SC1469

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO 86 OF 2015

JOSEPH KAIYO,
ACTING ADMINISTRATOR, SOUTHERN HIGHLANDS PROVINCE
First Appellant

SOUTHERN HIGHLANDS PROVINCIAL GOVERNMENT
Second Appellant

V

PAUL PAWA
First Respondent

HON JAMES LAGEA MP,
MEMBER FOR KAGUA-ERAVE
Second Respondent

Waigani: Cannings J, Toliken J, Bona J
2015: 29 October, 11 November

PRACTICE AND PROCEDURE – appeal against order of National Court, dismissing civil proceedings for failure to comply with statutory duty to refer dispute to mediation – District Development Authority Act, Section 37

COURTS AND JUDGES – duty to conduct proceedings in accordance with principles of natural justice

The appellants commenced proceedings in the National Court challenging the appointment, by the second respondent, of the first respondent as Acting District Administrator. The appellants obtained ex parte an interim injunction restraining the first respondent from performing the powers and duties of District Administrator. The respondents then filed a notice of motion seeking dismissal of the proceedings on the ground of failure to exhaust the dispute resolution process under Section 37 of the District Development Authority Act 2014. At the time set for hearing the return inter partes of the interim injunction and the respondents' motion, the primary Judge, rather than hearing those matters, directed the parties to leave the courtroom and discuss the appointment procedure and return with an agreement on an outcome. The parties left and returned several hours later without agreement. The primary Judge then conducted a discussion with counsel and dismissed the proceedings due to the appellants' failure to comply with Section 37 of the District Development Authority Act and ordered that certain steps be taken by the parties to facilitate the fresh appointment of a District Administrator within 14 days. The appellants appealed against the decision of the primary Judge to dismiss the proceedings and make the other orders, on three principal grounds: (1) denial of natural justice; (2) misapplication of Section 37 of the District Development Authority Act; and (3) making orders inconsistent with dismissal.

Held:

(1)	The principles of natural justice require that a Judge before whom a notice of motion is set down for hearing has a duty to hear the party moving the motion if the party requests that it be heard, be fair to all parties and be prepared to listen to all parties.

(2)	A Judge who makes a significant, substantive order must make the order as a consent order (having adhered to the requirements for making orders with the consent of all parties, as spelt out in Simon Mali v The State (2002) SC690) or following a hearing at which all parties are given a reasonable opportunity to be heard on the terms of the proposed order.

(3)	Here, the order for dismissal was not made with the consent of the parties and the respondents' notice of motion, which sought dismissal of the proceedings, was discussed but not formally heard. The appellants as a result were denied the opportunity to be heard on dismissal of the proceedings. That amounted to a breach of natural justice. Ground 1 of the appeal was upheld.

(4)	The proceedings involved a challenge to appointment of a CEO of a District Development Authority. It was not a dispute between a CEO and a Provincial Administrator and not subject to Section 37 of the District Development Authority Act. The proceedings should not have been dismissed. Ground 2 of the appeal was upheld.

(5)	The National Court is empowered by Section 155(4) of the Constitution to make such orders as are necessary to do justice, which might include, as well as an order for dismissal, consequential orders intended to resolve a dispute. Ground 3 of the appeal was dismissed.

(6)	As two of the three categories of grounds of appeal were upheld, the appeal was allowed, the decision of the National Court was quashed and the matter was remitted to the National Court.

Cases cited

The following cases are cited in the judgment:

Mangope v Haba (2015) SC1459
Mataio v August & The State (2014) SC1361
Paul Paraka v Eastern Highlands Provincial Government (2005) SC809
Simon Mali v The State (2002) SC690

Counsel

L Tangua, for the Appellants
W Mapiso & S Phannaphen, for the Respondents

11th November, 2015

1. BY THE COURT: This is an appeal against dismissal of proceedings by the National Court.

NATIONAL COURT PROCEEDINGS

2. The National Court proceedings, OS No 325 of 2015, were commenced on 11 June 2015 by the appellants, the acting Provincial Administrator of Southern Highlands Province Joseph Kaiyo and the Southern Highlands Provincial Government. They challenged the appointment of the first respondent Paul Pawa as acting District Administrator for Kagua-Erave District, which had been facilitated by the local member, Hon James Lagea MP. The appellants proposed to argue that Mr Pawa's appointment was unlawful as it had been made by Mr Lagea contrary to the Organic Law on Provincial Governments and Local-level Governments and the Public Services (Management) Act 1995, which makes the Provincial Administrator, not the local member of Parliament, the appointing authority.

3. On 15 June 2015 the National Court (Kandakasi J) granted an interim injunction ex parte, restraining Mr Pawa from holding himself out as District Administrator until the substantive hearing of the matter.

4. On 2 July 2015 the respondents filed a notice of motion seeking dismissal of the proceedings for abuse of process. They proposed to argue that the appellants had failed to exhaust the dispute resolution process under Section 37 of the District Development Authority Act 2014, which provides that legal proceedings are not to be taken in relation to a dispute between the CEO of a District Development Authority (a District Administrator) and a Provincial Administrator, unless mediation has been held. The motion was set down for hearing on 9 July 2015, which was also the date for an inter partes hearing on the interim order.

5. On 9 July 2015 the primary Judge, rather than hearing the parties on whether the respondents' motion should be upheld or the interim injunction should continue, directed the parties to leave the courtroom and discuss the appointment procedure and return with an agreement on an outcome. The parties left and returned several hours later without agreement.

6. The primary Judge then discussed the issues with counsel for the parties. Without asking for submissions on the respondents' motion, his Honour concluded that the proceedings should be dismissed due to the appellants' failure to comply with Section 37 of the District Development Authority Act and that certain steps be taken by the parties within 14 days that would result in appointment of a District Administrator. His Honour ordered:

1	Pursuant to Order 12, Rule 40(1) (c) of the National Court Rules and based on Section 37(3) of the District Development Authority Act 2014, this proceeding is dismissed for abuse of process.

2	Both the first defendant and the person that has been appointed by the Provincial Administrator, namely Mr Mark Nande, are restrained from holding out or assuming any power and or seek to or purport to discharge such powers or authorities as the District Administrator for Kagua-Erave District, Southern Highlands Province until the due process of the law as to appointment to that position is followed and an appointment is made, be it substantive or acting.

3	In the interest of enabling normal administration for the Kagua-Erave District to function the two relevant appointing authorities, namely the Kagua-Erave District Authority for its recommending powers and or rights consider and make the necessary recommendations within 7 days from today.

4	The appointing authority which is the Southern Highlands Provincial Administrator shall make and appoint the District Administrator for the Kagua-Erave District from the list recommended by the District Authority within 7 days from the date of the receipt of the recommendation.

5	If the question of the Office of the District Administrator of Kagua-Erave is not resolved by the foregoing orders, the dispute shall be referred to the Minister for Provincial and Local Level Government Affairs as contemplated under Section 37(1) and (2) of the District Development Authority Act 2014 for resolution by mediation.

6	For avoidance of any doubt, the ex-parte interim orders of this Court made on 15th June 2015 are lifted.

7	The plaintiffs shall pay the defendants' costs of and incidental to the proceeding, to be agreed, if not taxed.

8	The time for entry of these orders is abridged to take place upon the Court signing them. [sic]

THE APPEAL

7. The appellants appealed against the order of 9 July 2015 by filing a notice of appeal containing eight grounds, which fall into three categories:

(1)	denial of natural justice (grounds 1, 4 and 5);

(2)	misinterpretation of Section 37 of the District Development Authority Act (grounds 2 and 3); and

(3)	making orders inconsistent with dismissal (grounds 6, 7 and 8).

8. We deem that categorisation to amount to three grounds of appeal, which give rise to these issues:

(1)	Was there a denial of natural justice?

(2)	Was there a misinterpretation of Section 37?

(3)	Did the primary Judge err by making consequential orders, after dismissing the proceedings?

(4)	What orders should be made?

1 	WAS THERE A DENIAL OF NATURAL JUSTICE?

9. Mr Tangua, who was counsel for the appellants at the hearing of 9 July 2015, and before us, submitted that the hearing was conducted contrary to the principles of natural justice, in that:

(a)	no formal application was moved before the National Court;
(b)	the primary Judge only engaged in a discussion with counsel as to the issues;
(c)	his Honour did not hear counsel on the evidence or the law regarding dismissal of proceedings or abuse of process;
(d)	his Honour dismissed the proceedings "at his own behest";
(e)	ample time and opportunity was not given to the appellants' counsel to put forward their case;
(f)	his Honour unnecessarily compelled the parties to negotiate; and
(g)	his Honour unreasonably refused to hear argument on the matters before the Court.

10. We consider, after examining the transcript of the proceedings of 9 July 2015, that those submissions should, generally, be upheld.

(a)	No formal application was moved before the National Court

11. There were two distinct matters before the Court: the return of the interim injunction for an inter partes hearing and the respondents' notice of motion, seeking an order for dismissal. His Honour did not allow, or insist on, either of those matters being the subject of a formal application. This was not by itself an error of law but it created the environment in which a denial of natural justice could easily occur, which is what, we find, actually happened.

(b)	The primary Judge only engaged in a discussion of the issues

12. This is a fair description of what happened. The respondents' notice of motion filed on 2 July 2015 was before the Court, but his Honour did not conduct a hearing on it. He did not ask the respondents' counsel, Mr Mapiso, to argue the motion. Nor did his Honour ask the appellants' counsel, Mr Tangua, to respond to it.

13. There are no rigid rules that regulate how a motion should be heard. However, whatever procedure is followed, it must be fair. All parties must be heard. That end will usually be served by the conventional procedure of first, asking the mover of the motion to argue the motion, secondly seeking a response from all other parties and finally giving a right of reply to the mover of the motion.

14. Here, that procedure was not followed. The respondents' motion was largely upheld. But because of the failure to apply the conventional procedure for hearing and determining a motion, or any other structured or systematic procedure, the appellants were not heard on the motion. There was only a general discussion, led by his Honour, on the issues raised by the motion.

15. There is nothing wrong with a Judge having a general discussion with counsel for the parties. This can sometimes result in agreement that the motion set down for hearing is unnecessary. But if there is no agreement, the Judge should accept that that is the case and move on. The Judge should require the party who has filed the notice of motion to move the motion. The Judge should not force agreement on the parties or impose his own views on the parties without allowing all of them to be heard.

16. Here, it was clear the appellants did not agree with the respondents' argument that the proceedings were an abuse of process under Section 37 of the District Development Authority Act. The appellants at all times retained the position that the appointment of the first respondent was unlawful. This was clearly the case when the parties returned to the courtroom after having been ordered to go outside to discuss the matters. It was at that point that the learned primary Judge ought to have ceased general discussion of the issues and imposed the conventional structure and rigour of a hearing of a motion for dismissal. His Honour, however, continued a general discussion with the parties; and it was a discussion that his Honour led, and dominated, in which Mr Tangua was interrupted on a number of occasions.

17. We consider, with respect, that that was not a proper course of action for the learned primary Judge to take. A Judge before whom a notice of motion is set down for hearing has a duty to hear all parties on the motion. A Judge must be fair to all parties and be prepared to listen to all parties (Paul Paraka v Eastern Highlands Provincial Government (2005) SC809). We find, with respect, that his Honour's failure to conduct a conventional hearing on the motion, and to instead continue a discussion of the issues, was, in the circumstances, a denial of natural justice.

(c)	His Honour did not hear counsel on the evidence or the law regarding dismissal of proceedings for abuse of process

18. This is also a fair description of what happened. This situation came about because his Honour continued to discuss the evidence and the law generally. His Honour did not require the respondents to move their motion for dismissal, which meant that no effective opportunity was given to the appellants to respond to the motion.

19. It is essential that, in whatever circumstances a Court is giving consideration to the dismissal of proceedings, the party who commenced the proceedings must be given a full and fair opportunity to argue against the proposed dismissal (Mataio v August & The State (2014) SC1361). That is another manifestation of the principles of natural justice, which was not adhered to here.

(d)	His Honour dismissed the proceedings "at his own behest"

20. This is not quite an accurate description of what happened. It was the respondents who raised the issue of Section 37, not his Honour. However, once his Honour's attention was drawn to that provision, it is fair to say that his Honour quickly formed the view that the proceedings should be dismissed.

21. It was clear, as a fact, that the appellants had not attempted mediation before commencing the court proceedings. The error that we find, with respect, that the primary Judge made was that he did not allow the appellants to be heard on the question of law – whether mediation was required – on which the dismissal of the proceedings was based. 

(e)	Ample time and opportunity was not given to the appellants' counsel to put forward their case

22. We think that is a fair and accurate description of what happened. A Judge who makes a significant, substantive order must make the order as a consent order (having adhered to the requirements for making orders with the consent of all parties, as spelt out in Simon Mali v The State (2002) SC690) or following a hearing at which all parties are given a reasonable opportunity to be heard on the terms of the proposed order (Mangope v Haba (2015) SC1459).

23. Here, the order for dismissal was not made with the consent of the parties. The respondents' motion, which sought dismissal of the proceedings, was discussed but not formally heard. The appellants as a result were denied the opportunity to be heard on dismissal of the proceedings. That amounted to a breach of natural justice.

(f)	His Honour unnecessarily compelled the parties to negotiate

24. We reiterate our view that there was nothing wrong in his Honour ordering the parties outside the courtroom for several hours, to give them time to negotiate and try to reach agreement. However, once they returned to the courtroom and it was clear that they were not in agreement, his Honour should, with respect, have ceased his attempts to get the parties to negotiate and agree. His Honour should have just heard the motion in the normal way.

(g)	His Honour unreasonably refused to hear argument on the matters before the Court

25. With respect, we consider that that is a fair summation of the manner in which the proceedings were conducted.

Conclusion re ground of appeal No 1

26. The principles of natural justice or procedural fairness are an integral part of the underlying law of Papua New Guinea, the minimum requirement of which, expressly recognised by Section 59 of the Constitution, is: "the duty to act fairly, and, in principle, to be seen to act fairly". These principles dictate that a person whose interests are likely to be affected by a judicial decision must be afforded an opportunity to be heard by the judicial officer, before the decision is made. We find, with respect, that the manner in which the learned primary Judge conducted the proceedings of 9 July 2015 offended against those principles. The appellants were denied natural justice. The first ground of appeal is upheld.

2	WAS THERE A MISINTERPRETATION OF SECTION 37 OF THE DISTRICT DEVELOPMENT AUTHORITY ACT?

27. His Honour dismissed the proceedings as he agreed with the respondents that the appellants' challenge to the appointment of the first respondent was a dispute that fell within Section 37 and the appellants had not attempted mediation. Therefore, the proceedings were an abuse of process under Section 37(3). Section 37 (dispute resolution) states:

(1)	If there is a dispute between —

(a)	the Chief Executive Officer and a Provincial Administrator; or
(b)	the Chief Executive Officer and a Board member; or
(c)	a Board member and the Provincial Government; or
(d)	an Authority and any other government entity or State agency,

a party may bring the matter to the attention of the Minister and make a written submission to the Minister.

(2)	The Minister shall consider the submission (if any) made by the parties to the dispute and may meet with one or more of those parties, together or separately, to mediate a solution to the dispute.

(3)	Legal proceedings are not to be taken in relation to a dispute, unless mediation has been held but failed to resolve the dispute.

We have a different view. The prohibition against legal proceedings in Section 37(3) is imposed only in relation to a "dispute" that is caught by Section 37(1), which refers to four categories of dispute. Of those four, the only category that the dispute as to the appointment of the first respondent could conceivably fall into, is Section 37(1) (a).

28. This gives rise to the question whether the subject of the National Court proceedings was a dispute between the CEO of a District Development Authority and a Provincial Administrator.

29. The answer is no. This was a dispute regarding the appointment by the second respondent of the first respondent as acting District Administrator. It was a challenge to the appointment on the ground of failure to comply with the procedures of the Organic Law on Provincial Governments and Local-level Governments and the Public Services (Management) Act 1995. In particular, the appellants were arguing that the first respondent had been appointed by the second respondent, which was unlawful as he could only be appointed by the first appellant. It was not a dispute between the first respondent and the first appellant as to the affairs of Kagua-Erave District or the business of the District Development Authority, those being the sorts of dispute being referred to in Section 37. We cannot see any legislative intention to make legal challenges to the appointment of a District Manager or the CEO of a District Development Authority brought within Section 37 or to make such challenges subject to the requirement that mediation be first held.

30. We respectfully consider that the learned primary Judge erred when interpreting and applying Section 37 in the manner contended for by the respondents. The second ground of appeal is upheld.

3 	DID THE PRIMARY JUDGE ERR BY MAKING CONSEQUENTIAL ORDERS AFTER DISMISSING THE PROCEEDINGS?

31. The appellants argue that once the primary Judge dismissed the proceedings, which he did under order No 1 of 9 July 2015, his Honour had no jurisdiction to make any other orders, or at least substantive orders such as order Nos 2 to 5 of 9 July 2015.

32. We are not persuaded by this argument. It might have been preferable to use a form of words other than "the proceeding is dismissed" in order No 1. For example if the order had stated "the relief sought in the originating summons is refused", the contradiction in terms, which appears on an initial comparison of order 1 with order Nos 2 to 5, would not so readily arise. However, the contradiction is only of form, not substance. His Honour was making a final order, determining the originating summons and bringing the proceedings to a close. Viewed in that light, it was much like a final order disposing of many other types of civil proceedings, whereby the Court refuses to grant some forms of relief and grants some others, thereby setting out certain acts that must be performed by the parties and the time in which they must be performed.

33. We find no error of law in the manner in which the order of 9 July 2015 was granted. The third ground of appeal is dismissed.

4	WHAT ORDERS SHOULD BE MADE?

34. We have upheld two of the three grounds of appeal. Both have exposed significant errors of law regarding the procedure that led to the order (ground 1) of 9 July 2015 and the substance of the order (ground 2). It follows that the appeal will be allowed and the order will be quashed. The proceedings will be remitted to the National Court before another Judge. Costs will follow the event of the appeal.

ORDER

(1)	The appeal is upheld.

(2)	The order of the National Court of 9 July 2015 in OS No 325 of 2015 is quashed.

(3)	The matter is remitted to the National Court before another Judge.

(4)	The respondents shall pay the costs of the appeal to the appellants on a party-party basis, which shall, if not agreed, be taxed.

(5)	The parties will bear their own costs of the National Court proceedings.

Judgment accordingly,
_________________________________________________________________

Baniyamai Lawyers: Lawyers for the Appellants
Guardian Legal Services : Lawyers for the Respondents