7.	The argument advanced by the respondent not named as a party on the initial proceedings but to whom the applicant/plaintiff was its managing director is the Small and Medium Enterprises Corporation alias SMEC. It contends that costs in that proceedings were against the parties who were the defendants now respondents and not it. It was never a party to the proceedings and will not be responsible for costs that it never made the applicant to incur. SMEC is created by Statute of the same name particulars set out above. And it is a legal entity and cannot be responsible without its personality named in the proceedings. But the fact of the matter is the applicant/plaintiff was its managing director appointed duly material particulars that I have set out above. And therefore when he came to court he did not come as an individual but its managing director duly appointed and gazetted by the provisions of that Act and the costs follow from that fact not without. There is therefore no corporate distinction but the same coin looked at as one and therefore the Costs that arise are of the Small and Medium Enterprise Corporation to pay as ordered by this Court.

8.	It is certified costs not waived or disputed in accordance with Order 22 rule 62 which is in the following; “Where the amount of any costs has been certified under this Division the Court may, on motion by a party, direct the entry of such judgement for the costs as the nature of the case requires.” Here the applicant seeks entry of Judgement on that figure taxed and certified. But the query and argument raised is whether or not a party not initially named in the proceedings can be made liable to pay the costs.

9.	Here counsel applying has relied on a decision of this Court in Pololi v Wyborn [2013] PGNC 144; N5395 (30 July 2013) that a non-party is as much as liable as a party named for the costs that emanate from the proceedings. Small and Medium Enterprises Corporation was not named as a party but is liable because the action was against and instituted by its then Managing Director now the applicant. He sought out the action in the Managing Directors Chair of that Corporation. The Costs were incurred in that pursuit and rightly should be levelled where it has started and falls. Costs are discretionary exercised upon consideration of the facts stemming. 

10.	 It is for this reason that the Court has very wide discretion by its rule making discretion under section 184 (2) of the Constitution. This is not rule making but compliance of the rules relating to costs taxed and certified. Nor is it a case of dispute as to the figures worked out taxed and certified. Both sides agree it is owing and must be paid. But the Small and Medium Enterprises Corporation says, it was not a party to the proceedings initially, and therefore will not pay the costs. But advances and qualifies that the applicant contends that it is by his employer SMEC in equal parts with the Department of Commerce and Industry. The Minister of that Department is the First Defendant now named second respondent. And all are State Entities part of the administration of the Independent State of Papua New Guinea conjoined to its core, the National Executive Council under section 149 of the Constitution. The Minister for Commerce and Industry Hon. Wera Mori, first defendant is one of the Ministers making up that composition. That is the pinnacle of Executive decision making. It is not just any other ordinary decision making body, because its composition is made up of Ministers whose head is the Prime Minister who is the Chairman. The establishment under section 149 of the Constitution gives it as the apex of the decision making arm of the Government section 141 (2) of the Constitution. It has wide and inherent powers to make and formulate public policies. The Ministers who make up the NEC are appointed by the Prime Minister, and each Minister is responsible to the NEC for the functions of his portfolio and NEC is in turn responsible to the people: S.C.R. No.1 of 1982; Re Bouraga [1982] PNGLR 178.

11.	  Therefore, it follows that the Department of Commerce represented by its Minister Hon. Wera Mori First Defendant has under its wings because of the functions it carries out, the Small and Medium Enterprises Corporation. Although established by an Act of Parliament it is within the Department of Commerce and Industry by reading section 6 Functions of the Corporation which intertwines the Ministry Responsible for trade commerce and industry. This gives the leverage that all are agencies of the State administration. And therefore, cannot be different one from the other. The name maybe but the functions are part of the same machinery of the executive arm of Government headed by the National Executive Council. 

12.	And this is even clearer when glossed in the light of the Public Finances Management Act 1995 where the responsibilities of the Minster for Finance is set out by section 3. All in my view are part of the same Executive arm of Government and therefore are not isolated one from the other. But are part of the integral administrative machinery of the Government: Golu v National Executive Council [2011] PGNC 134; N4425 (21 October 2011). So, for our purposes here, SMEC is not isolated nor an island away from the Department of Commerce and Industry and the State. And in the case at hand the applicant in his capacity as the Managing Director of Small and Medium Enterprises Corporation (SMEC) and as member of the Board of SMEC sued and got the judgment in his favour. It was a matter within that organization in and by that Minister responsible. Therefore, costs will be within and derived from there, not without, or isolated.

13.	And the facts here do not support abstaining or not paying up, because by the affidavit material set out above the first defendant through the Department of Commerce and Industry made part payment of K 39, 867.05. What is outstanding is K 47, 840.45 which has been the subject of forewarnings on the 22nd September 2022 to the both first and second defendants set out in annexure BS2 of the Affidavit of Benjamin Samiat. Yet another one was done up on the 31st October 2022 warning that Judgement will be sought for the taxed costs. And that is annexure BS3 of that affidavit.  So, all along the defendants are aware of the intent of the applicant now laid out by motion here. And it would not be imposing on the Parties and in particular the defendants all inclusive. Because of the reasons set out above. Here it is clear that the Department of Commerce and Industry with Small and Medium Enterprises Corporation are together responsible by the Judgment for the costs that have come out as a result. It is from that fact that there is nothing apparent or identifiable to prevent that costs are in equal parts proportioned as K 3, 986.70 to be paid by the Department of Commerce and Industry. And the Small and Medium Enterprises Corporation in the sum of K 43, 853.75. 

14.	And it will not be out of the ordinary viewing Limporo v Meabune [2020] PGNC 422; N8692 (11 December 2020) approving Carter Holdings Ltd v Sipison [2019] PGNC 25; N7725 (22 February 2019) where State Departments responsible have been tasked by orders of costs to pay. To go the way of corporate veil would be to avoid obligations that are clear by the discussions set out above. And given all it would be apportioned in that, Department of Commerce and Industry will pay K3, 986.70 remaining from what they have already paid. And K 43, 853.75 will be paid by Small and Medium Enterprises Corporation. Judgment is entered accordingly in each case individually and severely in those respective amounts. And the costs of the application is in the sum of K 1000 to be paid by both Department of Commerce and Industry and the Small and Medium Enterprise Corporation following the event.

15.	The formal orders of the Court are: 

(i)	Judgment is entered against the State in particular its Department of Commerce and Industry in the taxed certified costs of K3, 986.70. 

(ii)	Further Judgment is entered against the Small and Medium Enterprises Corporation in the taxed certified costs of K43, 853. 75.

(iii)	The State through its Department of Commerce and Industry together with the Small and Medium Enterprises Corporation pay the applicant plaintiff’s costs of these proceedings in the sum of K1000.00.

Orders Accordingly.
__________________________________________________________________
Holingu Lawyers: Lawyers for the Plaintiff/Applicant		
In house Lawyers SMEC: Lawyers for SMEC