Reference by the Ombudsman Commission pursuant to Constitution, Section 19(1) re the Public Money Management Regularisation ACT 2017 (2020) SC1944

• Jurisdiction: Papua New Guinea
• Judge: Salika CJ, Kandakasi DCJ, Gavara-Nanu J, Cannings J, Yagi J
• Judgment Date: 27 May 2020
• Court: Supreme Court
• Docket Number: SC REF No 2 of 2018
• Judgement Number: SC1944

Full Title: SC REF No 2 of 2018; Reference by the Ombudsman Commission pursuant to Constitution, Section 19(1) re the Public Money Management Regularisation ACT 2017 (2020) SC1944

Supreme Court: Salika CJ, Kandakasi DCJ, Gavara-Nanu J, Cannings J, Yagi J

Judgment Delivered: 27 May 2020

SC1944

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SC REF NO 2 OF 2018

REFERENCE BY THE OMBUDSMAN COMMISSION

PURSUANT TO CONSTITUTION, SECTION 19(1)

RE THE PUBLIC MONEY MANAGEMENT

REGULARISATION ACT 2017

Waigani: Salika CJ, Kandakasi DCJ,

Gavara-Nanu J, Cannings J, Yagi J

2019: 30th April

2020: 27th May

CONSTITUTIONAL LAW – national legal system – supremacy of Constitution – construction of written laws – constitutional alteration – Constitution, ss 9, 10, 11, 12, 13.

CONSTITUTIONAL LAW – Basic Rights – general qualifications on qualified rights – protection of the law – proscribed acts – freedom from arbitrary search and entry – freedom of expression – right to privacy – protection from unjust deprivation of property – Constitution, ss 37, 41, 44, 46, 49, 53.

CONSTITUTIONAL LAW – national judicial system – independence of judiciary – exercise of judicial power – structure of government – separation of powers – Constitution, ss 37(11), 99, 155, 157, 166, 209, 225.

CONSTITUTIONAL LAW – supervision and control – parliamentary responsibility for raising and expenditure of finance by National Government – Constitution, ss 209, 210, 211.

CRIMINAL LAW – offences defined by written law – whether penalties for offences can be proscribed acts – Constitution, ss 37(2), 41.

STATUTES – validity – Public Money Management Regularisation Act 2017 – whether regulates or restricts Basic Rights – whether compliant with Constitution, ss 38, 39 – whether made contrary to constitutional principles: supremacy of Constitution; parliamentary responsibility for raising and expenditure of public finance; separation of powers; judicial independence.

Various questions of constitutional interpretation and application were referred by the Ombudsman Commission to the Supreme Court under s19(1) of the Constitution, seeking the Court’s opinion on the constitutionality of the Public Money Management Regularisation Act 2017 (“the PMMR Act”).

The purpose of the Act is“to regularise the handling and management of public money received by public and statutory bodies”. It provides that public money held or received by a public or statutory body must be deposited in “revenue bank accounts” specified by the Secretary for Finance and that public and statutory bodies must have only one operating bank account, subject to ultimate control by the Secretary for Finance. It establishes the Strategic Budget Committee, which makes determinations as to amounts of public money to be transferred back to public or statutory bodies to meet their reasonable operating budget requirements. It has an extensive operation by broad definitions of “public money”, “public body” and “statutory body”, by making constitutional institutions subject to the Act and by providing that the Act overrides other legislation. It imposes restrictions on judicial review of determinations of the Strategic Budget Committee, legal representation for public and statutory bodies and claims against the State and statutory bodies. It creates the offence of failing to comply with a duty, obligation or requirement of the Act, “of strict liability”, punishable for an individual person by a maximum 15 years imprisonment and fine of K2 million, and for a body corporate, by a fine of K50 million. It confers power on the Secretary for Finance to supervise and control all bank accounts of public and statutory bodies.

The referrer asked the Court to declare that the Act is unconstitutional in whole or in part in that it: (1) provides for compulsory acquisition of property in a way not permitted by s 53 of the Constitution; (2) alters the Constitutional Laws (by purporting to bind constitutional institutions), other than by ss 12 and 13 of the Constitution; (3) ousts the jurisdiction of the courts by restricting exercise of judicial power to an extent not permitted by ss 37, 155, 166 and 157 of the Constitution; (4) offends against the principle of parliamentary control over raising and expending of public money, under ss 209, 210 and 211 of the Constitution; (5) provides for such harsh and oppressive penalties for offences that it offends s 41 of the Constitution; (6) creates an offence, the elements of which are so broad and ill-defined that it offends against the requirement of s 37(2) (protection of the law) of the Constitution that offences be defined by written law; (7) purports to elevate itself to a status above the Constitutional Laws, contrary to ss 12, 13 and 14 of the Constitution; (8) restricts exercise of rights of freedom of expression and freedom from arbitrary search and entry without complying with s 38 of the Constitution; (9) by its application to the judiciary, is offensive to the principle of judicial independence entrenched by ss 99 and 157 of the Constitution; (10) restricts exercise of the right to privacy without complying with s 38 of the Constitution.

Held:

(1) By the Court: The Act provides for compulsory acquisition of property other than on just terms, contrary to s 53 of the Constitution, and for that reason alone, being inconsistent with the Constitution, is invalid and ineffective in its entirety.

(2) Per Salika CJ & Cannings J (Kandakasi DCJ deciding otherwise; Gavara-Nanu J & Yagi J declining to give opinion): Though the Act binds constitutional institutions, it does not purport to alter any Constitutional Laws, and there was no need to comply with ss 12 or 13 of the Constitution.

(3) Per Salika CJ, Kandakasi DCJ & Cannings J (Gavara-Nanu J & Yagi J declining to give opinion): Sections 5(5), 9(1), 9(5) and 11 of the Act restrict the jurisdiction of the National Court to an extent not permitted by ss 37, 155, 166 and 157 of the Constitution, so those provisions of the Act are, for that reason, invalid and ineffective.

(4) Per Salika CJ, Kandakasi DCJ & Cannings J (Gavara-Nanu J & Yagi J declining to give opinion): To the extent that the Act applies to public bodies and statutory bodies other than the courts and administrative agencies within the National Judicial System, it does not offend against the principle of parliamentary control over raising and expending of public money, under ss 209, 210 and 211 of the Constitution. However, the principle of separation of powers under s99 of the Constitution is strengthened and enforced by ss 209(2), (2A), (2B) and (3) of the Constitution with the effect that the Constitution did not intend that the Executive should control the finances of the other arms, the Parliament and the Judiciary.

(5) Per Salika CJ, Kandakasi DCJ & Cannings J (Gavara-Nanu J & Yagi J declining to give opinion): The Act does not provide such harsh and oppressive penalties for offences against the Act that it offends against s 41 of the Constitution.

(6) Per Salika CJ, Kandakasi DCJ & Cannings J (Gavara-Nanu J & Yagi J declining to give opinion): The Act creates an offence, the elements of which are so broad and ill-defined that it offends against the requirement of s 37(2) of the Constitution that every offence be defined by a written law.

(7) Per Salika CJ, Kandakasi DCJ & Cannings J (Gavara-Nanu J & Yagi J declining to give opinion): The Act does not successfully confer on itself a constitutional status, contrary to ss 12, 13 and 14 of the Constitution. However, (per Salika CJ) it may be viewed as an attempt to do so, to enable the Executive arm of government to exercise even more control over the other two arms of government, the Parliament and the Judiciary, which is dangerous to democracy and an opening to erosion of the principle of separation of power.

(8) By the Court: The questions about the Act’s alleged restriction of the rights of freedom from arbitrary search and entry and freedom of expression are hypothetical, and do not warrant an opinion.

(9) Per Salika CJ, Kandakasi DCJ & Cannings J (Gavara-Nanu J & Yagi J declining to give opinion): The Act, by its application to the Judiciary, is offensive to the principle of judicial independence guaranteed by ss 99, 155, 157, 209, 223 and 225 of the Constitution and is, for that reason alone, to the extent it applies to the Judiciary, invalid and ineffective.

(10) By the Court: The questions about the Act’s alleged restriction of the right to privacy are hypothetical, and do not warrant an opinion.

(11) By the Court: In summary, the Public Money Management Regularisation Act 2017 is unconstitutional, invalid and ineffective in its entirety.

Cases Cited

The following cases are cited in the judgment:

Acting Public Prosecutor v Uname Aumane [1980] PNGLR 510

Application by Geno (2016) SC1581

Application by Nilkare [1998] PNGLR 472

Avia Aihi v The State (No 1) [1981] PNGLR 81

Daniel v Air Niugini Ltd (2017) SC1886

Donald Valu v Dr Ken Ngangan, Secretary for Finance and The State (2019) N7733

Dr Allan Marat v Hanjung Power Ltd (2014) SC1357

Dumal Dibiaso ILG v Kola Kuma (2005) SC805

Enforcement of Rights Pursuant to Constitution...