IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU
(Civil Jurisdiction)

Civil Case No. 13 of 2005

BETWEEN:

JAMES ULAS, RONALD LIATIAMAL,
JOHNNY BOP, MAGUE HIVIRKON,
WILSON TERRY, JOSE YAPSEI
and HARRY BROWNHILL
representing a majority of councillors and the
Luganville Municipal Council, a Statutory Body Corporate
established pursuant to section 3 of the 
Municipalities Act [CAP. 126] (the Act).
Claimants

AND:

THE MINISTER OF INTERNAL AFFAIRS,
HON. GEORGE ANDRE WELLS
First Defendant

AND:

THE ATTORNEY GENERAL
Second Defendant

Coram: Mr Justice Oliver A. Saksak
Mrs Anita Vinabit - Clerk

Counsel: Mr Ronald Warsal for the Claimants
Mr Frederick Gilu for the First and Second Defendants

Date of Hearing: (1) 20th & 25th April; 4th May 2005, Port Vila
(2) 24th May 2005, Luganville.
Date of Oral Decision and Orders: 24th May 2005
Date of Judgment (Published): 27th May 2005

JUDGMENT

The Claimants sue in a representative capacity. They are elected councillors to the Luganville Municipal Council. The Minister suspended the Council for a period of 12 months commencing on 17th March 2005. During the period of suspension the Minister also appointed Mr Paul Hakwa as Commissioner to take charge over the running and the affairs of the Council. The Claimants challenged that suspension and appointment. They filed for judicial review.

Initially the Claimants sought declaration that:-

1. The Minister's actions in suspending the Council by letter dated 17th March 2005 for a period of 12 months is -

(a) Ultra vires the Municipalities Act [CAP. 126] and/or constitute administrative conduct that is unreasonable or undertaken for improper purposes or otherwise unlawful and should be quashed as invalid;

(b) Penalizes the innocent;

(c) Further and/or in the alternative, the rules of natural justice have in all the above circumstances been breached namely:

(i) the right to protection of the law; and

(ii) the right to equal treatment under the law;

2. The appointment of Paul Hakwa as Commissioner for the suspended Council is null and void.

3. Such further declaration as the Court deems fit.

4. Damages.

5. Costs.

The grounds stated by the Claimants were that -

1. The Minister failed to appoint a person to inquire into matters of the Council in accordance with section 61(1) of the Act, which council the claimants are elected members.

2. In failing to comply with the provisions of section 61(1) of the Act, the Minister did not adequately satisfy himself as to whether the Council of which the Claimants are elected Members has done or suffered any act.

3. The Minister failed to direct the Council to remedy any act that would render the Council negligent under section 61(1)(a) of the Act.

4. In all the Minister failed to comply with the procedural requirements as set out in section 61(2) of the Act prior to suspending the Council in accordance with section 61(3) (a) of the Act.

5. Further the actions of the Minister in proceeding to suspend the Council without satisfying the requirement set out in section 61(1), (2) and (3) of the Act is in breach of the Claimants constitutional rights as ensured in Article 5 of the constitution being:

(a) protection of the law;

(b) Equal treatment under law or administrative action.

6. The Minister acted in breach of the rules of natural justice.

7. The Minister's decision to suspend the Council is unreasonable and unfair.

8. The Minister's decision penalizes the innocent.

9. The Minister's decision is biased and used for improper purposes particularly when the Minister had appointed a Council Member and former Lord Mayor, Paul Hakwa the Second Respondent as Commissioner of the Council during the period of the suspension, Mr Hakwa being a party colleague of the Minister.

The Claimants filed evidence by sworn statements to support those grounds by Harry Brownhill, James Ulas, Jose Yapsei and Terry Wilson.

At the hearing on 20th April the Solicitor General sought an adjournment to allow time to the Defendants to file defences and sworn statements. The matter was adjourned to 25th April. The Defendants were ordered to file and served their documents by 4.30 pm Thursday 21st April. On 20th April the Defendants filed a Statement of Defence and a Sworn Statement by Mr Johnson Wabaiat, Director General.

At the second hearing on 25th April Mr Gilu made oral application for orders to strike out the Claimants' case on the basis of their defence and sworn statements. The Court found that the Claimants had an arguable case but found that there was no reasonable cause against Paul Hakwa, who was then joined as the Second Defendant. The Court dismissed their claim as against Mr Hakwa and adjourned the matter for hearing on 4th May. The hearing was vacated due to illness by Mr Warsal, and adjourned to 24th May 2005.

On 29th April the Claimants filed an Amended Claim for Judicial Review. The significant changes made to the original claim are indicated by underlining on pages 1, 2 and 3 of this judgment.

At the hearing on 4th May the Defendants were directed to file and serve their responses to the Claimants Amended Claim and the Claimants to file their responses. The Defendants filed an amended statement of defence on 11th May. They filed a further sworn statement from Mr Johnson Wabaiat on 4th May. The Claimants did not file any further or additional statements but relied on the statement of Harry Brownhill, James Ulas, Jose Yapsei and Terry Wilson filed on 21st March 2005.

At the close of submissions by both counsel, the Court delivered an oral decision and issued declarations and orders on 24th May. This judgment provides reasons for that decision and the declarations and orders issued.

It is necessary to understand the sequence of events that took place leading up to the Minister's decision to suspend the Council on 17th March 2005 in the following manner as shown from the evidence of James Ulas, Jose Yapsei and Harry Brownhill and Terry Wilson-

(1) Mr Paul Hakwa, the Lord Mayor's one year term had or was about to expire and the Claimants were expecting a meeting called on 22nd March 2005 to elect a new Mayor.

(2) On 16th March 2005 the Minister appointed Mr Luke Shem to inquire into the affairs of the Council.

(3) On the morning of 17th March 2005, Mr Hakwa resigned as Mayor and Councillor.

(4) On the same date 17th March, the Acting Town Clerk accepted Mr Hakwa's resignation.

(5) On the same date 17th March, the Minister suspended the Council for a period of 12 months.

(6) On the same date 17th March, the Minister appointed Mr Hakwa as Commissioner for the suspended Council for 12 months.

These facts were accepted by the defendants and not challenged. The only facts challenged were paragraphs 10 and 11 of Jose Yapsei's sworn statement, paragraphs 5 and 6 of Harry Brownhill's and, paragraph 6 of James Ulas' statement immediately after "Council" in the second sentence. Those were not admitted into evidence. The rest were not challenged and were taken as read into evidence, including their various annexures.

Mr Warsal objected to the admissibility of certain parts of Mr Wabaiat's sworn statements. Firstly he challenged paragraphs 8 and 10 of the statement dated 20th April 2005 on the basis of opinion. He challenged the admissibility of Mr Luke Shem's Report of Enquiry annexed as JW6 on the basis that Mr Shem did not deposed to a sworn statement confirming he was the maker of the document. This document and paragraphs 8 and 10 were not admitted into evidence. On the further sworn statement by Mr Wabaiat dated 3rd May Mr Warsal objected to the last sentence of paragraph 3. That sentence was disallowed by the Court. The other parts of the two sworn statements including the annexures were not challenged and were taken as read into evidence. No parties expressed any wish or intention to cross-examine any deponents of the sworn statement filed in the proceeding.

At the hearing of submissions Mr Warsal informed the Court that the Claimants had abandoned the reliefs sought in paragraph 1(b) and (c)(i) & (ii) of the Amended Claim. The effect of that decision was that grounds (5), (6) and (8) touching the constitutional arguments or issues were also abandoned. That substantiality reduced the Claimants claims to one central issue and that is -

"Whether the Minister's actions in suspending the Luganville Municipal Council by letter dated 17th March 2005 for a period of 12 months is ultra vires the Municipalities Act [CAP. 126] and/or constitute administrative conduct that is unreasonable or undertaken for improper purposes or other unlawful, and should be quashed as invalid."

Mr Warsal in the course of his arguments and submissions conceded that the Claimants did not dispute that the Minister has the powers to suspend the Council under section 61 of the Act, however he contended that the Minister had abused or exercised his discretion unreasonably and secondly, that in doing so he was biased.

Mr Warsal referred to Mr Wabaiat's letter dated 11th June 2004. That was the letter that expressed the Ministry's concerns about the Council's financial status. I set it out below in full-

"11 June 2004

Town Clerk
Luganville Municipal Council
P O Box 232
Port Vila

Re: Increase Overdraft Facility - ANZ Bank

We acknowledge receipt of your undated letter pertaining to the above captioned matter.

Whilst we agree that the Council's financial situation is weak, the Ministry is of the view that no stringent measures were taken by the Council's management to stop prolonged meetings. It is seen as a failure on the part of the Council administration and Councillors.

I understand there exists a total of VT10.400.000 worth of creditors to settle and an increase in the overdraft ceiling from 5 million to 8 or 10 million vatu is not justified. A simple statement stating justification of this overdraft to derive from minimal revenue in the next few months is weak. There is no indication of repayment schedule and how much is being re-paid so far. The Ministry is not convinced that the request for increase in overdraft facility is justified and therefore declines this request.

The financial hurdles of Luganville Municipality could have improved and eased out should staff and Councillors act reasonably and are concerned about the welfare of the Luganville urban population. If there exists no trace of accountability within the Council, no financial improvement will suffice.

Please let me raise my official comments on the Luganville Municipal Council Audit report for the period July 2002 to June 2003. It was apparent there is lack of control financially and administratively from Council's management. Prolonged meetings, continual allowance of advances, haphazard payment of creditors with no suppliers invoices indicates mismanagement at the first instance. There is no transparent spending and recording of expenditure.

On the basis of the audit report, the following must be adhered to:-

• The Ministry is convinced that the current financial constraint is caused by Councillors and staff.

• Management is weak and there is no control over the affairs of the Council.

• Advances are at peak stage. Please be reminded that LMC is not a borrowing institution.

• All current and future planned meetings are to be suspended.

In light of the above, the Luganville Municipal Council has of this day 11 June 2004 to 11 September 2004 three months to rectify its financial situation. Should the Council fail to this instruction, the Ministry has no choice but to suspend the Council.

I hope we have made our status clear on this matter.

Yours Sincerely,

(Signed)
Johnson Wabaiat
Director General".

Mr Warsal argued that if the primary reason for the suspension of the Council was poor financial control and affairs as indicated in the letter, he questioned why no suspension was made on 11th September 2004. He refuted the explanations provided for such delays in paragraph 5 of Mr Wabaiat's statement dated 3 May 2005 owing to the snap general elections in July 2004, the change in government and the reshuffles done to Ministers within the Ministry in August 2004. Mr Warsal further refuted the reason of orientation given at paragraph 11 by Mr Wabaiat on the grounds that the Minister who suspended the Council was the Minister then in June 2004 and therefore he needed no orientation to be familiar with his portfolio's coordination and management. The Court accepts those arguments and submissions.

Mr Warsal argued and submitted that having failed to suspend the Council on the given dateline being 11th September 2004 by any Minister who held the portfolio at the time, and having to wait until 9 months had passed on 17th March 2005, there could only be two possible reasons or purposes namely;

(1) That the Minister intended to disrupt the election of a new mayor, and

(2) That the Minister was biased.

Mr Warsal submitted that once the claimants had shown that there was another purpose other than that intended by the Act, that it was sufficient for the Court to hold that it was an unreasonable exercise of the Minister's discretion under section 61 of the Act.

Mr Warsal cited the case of Dinh Van Than v. Willie Jimmy & Ors Civil Case No. 101 of 1997 to support his proposition that "politics have no place in the Courts". He also cited the English case of R v. Brixton Prison Governor [1963] 2 Q.B. 302 for his proposition that it is trite law that any administrative body or tribunal or authority empowered by legislation that is done to secure one or more purposes, some authorised and some not, would be nullified by the Courts. I accept those authorities and adopt those principles as good law and accordingly apply them to this case.

In relation to the issue of bias, Mr Warsal cited the case of R. v. Meyer [1975] 1 Q.B.D. in support of his proposition that any direct pecuniary interest however small would have disqualified any decision by a decision-maker empowered by law. Although that is good law and this is a persuasive authority, in this case there was no evidence of a direct pecuniary interest of the Minister in the Council. The term "pecuniary" in my view relates to some financial or monetary involvement or interest. I think the issue was the Minister's direct political affiliation or association with Mr Paul Hakwa, the Commissioner. Mr Warsal asked the Court to take judicial notice of the fact that they both belong to the same party. I accept that.

Mr Warsal also cited the case of Metropolitan Properties (FGC Ltd) v. Lennon [1969] 1 QB 577 to support his proposition that it was trite law that where the issue of bias was reasonably suspected, the Court would rule so, and must nullify any decision so made. This case establishes the test of bias. I accept this authority as binding and apply it accordingly.

Mr Warsal successfully challenged the admissibility of the Enquiry Report prepared by Luke Shem and which Report was annexed to Mr Wabaiat's sworn statement. Mr Warsal cited the case of Francois Xavier Chani v. The Government Civil Case No. 17 of 1997 to support his proposition that as the Report was not judicially sanctioned, it should not be admitted as the Court did to the Ombudsman's Report in that case. I accept that authority as binding. The other reason why the Court did not admit the Report into evidence was because the maker, Mr Luke Shem did not confirm it by a simple sworn statement that could have been prepared for him. But even if the Report was admissible, there is still the issue and hurdle of bias that Mr Warsal raised and which the Court has now accepted was evident in this case. The Report was prepared within the period from 17th - 30th March 2005. During this time, Mr Paul Hakwa, who was former Mayor and Councillor and after his purported resignation, became the Commissioner of the Council. He being former Mayor and Councillor, being in office when such Report was prepared, it is apparent in my view that under those circumstances any person would question the impartiality of such a report.

It raised the maxim of the Mr Hakwa being a judge in his own case as submitted by Mr Warsal. The letter by Mr Wabaiat dated 11th June 2004 is clear. The Ministry was concerned about the Management of the Council. It placed the failure on the administration and councillors. When Mr Hakwa purportedly resigned on 17th March 2005 and returned to hold Office as Commissioner on the same date, after his appointment by the Minister. It was inevitable that he could be seen to be acting in his capacity as Commissioner and as former councillor and mayor, reasonably without favour and ill-will. That is where the element of bias comes in. And furthermore that is where unreasonableness comes into play as regards the Minister's exercise of discretion in this case.

But I would go further. As regards the issue of bias the common law Courts have developed three tests with varying degrees of objectivity. These are as follows:-

(a) The reasonable suspicion test. The Reading authority on this test is the case of R v. Sussex Justices; Ex parte McCarthy [1924] 1 KB 256. Lord Hewart C. J said this at p. 259:

"…… it is of fundamental importance that justice should not only be done, but be manifestly and undoubtedly be seem to be done…. The rule is that nothing is to be done which so much creates even a suspicion that there has been an improper interference with the course of justice." (underlining, mine).

That test was slightly modified in 1960 by Lord Devlin in the case of R v. Barnsley Licensing Justices [1960] 2 QB 167 when Devlin LJ held the view that it was enough that the courts are satisfied that there was a real likelihood of bias. (underlining, mine);

(b) The second test is the Real Likelihood of Bias Test. This test was established by Blackburn J in the early case of R v. Rand (1866) LR 1 QB. 230 when he said:

"There is no doubt that any indirect pecuniary interest, however small in the subject-matter of inquiry, does disqualify a person from acting as a judge in the matter. Where there is a real likelihood that the judge would, from kindred or any other cause, have a bias in favour of one of the parties, it would be wrong in him to act." (underlining, mine);

(c) The third test is the Reasonable Man's test. In R v. Sussex Justices' case (supra) Smith J posed the question which formed the basis of this test as follows:-

"Might a reasonable man suppose there had been such an interference with the cause of Justice?"

From the facts and evidence of this case, considering and applying these tests, it is my view that the Claimants have satisfied all the tests. It was not encumbered upon them to meet all the three, in fact only one would have sufficed.

The evidence by James Ulas, Terry Wilson, Harry Brownhill and Jose Yapsei indicate some arrangements to elect a new mayor and to form and run the next council upon the current mayor's term expiring. Mr Wabaiat did not respond or rebut any of that evidence. Only Mr Hakwa in his sworn statement dated 29th April 2005 endeavoured to address those issues. But in all probability the Court placed more weight on the evidence of the Claimants as credible as opposed to that of Mr Hakwa. In the view of the Court, the circumstances that preceded the suspension of the Council were such that it was not difficult for any ordinary person on the street to question its reasonableness. The circumstances were such that it was not impossible for the Court to see that there was no other reason for suspending the Council other than for the poor financial standing control and management of the Council. For those reasons the Court was satisfied that the Claimants had proven their case on the balance of probabilities. Accordingly the Court found in the Claimants' favour and issued the declarations and orders dated 24th May 2005.

DATED at Luganville this 26th day of May, 2005.

BY THE COURT

OLIVER A. SAKSAK
Judge