SC2500

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCM NO. 08 OF 2023 [IECMS]

BETWEEN
HENRY JOSEPH MOKONO
Appellant

AND
HONOURABLE JUSTIN TKATCHENKO MP, MINISTER FOR HOUSING AND URBANI SATION
First Respondent

AND
THE SECRETARY, DEPARTMENT OF PERSONNEL MANAGEMENT
Second Respondent

AND
THE PUBLIC SERVICES COMMISSION
Third Respondent

AND
THE NATIONAL EXECUTIVE COUNCIL
Fourth Respondent

AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fifth Respondent

AND
ELIZABETH BOWADA
Sixth Respondent

Waigani: Makail, Frank & Eliakim JJ
2023: 30th August & 30th November

SUPREME COURT APPEAL – Judicial Review upheld – Appeal by Notice of Motion – Process of appointment of Managing Director – Statutory Interpretation – Functional or dysfunctional board – Appeal dismissed – Constitution – Sections 208A & 208B – National Housing Corporation Act – Sections 7, 15 & 17 – Regulatory Statutory Authorities (Appointment to Certain Offices) Act, 2004 – Sections 4, 8 & 13 – Supreme Court Rules – Order 10 

WORDS & PHRASES – “No Board” – Meaning of – Construction of – Literal as opposed to purposive approach to statutory interpretation discussed – Fair and liberal interpretation – Constitution – Section 109(4) – Regulatory Statutory Authorities (Appointment to Certain Offices) Act, 2004 – Section 13

Facts

The appellant and sixth respondent applied for the position of Managing Director of the National Housing Corporation (“NHC”).  The appellant was appointed to the substantive position of Managing Director. Section 4 of the Regulatory Statutory Authorities (Appointment to Certain Offices) Act, 2004 (“RSA Act”) authorised the Board of the NHC to initiate and conduct the appointment process of the Managing Director.  The process included publication of a notice in the National Gazette and newspaper to declare the office of the Managing Director as being vacant, advertisement of the vacancy and invitation for applicants for appointment to the office, preparation of a short list of candidates for appointment, and submission to the Public Services Commission for consideration.  The second respondent invoked Section 13 of the RSA Act, and conducted the selection and short list of candidates for appointment of the Managing Director on the grounds that there was “no Board” of the NHC.  The membership of the Board is nine.  The required number of members to form a quorum for a Board meeting is three.  Four of the members including the Chairman were terminated for misbehaviour and five members remained.  The sixth respondent sought judicial review of the appointment of the appellant as Managing Director.  The National Court upheld the application for judicial review and quashed the decision to appoint the appellant as Managing Director.  The appellant appealed the National Court decision.  On appeal, it was argued that a purposive approach as opposed to a literal approach to statutory interpretation be adopted because it is uncertain how Section 13 applied in a situation where a Board existed but is ‘non-functional’ or ‘dysfunctional’.

Held:

1.	Section 13 of the RSA Act must be construed literally.

2. 	The phrase “no Board” in Section 13 of the RSA Act in its literal construction means that there are no members of the Board appointed or a smaller number of members than the requisite number of three members to constitute a quorum of a Board within the meaning of Sections 7 and 15(3)(a) of the National Housing Corporation Act (“NHC Act”).

3.	The words ‘non-functional’ or ‘dysfunctional’ Board are not found in Section 13 or elsewhere in the RSA Act.  If the legislature had intended for Section 13 of the RSA Act to be conditional upon a functional Board, then it would have provided additional words to that effect.

4.	It is undisputed that out of the nine-member Board, four members including the Chairman were terminated for misbehaviour and five members remained.  Pursuant to Section 15(3)(a) of the NHC Act the remaining five members had the requisite number to form a quorum at a next Board meeting to initiate, advertise, screen and short list of candidates for appointment of the Managing Director of the NHC.

5.	Where the Board has the requisite number of members to form a quorum but does not convene a meeting because of the absence of the Chairman, the Minister may exercise the power conferred on him under Section 15(2) of the NHC Act to convene a Board meeting.  This is a recourse available to the Board if the Chairman is absent and the power may be exercised by the Minister only in a case where the Chairman is absent to convene a Board meeting.

6.	In this case, the advertisement, screening, and short listing of candidates for appointment of the Managing Director hit a stalemate due to no Chairman.  However, as the Board members had the numbers to form a quorum to convene a Board meeting, it was open to the Minister to invoke Section 15(2) of the NHC Act and convene a Board meeting to start the selection and appointment process of the Managing Director.

7.	Where there is no Chairman and members of the Board or a smaller number of members than the requisite number to form a quorum of three members, such a case will fall within the literal meaning of the phrase “no Board” under Section 13 of the RSA Act and will trigger the Department of Personnel Management to intervene. The invocation of the Section 13 of the RSA Act by the Department of Personnel Management is akin to a ‘last resort’ measure.

8.	For the second respondent to intervene and conduct the advertisement, screening, and short listing of candidates for appointment of the Managing Director on the grounds that the Board was ‘non-functional’ or ‘dysfunctional’, this is where the second respondent not only prematurely usurped the powers and functions of the Board but also committed an error of law.  

9.	The error of law cuts across and deep into the whole decision-making process of selection and appointment of the Managing Director under Section 4 of the RSA Act and Section 15 of the NHC Act such that the trial judge was correct to find that the ultimate decision by the fourth respondent to approve the recommendation of the first respondent to appoint the appellant as Managing Director without the Board’s input was illegal, null and void. 

10.	The appeal is dismissed with costs.

Cases Cited:
Elizabeth Bowada v. Honourable Justine Thatchenko, MP (2022) SC2258 (PLAR No.1 of 1980 [1980] PNGLR 326 
Placer Holdings Pty Ltd v. PNG [1982] PNGLR 16
Singorom v. Kalaut [1985] PNGLR 238 
Karingu v. PNG Law Society (2001) SC674 
Fly River Provincial Government v. Pioneer Health Services Limited (2003) SC705
Ramu Nico Management (MCC) Limited v. Farina Siga (2010) SC1056

Counsel
Mr. I. Molloy with Mr. W. Bigi, for Appellant
Mr. N. Kondop, for First Respondent
No appearance, for Second, Third & Fourth Respondents 
Mr. L. Tangua, for Fifth Respondent
Mr. A. Mana, for the Sixth Respondent  

JUDGMENT

30th November, 2023

1.	BY THE COURT:  This is an appeal against a decision of the National Court on 28 April 2023 upholding the sixth respondent’s application for judicial review. As such, the appeal is made by way of a notice of motion pursuant to Order 10 of the Supreme Court Rules.
Background Facts

2.	The appellant and sixth respondent applied for the position of Managing Director of the National Housing Corporation (“NHC”). The sixth respondent had been Acting Managing Director for a period of two (2) years commencing May 2019 to July 2021.

3.	The appellant was appointed to the substantive position to take effect on 03 August 2021 at which time the sixth respondent’s acting appointment was revoked.

4.	This resulted in the sixth respondent applying for judicial review on a series of decisions up to the appellant’s appointment.

5.	The National Court heard the substantive application for judicial review on 21 April 2023 and delivered its ex-tempo decision on 28 April 2023.

6.	In its decision, the National Court found that the appointment of the appellant was flawed as due process was not followed. The following orders were made:

1.	“The Judicial Review is upheld.

2.	The following decisions under review are brought into this court and quashed:-

a.	The second defendant’s decision in failing to consult and allow the National Housing Corporation (NHC) Board to submit the list of candidates for appointment to the position of Managing Director to the NHC, under Section 4(2) of the Regulatory Statutory Authorities (Appointment to Certain Officers) Act 2004, to the third Defendant, to commence the appointment process to the position of Managing Director to the NHC;

b.	The third defendant’s decision in failing, on the receipt of a list of candidates for appointment to the position of Managing Director to the NHC, under Section 4(2) of the Regulatory Statutory Authorities (Appointment to Certain Offices) Act 2004, to submit its recommendations to the NHC Board;

c.	The second defendant’s decision in failing, upon receipt of a list of candidates for appointment to the position of Managing Director the NHC, under Section 4(2) of the Regulatory Statutory Authorities (Appointment to Certain Offices) Act 2004., to submit its recommendations to the third Defendant, thereby by-passing the NHC Board; 

d.	The First Defendant’s decision, in submitting his recommendation as to the preferred candidate for the position of Managing Director to the NHC, to the National Executive Council for its consideration, upon receipt of the list of candidates; and

e.	The Fourth Defendant’s decision, in considering the submission from the First Defendant, and selecting the Sixth Defendant as the candidate recommended by the Minister, culminating in the Sixth Defendant’s appointment on 09 July 2021, as gazetted by Gazettal notice No. G524 dated 03 August 2021, as Managing Director of NHC.

3.	An order in the nature of a prohibition, prohibiting the Defendants and their servants, agents, officers and employees and others from giving effect to or relying on the quashed decisions.

4.	A declaration that the decisions covered in Term 1 of these orders are void, invalid and of no effect.

5.	An injunction restraining the Defendants and their servants, agents, officers and employees and others from making an alternative appointment to the position of Managing Director to the National Housing Commission without complying with the law.

6.	An order in the nature of mandamus directing the Defendants and their servants, agents and officers and employees and others to comply with the law, in particular, the Regulatory Statutory Authorities (Appointment to Certain Offices) Act 2004, in the process of making an alternative appointment to the position of Managing Director to the National Housing Corporation.”

7.	At the hearing of this appeal, only the appellant, first, fifth and sixth respondents were represented and heard. The fifth respondent, however, supported the appeal. 

Grounds of Appeal

8.	It is undisputed that the appellant’s appointment as Managing Director of the NHC was facilitated by the Secretary, Department of Personnel Management who is the second respondent in this appeal pursuant to Section 13 of the Regulatory Statutory Authorities (Appointment to Certain Offices) Act, 2004 (“RSA Act”). 

9.	To guide us in our deliberation, there are eleven grounds of appeal.  Each of them challenged the trial judge’s exercise of discretion on the grounds that his Honour erred both in fact and law. The grounds can be summarised and are rearranged as follows: 

1.	Ground One and Ground Two

Grounds one and two are related because they bring up the appellant’s primary contention that the NHC Board was non-existent or dysfunctional, resulting in Section 13 of the RSA Act being invoked. Hence, the appointment process under the circumstances was valid and the subsequent appointment of the appellant as Managing Director of NHC was proper.

2.	Ground Three and Ground Eight 

Grounds three and eight can be dealt with together as they go to challenge the sixth respondent’s standing and further that she was estopped from raising the issue because by her conduct, she had accepted the process adopted by the first, second and third respondents to appoint a Managing Director. 

3.	Ground Four, Ground Five, Ground Six, Ground Seven and Ground Nine 

Grounds four, five, six, seven and nine bring up the question of powers of the first respondent to take the second and third respondents’ recommendations to the fourth respondent for its consideration and decision. The appellant will contend that the fourth respondent is the appointing authority pursuant to Section 6(3) of the RSA Act, and the appointment of the appellant as Managing Director of NHC was proper and in order. Further, that the Supreme Court granted leave to the sixth respondent to review only the decision of the first respondent and not the second, third and fourth respondents’ decision. 
4.	Ground Ten and Ground Eleven 

Grounds ten and eleven bring up the question of how the trial was conducted in the National Court and exercise of discretion.  

10.	While it is noted that Grounds three to eleven of the appeal bring up further issues which go to question the correctness of the trial judge’s decision, it is not necessary to consider them because Grounds one and two bring up the major issue that will decide the success of the appeal.  In our view, it is in the interests of justice that we address the major issue to resolve the controversy of the appointment of Managing Director between the parties and bring it to a close rather than focusing on peripheral issues because it has been a hotly contested issue for the last couple of years.

11.	The major issue to be determined is the construction of the phrase “no Board” in Section 13 of RSA Act. Does the phrase “no Board” mean a Board that lacked the requisite number of members or has the requisite number of members but is dysfunctional or non-functional?

National Court – OS (JR) 115 OF 2021

12.	On 21 April 2023, the transcript of the hearing reveal that only the appellant and the sixth respondent were represented at the hearing of the substantive matter. In addition, the trial judge was assisted with written submissions from counsels. 

13.	Mr. Mana for the sixth respondent argued there was an existing NHC Board which convened a meeting sometimes in 2020.  Furthermore, the State Solicitor’s Office, through a letter dated 15 October 2020 to the first respondent, provided legal advice that despite four members of the Board being suspended, the other five remaining members can form a quorum over and above of the minimum of three, to convene a Board meeting.

14.	However, according to Mr Mana, the remaining five members did not convene a meeting.  Instead, the second respondent intervened and undertook the task of the Board to facilitate the appointment of the Managing Director of the NHC whereby the appellant was ultimately appointed by the fourth respondent as the Managing Director.  

15.	Mr. Bigi for the appellant referred the trial judge to the Supreme Court decision in Elizabeth Bowada v. Honourbale Justine Thatchenko, MP (2022) SC2258 which deliberated on the sixth respondent’s appeal against the National Court’s refusing her application for Leave to review.  The Supreme Court set aside the National Court’s decision and further ordered that “The appellant is granted leave to review the decision of the first respondent to appoint the 6th respondent to the position of the Managing Director for the NHC”.

16.	Secondly, Mr Bigi submitted that the second respondent invoked Section 13 of the RSA Act and executed the functions of the Board for reasons that although a NHC Board existed, it was dysfunctional. In the circumstances, it was a proper exercise of power by the second respondent and the appointment of the appellant was proper and in order.

17.	Thirdly, Mr. Bigi argued that the sixth respondent is estopped from challenging the process because by her conduct she had accepted the decision that the second respondent duly complied with the process of appointment under RSA Act. This is because in 2020 the second respondent adopted the same procedure under Section 13 to facilitate the appointment of the acting Managing Director where the sixth respondent was ultimately the beneficiary.  This is confirmed by the NHC Board Meeting Minutes 20/11/20, under AOB – “Extension of Acting Appointment for Acting Managing Director Ms. Elizabeth Bowada.  Ms Elizabeth Bowada’s acting capacity to be extended in order to maintain continuity while the permanent appointment process is handled by Department of Personnel Management.”   

18.	Despite the appellant’s strong submission that the NHC Board was dysfunctional, the trial judge adopted the literal interpretation of Section 13 of the RSA Act and held that an NHC Board did exist. His Honour’s finding was based not only on the concurrence of all parties, but that there was also evidence of a Board meeting held in the year 2020.  As there was a Board, it was not necessary for the second respondent to step in and perform the powers and functions of the Board in relation to the selection and appointment of the Managing Director.

Law on Appointment of Managing Director of NHC 

19.	Before we address the major issue, it is appropriate to give some background information to relation to the selection and appointment process of the Managing Director under the RSA Act and the NHC Act.  The NHC is a regulatory statutory authority as determined by Part VIIA of the Constitution of the Independent State of Papua New Guinea (“PNG Constitution”) and enabled by the RSA Act 2004.

20.	Section 208A of the PNG Constitution sets out the legal framework of how Regulatory Statutory Authorities are established and operated within the governmental structure.  Section 208A provides:

“(1)	The following are Regulatory Statutory Authorities for the purposes of this Part:-

(a)   a body corporate established by an Act of Parliament to perform specific statutory functions; and

(b)   a body corporate incorporated by authority of an Act of Parliament and declared by an Act of Parliament to be a body to which this Part applies.

(2)   An Act of the Parliament may make provision for or in respect of other Regulatory Statutory Authorities to which this Part applies.”

21.	Pursuant to Section 208B of the PNG Constitution, the positions and offices governed by the RSA Act are the offices of the Chief Executive Officer and non-ex officio members of the relevant boards, respectively.  Section 208B states:

(1)	“This section applies to and in respect of the following offices and positions: -

(a)   all offices of chief executive officers of Regulatory Statutory Authorities; and

(b)   all offices of non ex officio members of Boards of Regulatory Statutory Authorities; and

(c)   such other offices and positions as are prescribed by an Act of Parliament254 for the purpose.

 (2)   All appointments (whether temporary or substantive) to offices to which Subsection(l)(a) applies shall be made by the Head of State, acting with, and in accordance with, the advice of the National Executive Council given after considering recommendations from the relevant Minister, acting on the advice of the relevant Board, following procedures prescribed by an Act of Parliament. 

 (3)   All appointments (whether temporary or substantive) to offices to which Subsection (l)(a) applies shall be made by the National Executive Council given after considering recommendations from the relevant Minister, acting on the advice of the relevant Board, following procedures prescribed by an Act of Parliament.

 (4)   The revocation of appointments of persons appointed under Subsection(l)(a) shall be made by the Head of State, acting with, and in accordance with, the advice of the National Executive Council given after considering recommendations from the relevant Minister, acting on the advice of the relevant Board, following procedures prescribed by an Act of Parliament. 

 (5)   The suspension from office of persons appointed under Subsection(l)(a) shall be made by the Head of State, acting with, and in accordance with, the advice of the National Executive Council given after considering recommendations from the relevant Minister, acting on the advice of the relevant Board following procedures prescribed by an Act of Parliament. 

 (6)   All appointments (whether temporary or substantive) to offices to which Subsection (l)(b) applies shall be made by the Head of State, acting with, and in accordance with, the advice of the National Executive Council given after considering recommendations from the relevant Minister following procedures prescribed by an Act of Parliament.”

22.	The National Housing Corporation Act (“NHC Act”) provides, amongst others, for the establishment of the National Housing Corporation Board (“NHC Board”) and appointment of its members.

23.	Section 7 of the NHC Act provides for a nine-member Board which consists of three ex-officio members and six non-ex-officio members. A member shall be appointed as Chairman by the Head of State acting on advice pursuant to Section 8 of the NHC Act. Where the Chairman is absent or unable to act in relation to a matter, Section 8(2) provides that:

“If the Chairman is absent from any meeting of the Board or is unable to act in relation to a matter, the person elected under Section 15(3)(b) has and may exercise and perform the powers and functions of the Chairman”.

24.	Section 15 of the NHC Act provides for the meetings of the Board. It states:

(1)	The Board shall meet at such times and places as the Chairman determines.

(2)	The Minister may at any time convene a meeting of the Board.

(3)	At a meeting of the Board –

(a)	Three members are a quorum; and

(b)	The Chairman, or in his absence a member elected by the members present from their own number, shall preside; and

(c)	All matters shall be decided by a majority of votes of the members present and voting; and

(d)	The member presiding has a deliberative and, in the event of an equality of votes, also a casting vote.

(4)	Subject to this Act, the procedure at a meeting of the Board are as determined by the Board.” 

25.	Section 17(1)(a) of the NHC Act provides for, amongst other matters, the appointment of a Managing Director.  It states:

“There shall be a Managing Director of the Corporation who shall be appointed, suspended or dismissed in the manner as is specified in the Regulatory Statutory Authorities (Appointment to Certain Officers) Act 2004;”.  

26.	Section 4 of the RSA Act confers power on the Board to initiate and undertake the selection and appointment process of the Chief Executive Officer who is the Managing Director.  It provides as follows:

“(1) Where the office of the chief executive officer of a Regulatory Authority is vacant, or is likely to become vacant, the Board shall –

(a)	By notice in the National Gazette and in at least one newspaper circulating generally in Papua New Guinea, declare the office vacant; and

(b)	Advertise the vacancy and invite applications for appointment to the office;

(2)	The Board shall, follow the merit-based appointment process specified in Section 5 – 

(a)	Prepare from the applications received a ranked list of five candidates in the order of preference; and

(b)	Submit the list to the Public Services Commission for its consideration.

(3)	Where, in relation to an advertised vacancy……..”.

27.	The pertinent provision is Section 13 of the RSA Act.  Section 13 states: 

“Where, in relation to a Regulatory Statutory Authority, there is no Board or other controlling or governing body, the functions of a Board specified under Parts 2, 3 and 4 of this Act shall be exercised by the Department responsible for personnel management matters”.

Construction of Section 13 of the RSA Act

28.	Mr. Molloy for the appellant, contended that it is not a requirement for the invocation of Section 13 of the RSA Act in that there literally is no Board.  He further submitted that the task of statutory interpretation is subject to Section 109 (4) of the PNG Constitution which provides:

“Each law made by the Parliament shall receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the law according to its true intent, meaning and spirit, and there is no presumption against extra-territoriality”.
 
29.	Mr. Molloy referred us to the Supreme Court decisions which supported a purposive approach to statutory interpretations as opposed to a literal approach. These are: (PLAR No.1 of 1980 [1980] PNGLR 326, Placer Holdings Pty Ltd v. PNG [1982] PNGLR 16, Singorom v. Kalaut [1985] PNGLR 238 (per Kidu CJ), Karingu v. PNG Law Society (2001) SC674, Fly River Provincial Government v. Pioneer Health Services Limited (2003) SC705 and Ramu Nico Management (MCC) Limited v. Farina Siga (2010) SC1056.

30.	We agree that as judges, it is our responsibility to interpret legislation in the best way possible to achieve the result as intended by Parliament when it, in this case the RSA Act, was enacted.

31.	Generally, there are various categories of reasons as to why statutes need to be interpreted.  For instance, statutory interpretation would be required where there are drafting errors, change in circumstances and or incomplete rules.

32.	In this case, Mr. Molloy for the appellant urged us to adopt a purposive approach to statutory interpretation of Section 13 while the sixth respondent contended that we construe Section 13 literally.

33.	According to the appellant it is necessary to adopt a purposive approach to the statutory interpretation of Section 13 of the RSA Act because it is uncertain how it applies in a situation where a Board exists but is non-functional or dysfunctional. In a case where the Board may have the number of members to form a quorum but is non-functional or dysfunctional as it is unable to fulfill its purpose in terms of meeting and conducting the selection and appointment of the Managing Director, the matters as described constitute a “no Board” as envisaged by Section 13 of the RSA Act.

34.	 The sixth respondent submitted that it is immaterial whether the Board was non-functional or dysfunctional.  The significant consideration is the Board was in existence at the material time because it had the number of members capable of forming a quorum if a meeting of the Board was convened by the Chairman or in his absence, the Minister pursuant to Section 15(1) & (2) of the NHC Act. 

35.	We prefer the submissions of the sixth respondent.  We construe Section 13 literally because to construe Section 13 in the way the appellant has submitted is to read too much into Section 13 which will have the effect of adding words to it.  This is because the words ‘non-functional’ or ‘dysfunctional Board are not found in Section 13 or elsewhere in the RSA Act.  In our view, if the legislature had intended for Section 13 of the RSA Act to be conditional upon a functional Board, then it would have provided additional words to that effect. 

36.	On the other hand, in our view the phrase “no Board” in Section 13 in its literal construction means that there are no members, or a smaller number of members than the requisite number of three members of the Board appointed to constitute a quorum of a Board within the meaning of Sections 7 and 15(3)(a) of the NHC Act.  In either case, there would be “no Board”.  Where there is a “no Board” it would be impracticable for the Board to meet and conduct the selection and appointment process of the Managing Director under Section 4 of the RSA Act.

37.	For these reasons, we uphold the submissions of the first and sixth respondents that it is immaterial whether the Board was non-functional or dysfunctional.  The important consideration is whether the Board was inexistence in terms of its membership and its meeting could be convened.

38.	As noted at [23] above, Section 7 provides for a nine-member Board.  Out of that number, three are ex-officio members and six are non-ex-officio members. We should also mention that the NHC Act is silent on the distinction between ex-officio and non-ex-officio members when determining the quorum of a Board meeting. Accepting that there is no issue with the membership of the Board, it is open to find that the remaining members may form a quorum to convene a meeting.

39.	That said, as noted at [23] above, according to Section 8(2) of the NHC Act, where the Chairman is absent from any meeting of the Board or is unable to act in relation to a matter, one of the members of the Board may be elected as Chairman by the members and may preside over the meeting under Section 15(3)(b) of the NHC Act.

40.	In the case of meetings of the Board, as noted at [24] above, Section 15 of the RSA Act provides for two types of situations.  First, the Chairman shall determine the times and places of meeting of the Board.  In the second case, the Minister may at any time convene a meeting of the Board.   

41.	Next, as to quorum of the Board at any given meeting, as noted at [24] above, Section 15(3)(a) of the NHC Act provides for three members to form a quorum.    

42.	Finally, where there is a vacancy in the office of the Chief Executive Officer of a Regulatory Authority, as noted at [26] above, Section 4 of the RSA Act confers power and responsibility on the Board, amongst other matters, to advertise the position in the National Gazette and newspaper, prepare from the applications received a ranked list of five candidates in order of preference and submit to the Public Services Commission for its consideration.  

43.	The converse of that is where there are no members including the Chairman of the Board being appointed, or the number of members of the Board is less than the required quorum of three members, it gives rise to a case where there is “no Board” and leaves open the option for the second respondent as the Departmental Head of the Department of Personnel Management to invoke Section 13 and perform the powers and functions of the Board in relation to the advertisement,  screening and short listing of candidates for appointment of the Managing Director.

44.	In the present case, the undisputed facts are, the NHC Board is responsible for initiating, advertising, screening, and short listing of candidates for appointment of the Chief Executive Officer who is the Managing Director of the NHC.  There is a vacancy in the office of the Chief Executive Officer and Managing Director of the NHC.  The sixth respondent was acting Chief Executive Officer and Managing Director of the NHC.  

45.	It is also undisputed that out of the nine-member Board, four members including the Chairman were terminated for misbehaviour.  Five members remained.  Pursuant to Section 15(3)(a) of the NHC Act above, the remaining five members had the numbers to form a quorum at a next meeting to initiate and conduct the selection and short listing of candidates for appointment of the Chief Executive Officer and Managing Director of the NHC.  However, the Board did not convene a meeting.

46.	Where the Board has the requisite number of members to form a quorum but does not convene a meeting because of the absence of the Chairman, the Minister may exercise the power conferred on him under Section 15(2) of the NHC Act and convene a Board meeting.  This is a recourse available to the Board if the Chairman is absent.  We consider that the power conferred on the Minister under Section 15(2) may be exercised only in a case where the Chairman is absent to convene a Board meeting.

47.	In this case, the advertisement, screening, and short listing of candidates for appointment of the Managing Director hit a stalemate due to no Chairman.  However, as the Board members had the numbers to form a quorum to convene a meeting, it was open to the Minister to invoke Section 15(2) of the NHC Act and convene a Board meeting to start the selection and appointment process of the Managing Director.  Where the Minister convenes a Board meeting and subject to meeting the quorum of three members, one of the members present at the meeting may be elected to preside over the meeting under Section 15(3)(b) of the NHC Act. After the Minister convenes the Board meeting, his engagement ends.  In other words, he does not play any role in the selection and appointment of the Managing Director.

48.	Such is the significance of the independence of the Board that it be amiss of us not to draw to the attention of the parties the dictates of Section 208B of the PNG Constitution (above) and Section 4 of the RSA Act in particular, powers to initiate and conduct the selection and appointment and or suspension of the Managing Director of NHC which vests solely in the NHC Board.

49.	We reiterate that although the effectiveness of good Board practices cannot be mandated by law, the legal and regulatory requirements need to be clearly provided for under the relevant legislations to avoid any uncertainties. It is important to be reminded that an effective Board is the heart and engine of the governance structure of a well-functioning and well governed corporation acting as the ultimate internal monitor. 

50.	In the case of selection and short-listing of candidates for appointment of the Managing Director, that function falls squarely within the jurisdiction of the Board pursuant to Section 4 of the RSA Act.   At this juncture, it is pertinent to note that due to the absence of the Chairman, the Minister sought legal advice from the State Solicitor.  In a letter to the Minister dated 15 October 2020 the State Solicitor advised the Minister that five remaining members of the Board may form a quorum for a Board meeting.  Further, he advised the Minister to exercise his power under Section 15(2) of the NHC Act to convene a Board meeting.  It is unclear why the Minister did not convene a Board meeting.

51.	Nevertheless, given the significance of the independence of the Board, it is important that the Minister intervene and convene a Board meeting to get the selection and appointment process of the Managing Director underway.  As noted at [45] above, the remaining members of the Board had the numbers to form a three-member quorum of the meeting and amongst other matters, advertise the position in the National Gazette and newspaper, prepare from the applications received a ranked list of five candidates in order of preference and submit to the PSC for its consideration.  After the PSC’s input, a recommendation of the preferred candidate is made by the Minister to the National Executive Council to approve and advise the Head of State to appoint a Managing Director.  

52.	Where there is no Chairman and members of the Board, or a smaller number of members than the requisite number to form a quorum of three members, such a case will fall within the literal meaning of the phrase “no Board” under Section 13 of the RSA Act and will trigger the Department of Personnel Management to intervene.  In our view, the invocation of Section 13 of the RSA Act by the Department of Personal Management is akin to a ‘last resort’ measure.   As the undisputed facts show, this was not a case where the Minister was unable to exercise his power to call a meeting of the Board or there were no members of the Board, or a smaller number of members than the requisite number to form a quorum of three members and it was necessary for the second respondent to intervene and perform the functions of the Board under Section 13 of the RSA Act.

53.	For the second respondent to intervene and conduct the advertisement, screening, and short listing of candidates for appointment of the Managing Director on the grounds that the Board was non-functional or dysfunctional, this is where the second respondent not only prematurely usurped the powers and functions of the Board but also committed an error of law.  In our view, the error of law cuts across and deep into the whole decision-making process of selection and appointment of the Managing Director under Section 4 of the RSA Act and Section 15 of the NHC Act such that the trial judge was correct to find that the ultimate decision by the fourth respondent to approve the recommendation of the first respondent to appoint the appellant as Managing Director without the Board’s input was illegal, null and void.  We uphold this finding. 

Conclusion

54.	We conclude that the trial judge properly exercised his discretion and did not err in fact and law in finding that a NHC Board existed at the relevant time and as such, the invoking of Section 13 of the RSA Act was not proper and therefore invalidated the entire process of appointment of the appellant as Managing Director.

55.	For all these above reasons, we dismiss the appeal with costs.  Costs is awarded against the appellant and fifth respondent because the latter supported the appeal, such costs to be paid to the first and sixth respondents.

Formal Orders

56.	The final terms of the order of the Court are:

	1.	The appeal is dismissed.

2.	The appellant and fifth respondent shall pay the sixth respondent’s costs of the appeal, to be taxed if not agreed.

3.	Time for the entry of these orders shall be abridged to the date of settlement by the Registrar, which shall take place forthwith. 

________________________________________________________________
Henaos Lawyers:		Lawyers for Appellant 
Allan Mana Lawyers: 	Lawyers for Sixth Respondent
Manase & Co. Lawyers: 	Lawyers for First Respondent
Tangua Lawyers: 		Lawyers for Fifth Respondent