|
|
Home
| Databases
| WorldLII
| Search
| Feedback
National Court of Papua New Guinea |
PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]
OS NO 85 OF 2025 (CC1)
BETWEEN
AUTONOMOUS BOUGAINVILLE GOVERNMENT
First Plaintiff
AND
JOSHUA TAUKO in his capacity as Secretary for the Department of Treasury & Finance, Autonomous Bougainville Government
Second Plaintiff
AND
HON. PETER TSIAMALILI JNR, MP in his capacity as REGIONAL MEMBER FOR BOUGAINVILLE
First Defendant
AND
BOUGAINVILE REGIONAL GOVERNMENT
Second Defendant
AND
ANDREW F. OAEKA in his capacity as Secretary of the Department of Treasury
Third Defendant
AND
SAMUEL PENIAS in his capacity as Secretary of the Department of Finance
Fourth Defendant
AND
INDEPENDENT STATE OF PAPUA NEW GUINEA
Fifth Defendant
WAIGANI: MAKAIL J
10 JULY, 14 NOVEMBER 2025
CONTITUTIONAL LAW – Restoration and Development Grants – Prime Minister’s Commitment – Types of funds appropriated in National Budget – Authority to receive, manage and disburse funds appropriated in National Budget – Dispute of – Restoration and Development Grant distinct from funds under Prime Minister’s Commitment – Constitution – Section 326 – Organic Law on Peace-Building in Bougainville Autonomous-Bougainville Government and Bougainville Referendum, 2022 – Section 49 – Appropriation Acts, 2022, 2023, 2024
Facts
The National Government made the following payments to the Autonomous Bougainville Government (“ABG”) consistent with the Appropriation Act for the years, 2020, 2022, 2023 and 2024 of K50 million, K30 million, K100 million and K100 million respectively. The plaintiffs alleged that without informing the ABG, part of the payments for 2023 and 2024 were paid into the Bougainville Infrastructure Development Account, comprising of K50 million and K75 million respectively instead of the ABG’s Grants Account. They claimed the return of a total of K125 million in the originating summons filed on 23rd April 2025 by asking the Court to, amongst others, declare that the Restoration and Development Grant and/or Conditional Grant appropriated in the Appropriation (General Public Services Expenditure) Acts, for the years 2023, 2024 and 2025, and termed as “Prime Minister’s Commitment” are grants for the ABG consistent with Section 326(1) of the National Constitution and Section 49 of the Organic Law on Peace-Building in Bougainville-Autonomous Government and Bougainville Referendum, 2022. The defendants argued that the funds under the Prime Minister’s Commitment are distinct from Restoration and Development Grant and the plaintiffs’ claim is misconceived.
Held:
1. Key laws were enacted by the National Parliament including amendments to the National Constitution to establish the legal framework by which the National Government and the ABG may operate under to restore peace and rebuild the Autonomous Region of Bougainville (“AROB”) in relation to education, health, infrastructure and law and order. (Obiter dicta).
2. While the funds under the Prime Minister’s Commitment are not provided under the National Constitution or Organic Law, they are provided in the Appropriation Act for each year, 2022, 2023 and 2024. The Appropriation Act forms the legislative basis for these funds. By operation of the Appropriation Act, the purpose of these funds is distinct from the Restoration and Development Grant.
3. As the name suggests, it is the Prime Minister’s commitment to ABG. It recognises that while the Appropriation Act has fixed a sum for Prime Minister’s Commitment, the Prime Minister has some flexibility as to how he wishes to spend the funds in the ABG and not be tied down to a fixed schedule of payment. Because of the flexibility associated with the use of these funds, they can be appropriately characterised as discretionary funds. It follows that it is not necessary for these funds to be remitted to the ABG Grants Account for reappropriation/reallocation by the ABG.
4. The plaintiffs have failed to establish on the balance of probabilities that the sum of K125 million is Restoration and Development Grants or formed part of the funds for the ABG. Accordingly, the orders sought in the originating summons filed on 23rd April 2025 are refused and the within proceedings is dismissed forthwith with costs.
5. The defendants relied on further grounds to oppose the plaintiffs’ claim. Amongst these grounds, is the issue of legal capacity of the plaintiffs to sue under Section 5 of the Claims By and Against The Autonomous Bougainville Government Act. While it is open to the defendants to question whether the plaintiffs correctly engaged the jurisdiction of the National Court to address their grievance, such is the significance of the issue as to which of the parties is authorised by law to receive and disburse the funds under the Prime Minister’s Commitment that it is not necessary to consider the submissions of the parties in relation to these further grounds.
Cases cited
Robmos Ltd v Fredrick Punangi & The State (2008) N3372
South Pacific PNG Seafoods Co Ltd v Tanuvasa (2020) N8750
Atlas Corporation Ltd v Ngangan (2020) N8624
Hon. Sir Christopher Haiveta, MP & Gulf Provincial Government v Hon. Ian Ling-Stuckey CMG, MP, Minister for Treasury & 4 Ors
(2024) N11114
Counsel
Mr D Kints with Mr E Wembri, for plaintiffs
Mr N Kopunye, for first defendant
No appearance, for second defendant
Mr M Wangatau, for third and fourth defendants
Mr T Mileng, for fifth defendant
JUDGMENT
1. MAKAIL J: A legal and administrative framework of the Bougainville Autonomous Government is being put in place for restoring peace and rebuilding the Autonomous Region of Bougainville after the Bougainville civil conflict in the late 80s and the 90s. Amongst them is the funding of high impact projects in key priority areas.
Legal Framework of Autonomous Bougainville Government
2. Key laws were enacted by the National Parliament including amendments to the National Constitution to establish the legal framework
by which the National Government and the Autonomous Bougainville Government (“ABG”) may operate under to restore peace and rebuild the Autonomous Region of Bougainville (“AROB”) in relation to education, health, infrastructure and law and order.
3. One of the first amendments made by the National Parliament to the National Constitution was the addition of Section 326 which
provides for grants by the National Government to the Bougainville Government. There are five types of grants which are set out
in Section 326 as follows:
“326. GRANTS
(1) The National Government shall provide grants to the Bougainville Government as follows: –
(a) recurrent unconditional grants; and
(b) restoration and development grants; and
(c) conditional grants for specific purposes; and
(d) a Police grant; and
(e) an establishment grant.
(2) Subject to the Agreement, an Organic Law shall make provision for –
(a) the manner of calculation, adjustment (including the effects of progress towards fiscal self-reliance), timing, payment and management of such grants; and
(b) methods of consultation between the National Government and the Bougainville Government in relation to such grants.
(3) Grants provided to the Bougainville Government under Subsection (1) shall be subject to audit by the Auditor-General.”
4. Secondly, the National Parliament enacted the Organic Law on Peace-Building in Bougainville-Autonomous Government and Bougainville Referendum, 2022. A key provision of the Organic Law is Section 49 which provides for restoration and development grant. It states:
“49. RESTORATION AND DEVELOPMENT GRANT.
(1) The National Government shall make to the Bougainville Government an annual restoration and development grant no less than the 2001 Programme appropriations for Bougainville.
(2) The annual restoration and development grant under Subsection (1) shall be adjusted upwards pro rata in accordance with the National
Public Investment Programme average over a rolling five year period.
(3) The National Government and the Bougainville Government shall agree to the establishment by the Bougainville Government of a mechanism, including both National Government and Bougainville Government representation, which shall be controlled by the Bougainville Government or by an authority of the Bougainville Government, to coordinate the restoration and development programme in Bougainville.
(4) The National Government representation in the mechanism referred to in Subsection (3) shall be subject to review in the future review process under Section 337 (Reviews) of the Constitution.”
Administrative Framework of Autonomous Bougainville Government
5. In terms of the administrative framework, a Bougainville Government is established under Part XIV of the National Constitution. While the Government is referred to as Bougainville Government instead of Provincial Government like rest of the provinces in PNG, the Bougainville Government is still subject to the Public Finances (Management) Act (as amended), 2016 pursuant to Section 1B. It states:
“1B. APPLICATION TO BOUGAINVILLE GOVERNMENT.
(1) Subject to this section, this Act applies to the Bougainville Government established under Part XIV of the Constitution.
(2) The Bougainville Government is subject to the provisions of this Act that apply to public and Provincial Governments and this Act shall be interpreted accordingly.
(3) The Minister responsible for financial matters, when satisfied that the Bougainville Government has legally adopted and operationalized laws efficiently and transparently managing public financial administration shall, by notice published in the National Gazette, exempt the Bougainville Government, in whole or part and subject to such conditions as he thinks fit, from the application of this Act.”
6. A Joint Supervisory Body (“JSB”) was established under Section 332 of the National Constitution to oversee the Bougainville Peace Agreement and provide consultative forum at which consultation between the National Government and the ABG takes place to prepare the AROB for Independence. In addition, an ABG Grants Account was established to receive the Restoration and Development Grants from the National Government’s annual budgetary allocation/appropriation.
7. Meanwhile another bank account called Bougainville Infrastructure Development Account was established. The purpose of this account is the cause of the controversy between the parties in the within proceedings which will become apparent shortly.
The Controversy
8. But it came to pass that on 12th September 2019 the JSB met and passed several resolutions. In Agenda Item No. 4 – Resolution of Development Grant, the JSB resolved that:
“new arrangement for the National Government to provide K100 million annually to the ABG for the next 10 years to be factored in the new financing arrangement.”
9. Consistent with the JSB resolution, the National Government made the following payments to the ABG consistent with the Appropriation Act for the following years:
10. The plaintiffs allege that without informing the ABG, part of the payments for 2023 and 2024 were paid into the Bougainville Infrastructure Development Account, particulars of which are as follows:
11. The plaintiffs formed a strong view and claim that a total of K125 million was unlawfully paid into the Bougainville Infrastructure Development Account while K25 million was paid into the ABG’s Grants Account. In the originating summons filed on 23rd April 2025 constituting the within proceedings, the plaintiffs seek the return of K125 million by asking the Court to, amongst others:
Determination
12. The plaintiffs rely on the following grounds to seek these orders:
13. As is the case with Restoration and Development Grants, which are by operation of law under Section 326 (supra) and Section 49 (supra), appropriated annually and allocated to the ABG, there must be a legislative basis for the funds under the Prime Minister’s Commitment. An absence of a legislative basis will lend support to the plaintiffs’ case that the Prime Minister’s Commitment must be treated as Restoration and Development Grants and paid to the ABG Grants Account.
14. In exhibit “D3” the first defendant as the Regional Member for Bougainville explained that the Prime Miniter, Honourable James Marape committed to provide annual funding of K100 million per year for a period of 10 years to support economic development in the AROB. The funds came under the category of Prime Minister’s commitment and since the announcement, the exact amount National Government honoured in the said commitments can be deduced from the fourth defendant’s records that are being produced. Since late 2023, the Prime Minister’s Commitment funds have been paid into the Regional Member’s Trust Account and administered according to the National Government priorities in Bougainville, through his office.
15. Also, the first defendant explained that in November 2023, he requested and received legal advice from the State Solicitor which reinforced his view that the funds allocated in the National Budget fall within Section 326(1) of the National Constitution are subject to the appropriation and management of ABG. Funds included in the Budget Code 590 which refers to Constitutional Grants and other expenditure items, other than those especially identified as a grant within the meaning of Section 326 of the National Constitution, were to be administered by law using the annual budgetary process under Section 209 of the National Constitution. This included funds under the Prime Minister’s Commitment.
16. The first defendant further explained that a Special Bougainville Executive Council (BEC) Meeting No. 01 of 2024 dated February 2024 the BEC noted that the balance of K50 million paid for financial year 2023 as Prime Minister’s Commitment be paid into the Bougainville Infrastructure Development Account controlled by him as Regional Member for Bougainville. Accordingly, funds under Prime Minister’s Commitment were paid into the Bougainville Infrastructure Development Account.
17. The first defendant’s explanation is further reinforced by the fourth defendant at paragraph 6 of exhibit “D7” after the latter referred to grants under Section 326(1) of the National Constitution and explained that “Besides these Constitutional grants, the national budget includes appropriations for other expenditure items such as DSIP, PSIP, PIP, and the Prime Minister’s Commitment (Vote 23618-000-01-276000). These appropriations are administered under the Public Finance (Management) Act (PFMA), the National Procurement Act (NPA), and related guidelines and instructions issued by the Secretary for Finance under Section 117 of the PFMA.”
18. At paragraph 7 of exhibit “D7”, the fourth defendant further explained that “On 13 December 2023, I issued Financial Instruction 4 of 2023 (“FI 4/2023”) pursuant to Section 117 of the PFMA. The purpose of this instruction was to implement the Public Infrastructure Program and Prime Minister’s Commitment programs for the Autonomous Bougainville Government.”
19. Furthermore, at paragraph 7 of exhibit “D7”, the fourth defendant explained that “Clause 3.0 of F1 4/2023 defines Prime Minister’s Commitment Programs as non-grant funds provided by the National Government to support critical infrastructure development across Bougainville, as part of a financing initiative aimed at stimulating such infrastructure. This program operates based on the National Government’s allocations and aims to promote local ownership and accountability in infrastructure projects.”
20. Relevantly, at paragraph 13(a)-(i) and paragraphs 14 and 15 of exhibit “D5”, the fourth defendant sets out the break-up of the disbursement of the funds under Prime Minister’s Commitment to the ABG between 5th July 2023 and 27th December 2024. Significantly and reinforcing the plaintiffs’ case, the funds under the Prime Minister’s Commitment are appropriated as follows:
20.1. K30 million under Appropriation (General Public Services Expenditure 2022) Act, 2021 (Annexure “JT4” of exhibit “P1”).
20.2. K100 million under Appropriation (General Public Services Expenditure 2023) Act, 2022 (Annexure “JT7” of exhibit “P1”).
20.3. K100 million under Appropriation (General Public Services Expenditure 2024) Act, 2023 (Annexure “JT8” of exhibit “P1”).
21. While the funds under the Prime Minister’s Commitment are not provided under the National Constitution or Organic Law, they are provided in the Appropriation Act for each year, 2022, 2023 and 2024. The Appropriation Act forms the legislative basis for these funds. By operation of the Appropriation Act, the purpose of these funds is distinct from the Restoration and Development Grant.
22. As the name suggests, it is the Prime Minister’s commitment to ABG. It recognises that while the Appropriation Act has fixed a sum for Prime Minister’s Commitment, the Prime Minister has some flexibility as to how he wishes to spend the funds in the ABG and not to be tied down to a fixed schedule of payment. For example, the Prime Minister may be visiting a secondary school as a guest speaker at its end of year school graduation. He must be able to make a commitment to building a new classroom for the school if he finds that the school is in dire need of one. This is where the funds for the new classroom will be sourced from. Because of the flexibility associated with the use of these funds, they can be appropriately characterised as discretionary funds. It follows that it is not necessary for these funds to be remitted to the ABG Grants Account for reappropriation/reallocation by the ABG.
23. The risk of abuse and misuse of these funds are adequately addressed by guidelines put in place by the fourth defendant from clauses 4.0 to 8.0 of Financial Instruction 4 of 2023. The plaintiffs do not contest the fourth defendant’s authority to issue this Financial Instruction under Sections 2 and 17 of the Public Finance (Management) Act, 1995 to manage and disburse these funds. See also Robmos Ltd v Fredrick Punangi & The State (2008) N3372. Amongst others, it provides for an ABG Project Trust Account to be established for the funds under the Prime Minister’s Commitment to be remitted under clause 5.0. Consistent with clause 5.0, the first and fourth defendants have been appointed as signatories to the account. There is also a procurement procedure for applicant to apply to secure these funds to undertake projects consistent with the National Government’s priorities in Bougainville, through the first defendant’s office.
24. It must be the case then that, except for the plaintiffs’ assertion that the total sum of K125 million should be treated as Restoration and Development Grant or that appropriated for the ABG, the plaintiffs do not refute the first and fourth defendants’ explanation in relation to the distinction between Restoration and Development Grant and funds under the Prime Minister’s Commitment and the fiscal arrangement for management and disbursement of the latter. For these reasons, the first and fourth defendants’ explanation is accepted.
25. Consequently, it is observed that Restoration and Development Grant are distinct from funds under the Prime Minister’s Commitment appropriated under the Appropriations (General Public Services Expenditure) Acts, for the years 2023, 2024 and 2025. According to the third and fourth defendants, funds appropriated under the Appropriation Act for each year are “designated for that purpose and that purpose alone”: South Pacific PNG Seafoods Co Ltd v Tanuvasa (2020) N8750 at [8] and “....the Budget Appropriation Act is an act of parliament passed parliament every year in every budget allocation”. It must be upheld for the “proper management” of funds of the country: Atlas Corporation Ltd v Ngangan (2020) N8624 at [6].
26. A more recent judicial determination is Hon. Sir Christopher Haiveta, MP & Gulf Provincial Government v Hon. Ian Ling-Stuckey CMG, MP, Minister for Treasury & 4 Ors (2024) N11114. In that case, in the National Budget for 2023 K60 million was allocated to Gulf and Central Provinces as Business Development Grant and Project Management funds for the Papua LNG Project. K70 million was allocated to Gulf, Central, Hela, Western and Southern Highlands Provinces for key infrastructure projects.
27. The Minister for Treasury instructed the Secretary for Department of Treasury to transfer K60 million out of the Consolidated Revenue Funds to fund Business Development Grant, Infrastructure Development Grant and Security call out in Enga Province. It was held that the decision to transfer the allocated funds for Gulf and Central Provinces to fund activities in Enga Province was outside the Appropriation Act, 2023 under the Public Investment for National Government Departments and in breach of Section 29(1) of the Public Finance (Management) Act, 1995. This provision provides that “.....expenditure of moneys from the Consolidated Revenue Fund for the purpose for which those moneys were appropriated.......” The Court held that the Minister acted ultra vires his power and quashed the Minister’s decision to authorise the transfer of funds.
28. In the present case, the Court is guided by these judicial determinations and the Appropriation Acts. Consequently, because Restoration and Development Grant are distinct from funds under the Prime Minister’s Commitment, the purpose of these two types of funds is also distinct, and the plaintiffs’ claim that the funds under the Prime Minister’s Commitment be treated as additional Restoration and Development Grant or that they form part of the funds for ABG is misconceived.
29. For the foregoing reasons, the Court is not satisfied that the plaintiffs have proved on the balance of probabilities that the sum of K125 million is Restoration and Development Grants or forms part of the funds for the ABG. Accordingly, the orders sought by the plaintiffs in the originating summons filed on 23rd April 2025 are refused and the within proceedings is dismissed forthwith with costs.
Further Grounds to Oppose Claim
30. The first defendant also relies on further grounds to oppose the claim and made detailed submissions to support each of the grounds. The third to fifth defendants endorsed the first defendant’s submissions. The fifth defendant relies on a further ground and made detailed submissions in support of the ground. These grounds are summarised hereunder:
30.1. Lack of legal capacity of plaintiffs to sue under Section 5 of the Claims By and Against The Autonomous Bougainville Government Act.
30.2. Lack of jurisdiction of the Court as a dispute over monies which involves interpretation and application of a constitutional law such as Section 326 of the National Constitution and Section 49 of the Organic Law on Peace-Building in Bougainville-Autonomous Government and Bougainville Referendum, 2022 should be taken up in a constitutional application under Section 18 or constitutional reference under Section 19 of the National Constitution.
30.3. Lack of jurisdiction of the Court as a dispute over monies between the National Government and Bougainville Government fall within the jurisdiction of dispute resolution process under Section 333 of the National Constitution.
30.4. Lack of authority or consent from the Bougainville Executive Council and instructions from the Principal Advisor to plaintiffs to sue under Section 5 of the Claims By and Against The Autonomous Bougainville Government and Section 112 of the Constitution of AROB.
30.5. Lack of notice of claim to the State under Section 5 of the Claims By and Against The State, 1996.
31. While it is open to the defendants to question whether the plaintiffs correctly engaged the jurisdiction of the National Court to address their grievance, such is the significance of the issue as to which of the parties is authorised by law to receive and disburse the funds under the Prime Minister’s Commitment that is not necessary to consider the submissions of the parties in relation to these further grounds.
Order
32. The order is:
________________________________________________________________
Lawyers for plaintiffs: Jema Lawyers
Lawyers for first defendant: Kopunye Lawyers
Lawyers for second defendant: Hardy & Stock Lawyers
Lawyers for third & fourth defendants: ACE Lawyers
Lawyer for fifth defendant: Solicitor General
PacLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.paclii.org/pg/cases/PGNC/2025/448.html