SC716

PAPUA NEW GUINEA

[In the Supreme Court of Justice at Waigani]

SCA NO. 116 of 2002

BETWEEN:

THE INDEPENDENT STATE OF
PAPUA NEW GUINEA
Appellant

AND:

ZACHARY GELU,
SOLICITOR GENERAL
First Respondent

AND:

MANORBURN EARTHMOVING LIMITED
Second Respondent

Waigani:	Amet CJ., Kapi DCJ., Los J.
13th June, 15th August 2003

State of Papua New Guinea – Role of representation by the Attorney-General and Solicitor General – Attorney-General Act and Claims by and Against the State – Function of Attorney-General and Solicitor General considered.

Counsel:
K. Kua for the Appellant
A. Baniyamai for the First Respondent
M. Pokia for the Second Respondent

Cases cited:
Peter Aigilo v Sir Mekere Morauta & Others (Aigilo Case) (Unreported Judgment of the National Court dated 15th June 2001, N2102)
Lord Green MR in Carltona, Ltd v Commissioners of Works & Others [1943] 2 All ER 560 at 564)
Simon Mali & Others v The State (Unreported judgment of the Supreme Court dated 3rd April 2002, SC690)

Legislations cited:
Constitution
Public Finance Management Act
Acts of Parliament
The Attorney-General Act 1989
Claims By and Against the State Act 
Investment Promotion Act 1992
Public Services (Management) Act 1995
Public Holidays Act

15th August 2003

By The Court:	This is an appeal against an interlocutory ruling made by the National Court (Kandakasi J) on 13th December 2002 in which the Court directed that (1) investigation be undertaken to establish whether the allegations of fraud against Mr Zachary Gelu, (First Respondent) and Manoburn Earthmoving Ltd (MEL) (Second Respondent) exist (2) that if the investigations demonstrate a case of fraud the State through the Solicitor General (SG) will decide whether to proceed with the claim.

This direction arose out of the following circumstances. The Second Respondent made a claim for damages arising out of a road contract for road works in Oro Province against the State (Appellant) in a separate proceeding (WS 285 of 2000). The Appellant failed to file a defence and the Second Respondent obtained default judgment with damages to be assessed. 

The Appellant vigorously contested the damages. On the 29th June 2001, the Attorney-General (AG) briefed out to Posman Kua Aitsi, Lawyers to act for the State in the assessment of damages.

However, on 30th July 2001, the First Respondent acting as SG signed a Deed of Settlement and Release in favour of the Second Respondent settling the claim for K8.6 million. It is alleged that the First Respondent entered into the Deed without the knowledge and instructions of the AG and nor on the advice of Posman Kua Aitsi, lawyers for the Appellant.

On AG’s instructions, Posman Kua Aisi acting on behalf of the Appellant filed this action (WS 1343 of 2002), alleging that the Deed of Settlement was procured:

(a)	by fraud
(b)	in breach of s 61 of the Public Finance Management Act
(c)	in breach of s 13 (2) of the Attorney-General Act
(d)	ultra vires the powers of the First Respondent

The Second Respondent has filed a defence to the action while the First Respondent has not filed a defence.

On 6th November 2002, the Second Respondent filed motion seeking an order for the dismissal of the proceedings, alleging that the AG lacked capacity to bring the cause of action in the name of the State.

On 13th December 2002, the trial judge concluded amongst other things that:

(a)	The AG has no power to sue and defend proceedings in the name of the State
(b)	The SG has the exclusive power to act on behalf of the State in litigation.

The trial judge did not dismiss the action but based on the forgoing reasons, he gave directions to investigate the allegation of fraud and that the decision whether to pursue the claim is to be made by the SG.

The Appellant has appealed against this decision on the following grounds:

"Grounds

(1)	The Learned National Court Judge erred in law in holding that the Attorney General does not have any power to sue or defend any action on behalf of the State which are vested primarily in the Solicitor General in circumstances where the following statutory provisions provide in their ordinary and literal meaning to the contrary, namely:

(a)	Section 4 of the Claims and Against the State Act 1996 (the "Claims Act) provides that only the attorney General has the powers to bring any suit, including relator proceedings, in the name of the State, and;

(b)	Sections 7(a), (b) and (c0), of the Attorney General’s Act 1989, (the "AG Act") jointly and severally empower the Attorney General to issue or defend any suit on behalf of the State, and

(c)	Section 13(1) of the AG Act provides that whilst the primary function of the Solicitor General is to appear as an advocate to all matters in Court involving the State, the power is subject to two important limitations:

(i)	The Solicitor General can only act on such matter if and when instructed by the Attorney General (and not without it) pursuant to section 13(2), of the AG Act and

(ii)	The Attorney General has the powers to instruct external lawyers (other than the Solicitor General) to act for the State pursuant to his powers under section 7 of the AG Act.

(2)	The Learned Trial Judge erred in law in holding that section 4 of the Claims Act did not affect an earlier decision National Court in the matter of Pater Aigilo vs the State and Ors (No. 1) N2102, when on a combined reading of the section 4 of the Claims Act and sections 7(a), (b), (c), (I) and 13 of the AG Act, these provisions in their literal and ordinary meaning make it clear that only the Attorney has the power to sue or to defend any action on behalf of the State, and the Solicitor General’s role is confined to acting only on the exclusive instruction of the Attorney General in such matters.

(3)	Whilst the Learned Trial Judge correctly held that the National Court was not bound by one of its own previous decisions, the Learned Trial Judge erred in law insofar as he held that there were no reasons for the National Court in that instance to depart from a previous National Court ruling in the case of Peter Aigilo vs The state and Ors (N2102), in circumstances where for the reasons amongst others mentioned in paragraphs 3(1) and (2) above, the matter of Peter Aigilo vs The State was wrong decided.

(4)	The Learned Trial Judge erred in law in holding that the Attorney General had no power to brief external lawyers (other than the Solicitor General or lawyers in his office) without the recommendation and advice of the Solicitor General, when the scheme of the AG Act and inn particular sections 7(a), (b), (c), (I), 8, 9 and 13 of the AG Act and Section 4 of the Claims Act all provide to the contrary, namely, that the Attorney General has exclusive powers to brief external lawyers which maybe exercised without any recommendation or advice from the Solicitor General.

(5)	The Learned Trial Judge erred in law and in fact in holding that the pleadings disclosed negligence and mismanagement rather than fraud against the First Respondent and where His Honour did not have to make a final determination on the various causes of action as pleaded but need only satisfy himself that there was a prima facie cause of action. Further His Honour failed to consider whether any one of the causes of action other than fraud as pleaded disclosed a prima facie cause of action.

(6)	The Learned Judge erred in law in invoking summary jurisdiction under Order 12 Rule 1 of the National Court Rules and sections 155(4) and 166 of the Constitution which are both of general application in circumstance where there are specific provisions that provide for summary jurisdiction. In particular:

(a)	Order 8 rule 27 (Embarrassment), Order 10 rule 21 (Order for Decision), Order 12 rule 40 (Frivolity) of the National Court Rules, and the inherent powers provide the National Court with the only sources of summary jurisdictions.

(b)	The first three sources cited in paragraph 3(6)(a) herein are specific provisions.

(c)	The fourth source being the inherent powers under sections 155(4) and 166(1) of the Constitution are of general application, and may only be exercised in accordance with the principles in the National Court Rules cited in paragraph 3(6)(a) herein.

(d)	The Court below in having held earlier that there was no jurisdiction under Order 12 rule 40, and where the Second Respondent withdrew its application under Order 8 rule 27, and there being no application on foot under Order 10 rule 21, the Learned Judge erred in law in invoking the inherent powers of the Court and imposed jurisdiction outside the principles espoused in the specific provisions for summary jurisdiction when no case was made out or a need arose for it.

(7)	All the four orders made by the Learned Trial Judge were ultra vires his powers and therefore null and void on the basis that:

(a)	Those orders were not the subject of an motion, pleading or evidence.

(b)	The parties were not given any opportunity to make any submission in respect of each and everyone of those orders."

The main ground of appeal raises the important issue of the powers and the functions of the AG and the SG in relation to the interests of the State in litigation. 

The State is created by s 1 of the Constitution. Its legal capacity to sue and to be sued is prescribed under Section 247 of the Constitution which provides:

"247.	Legal capacity of the Independent State of Papua New Guinea.

(1)	Papua New Guinea has power to acquire, hold and dispose of property of any kind, and to make contracts, in accordance with an Act of the Parliament.

(2)	Papua New Guinea may sue and be sued, in accordance with an Act of the Parliament."

The law relating to the ability of the State to sue and be sued is to be found in Acts of Parliament in accordance with s 247 (2) of the Constitution. There are two relevant Acts; The Attorney-General Act (AG Act) 1989 and Claims By and Against the State Act (CBAS Act) 1996.

The Attorney-General Act 1989

This Act establishes both offices. Office of AG is established under s 2 of the AG Act. Duties, functions and responsibilities of AG are set out under s 7:

"7.	Duties, functions and responsibilities of the Attorney-General.

(a)	in accordance with Section 8, to carry out the duties of the principal legal adviser to the National Executive Council and related duties; and

(b)	to exercise the duties, functions and responsibilities conferred upon the Attorney-General or upon the principal legal adviser by the Constitutional Laws and Acts; and

(c)	to exercise the functions vested in the Office of Attorney-General by virtue of the underlying law including the bringing of proceedings known as relator proceedings; and

(d)	to exercise powers delegated to him by the National Executive Council or a Committee of the National Executive Council; and

(e)	in accordance with Section 10, to appoint a lawyer to be the Solicitor-General; and

(f)	in accordance with Section 13, to review any decision of the Public Solicitor to refuse legal aid and assistance to a person and to grant such aid and assistance in his absolute discretion following a review; and

(g)	in accordance with Section 15, to grant a certificate that a barrister or solicitor practising outside the country is authorized to appear before the National and Supreme Courts; and

(h)	in accordance with Section 16, to grant a certificate to IPA that—

(i)	a lawyer who is a non-citizen may commence practice as a lawyer in the country; and

(ii)	a firm of lawyers registered as a foreign enterprise under the Investment Promotion Act 1992 may continue to practise as lawyers in the country; and

(i)	to instruct lawyers within or outside the country to appear for the State in any matter; and

(j)	to recommend to the Minister responsible for finance matters the payment by the State of an ex gratia sum of money in cases where the State is not under a legal liability but where it appears nevertheless that the State should compensate a person as an act of grace."

This provision covers a wide range of duties, functions and responsibilities. It is necessary to refer to the relevant duties, functions and responsibilities. 

Principal Legal Advisor to the National Executive Council.

Section 7 (a) gives the AG power to perform the duties of Principal Legal Advisor (PLA) to the National Executive Council (NEC). This section is enacted in accordance with s 156 (2) of the Constitution. These functions are specifically provided under s 8:

"8.	Legal advice and opinion.

(1)	The Attorney-General, as the principal legal adviser, shall tender legal advice and opinion to the National Executive following a request to do so and shall of his own initiative give such advice where it appears to him necessary or appropriate for legal advice to be given on a matter.

(2)	The Attorney-General may tender or offer legal advice or opinion to the National Executive Council on a matter coming before the Council.

(3)	The Attorney-General may tender or offer legal advice or opinion to a Minister on a matter relating to the portfolio of that Minister.

(4)	On matters affecting the conduct of the business of the State where legal issues arise or might arise, legal advice shall be provided by the Attorney-General, either in his capacity as principal legal adviser to the National Executive or under Subsection (2) or (3) to the exclusion of all other lawyers unless the Attorney-General, in his absolute discretion, authorizes the giving of legal advice by any other person."

This provision empowers the AG to tender any legal advice or opinion to the NEC and Ministers (s 8 (1) (2) and (3)). This power is not qualified in any way. The AG is given exclusive power to tender legal advice and opinion on "any matter affecting the conduct of the business of the State" unless the AG in his absolute discretion authorizes any other person to give legal advice (s 8 (4)).

In addition the AG may perform any duty, function or responsibility that may be conferred on PLA by any other Constitutional Law or Act of Parliament (s 7 (b)). 

Moreover, the AG may exercise any power that may be delegated by NEC or Committee of the NEC (s 7 (d)).

Duties, Functions and Responsibilities that May Be Conferred on AG by an Act of Parliament.

The AG may perform any duty, function or responsibility that may be directly conferred on the AG by an Act of Parliament (s 7 (b)). We will come back to deal with other duties, functions and responsibilities conferred on AG by CBAS Act 1996.

Functions Vested By the Underlying Law.

The AG may perform functions that are vested by virtue of the underlying law in accordance with Sch. 2.2 and 2.3 of the Constitution (s 7 (c)). In particular, this provision makes reference to relator proceedings.

Appointment of the Solicitor General.

The AG is granted the power to appoint the SG in accordance with s 11 of the AG Act. This is a significant factor in considering the relationship between the two offices. Not only is the SG appointed by AG but as will be apparent from provisions relating to functions of SG, its functions are made subject to instructions by the AG. 

Power to Instruct Other Lawyers to Act for the State.

The AG is given power to instruct any lawyer to act for the State (s 7 (i)). This power is to be read together with the provisions relating to the functions of SG under s 13 of the AG Act:

"13.	Function of Solicitor-General.

(1)	The primary function of the Solicitor-General is to appear as an advocate for the State in matters coming before the courts in Papua New Guinea.

(2)	In the exercise of his function under Subsection (1), the Solicitor-General shall accept instructions only from the Attorney-General."

This provision indicates the nature and the scope of the functions of SG. Its main function is to "appear as an advocate for the State in matters before the courts." This is a specific and limited function. In exercising this function, SG shall accept instructions from the AG (s 13 (2)). 

In practice, where the State is a party in any litigation before the courts, the SG may act as an advocate if instructed to do so by the AG in accordance with s 13 (2) of AG Act. Where the SG is instructed, he must act in accordance with the instructions of the AG, such as to settle or not to settle a matter. 

Alternatively, the AG may in the exercise of his discretion instruct any other lawyer within or outside the country to act for the State (s 7 (i) of the AG Act). 

These provisions have to be read together with the relevant provisions of the CBAS Act. Section 7:

"7.	Service of process where State is a party.

(1)	Where the State is a party to a suit, all process in the suit required to be served on it shall be served on—

(a)	the Departmental Head of the Department responsible for justice matters; or

(b)	the Solicitor-General.

(2)	Service under this Section shall be effected by—

(a)	personal service on the officer referred to in Subsection (1); or
(b)	leaving the document at the office of the officer referred to in Subsection (1) with the person apparently occupying the position of personal secretary to that officer between the hours of 7.45 a.m. and 12 noon, or 1.00 p.m. and 4.06 p.m., or such other hours as may from time to time be declared by or under the Public Services (Management) Act 1995 to be the normal public service hours of duty, on any day which is not a Saturday, Sunday or a public holiday declared by or under the Public Holidays Act (Chapter 321)."

So far as service is concerned, two officers may receive service (a) Departmental Head responsible for justice matters and SG. With the former, if he is also AG by virtue of s 5 of the AG Act, he may give instructions to SG to act (s 13 (2) of AG Act) or give instructions to another lawyer (s 7 (i) AG Act). If the AG is a politician by virtue of s 4 of the AG Act, the Departmental Head will draw the matter to the attention of the AG to exercise his discretion either under s 13 (2) of the AG Act or under s 7 (i) of the AG Act.

If the SG is served with process, he will seek instructions from the AG (s 13 (2) AG Act). He cannot act without the instructions of the AG.

In the present case, the Departmental Head is AG by virtue of s 5 of the AG Act. He has given instructions to a private lawyer to issue a cause of action in the name of the State ( s 7 (i) of the AG Act). 

It is clear from the provisions we have examined that the AG is the principal officer who represents the interests of the State in terms of legal advice or opinion and where the State is a party before the courts. It would follow from this that the AG may issue suits in the name of the State. This is put beyond any doubt by s 4 of CBAS Act 1996:

"4.	Suits by the State.

Suits on behalf of the State, including relator proceedings, may be brought in the name of the State—

(a)	by the Attorney-General; and

(b)	in respect of a suit brought in a District Court, by—

(i)	 the Attorney-General; or

(ii)	a person appointed for the purpose by the Minister."

This provision makes it clear that suits on behalf of the State may be brought by the AG in the National Court and the District Court or in the case of the District Court by any person appointed for the purpose by the Minister.

We have considered the decision in Peter Aigilo v Sir Mekere Morauta & Others (Aigilo Case) (Unreported Judgment of the National Court dated 15th June 2001, N2102) in the light of the provisions we have examined of AG Act 1989 and CBAS Act 1996, we conclude that Aigilo Case was wrongly decided and therefore should not be followed. Counsel for the Appellant urged the trial judge to depart from his previous decision on the basis of the clear provisions of AG Act and CBAS Act but rejected these submissions and followed his own decision in Aigilo Case. In so doing he fell into error.

The trial judge reached a contrary view on the basis of "the principle of the separation of powers between the executive government and the civil service or politics and administration." The principle of separation of powers is descriptive only and is non-justiciable (s 99 of the Constitution). The separation of powers in this provision relate to the three arms of the National Government as set out under s 99 of the Constitution. What is involved in the present case relate to legal representation of the Executive arm of the National Government, namely, National Executive Council and other agents, servants and instrumentalities of the State.

The AG and SG represent the interest of the Executive arm of the Government. They do not represent the other two arms of the Government. In our view the notion of separation of powers is not a valid basis for interpreting the provisions of the relevant legislation.

The fact that a politician may become the AG under s 4 of the AG Act is a matter which the National Parliament in the exercise of its legislative power to enact in accordance with s 247 (2) of the Constitution. Where the Parliament passes an Act which is authorized by the Constitution, no court can question the policy or reasonableness of such an Act and substitute it with what it considers to be reasonable. All that the court can do is to see that the power which it is claimed to be exercised is one which falls within the four corners of the power (see Lord Green MR in Carltona, Ltd v Commissioners of Works & Others [1943] 2 All ER 560 at 564). The provisions of the AG Act and CBAS Act are not inconsistent with any Constitutional law.

Counsel for the Appellant also drew our attention to Simon Mali & Others v The State (Unreported judgment of the Supreme Court dated 3rd April 2002, SC690) in which the Supreme Court reached a somewhat similar conclusion in the Aigilo Case:

"The decision whether or not a certain litigation should be settled out of court is a professional decision of an advocate involved in that litigation. It certainly is not a decision intended to be made by someone in the exercise of an executive or political power or function. The point is emphasized when the position of an Attorney-General who is both a parliamentarian and a member of the executive government is appreciated. Such an Attorney-General would not have, has not the legislative and professional, capacity to make such a decision.

In this case the Office of the Solicitor-General had the carriage of the State’s defence to the claim. The Attorney-General had no power to settle the claim as he did."

However, the Supreme Court in this case did not consider all the relevant provisions of AG Act and CBAS Act. We would not follow this decision for this reason.

We agree with counsel for the Appellant that provisions of the two Acts of Parliament we have considered are clear in their terms. We do not find it necessary to resort to the principles of statutory interpretation where the language of legislation is unclear. The legislation in the present case do not fall into this category.

For these reasons, the trial judge erred in coming to the conclusion that the AG had no power to sue in the name of the State. We would allow the appeal on this ground.

Cause of Action in Law.

The ground of appeal in this regard relates to the view expressed by the trial judge that "The pleadings in these proceedings as they appear to disclose a case of negligence and mismanagement although they are framed in terms of a fraud" However, we note that the trial judge did not dismiss the action. The question is whether the pleading as it stands discloses a cause of action in law? We conclude that the pleading discloses a cause of action of fraud and illegality. We agree with counsel for the Appellant that any deficiency may be supplied by the exchange of Request for Further and Better Particulars and Interrogatories. In so far as there is any suggestion by the trial judge that there is no cause of action in law, this is an error.

In the result we would allow the appeal and set aside the orders made by the trial judge with costs to the Appellant.
___________________________________________________________________
Lawyers for the Appellant		:	Posman, Kua Aisi
Lawyers for the First Respondent	:	Stevens
Lawyers for the Second Respondent	:	Mirupasi