Robmos Limited v Frederick M Punangi and Michael Thomas Somare and The Persons Named in Schedule 1 and The Independent State of Papua New Guinea (2008) N3372

• Jurisdiction: Papua New Guinea
• Judge: Davani J
• Judgment Date: 14 May 2008
• Court: National Court
• Citation: (2008) N3372
• Docket Number: OS 1041 OF 2005
• Year: 2008
• Judgement Number: N3372

Full Title: OS 1041 OF 2005; Robmos Limited v Frederick M Punangi and Michael Thomas Somare and The Persons Named in Schedule 1 and The Independent State of Papua New Guinea (2008) N3372

National Court: Davani J

Judgment Delivered: 14 May 2008

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JUDICIAL REVIEW – NEC’s decision to issue closed tender – breach of tender process – ultra vires its powers – s40 of Public Finance Management Act

JUDICIAL REVIEW – Contract – tender process – non compliance with – contract illegal

JUDICIAL REVIEW - Financial Instructions – definition – has similar force and effect as the Public Finance Management Act and Regulations – s2 and s117 of Public Finance Management Act.

JUDICIAL REVIEW – closed tender – National Tenderer – who is -National Tenderer not considered – breach of tender rules – Tender Board bound by Financial Instructions and Public Finance Management Act – s39 (4) and 41 of Public Finance Management Act

JUDICIAL REVIEW – Certificate of Inexpediency – Central Supply and Tenders Board - process not followed – certificate improperly issued – s40 (3) (b) of Public Finance Management Act; Div. 4 of Financial Instructions.

Facts

The plaintiff was requested by the Director of Supplies for the PNG Defence Force (PNGDF) to provide a quotation to it for the supply of ceremonial uniforms and accessories to be used during the 30th Independence anniversary celebrations. The plaintiff submitted a quotation for K1,766,255.00. Three Australian companies also gave quotations, one of whom was awarded a closed tender for the amount of K2,217,833.19.

The closed tender was approved at an NEC meeting which considered the four quotations. The NEC also directed the Secretary for Department of Finance to provide authority to pre-commit funds for a closed tender to that company. Thereafter, upon the Secretary for Finance’s advice, the PNGDF requested the Central Supply and Tenders Board for a Certificate of Inexpediency, citing the urgent need for the uniforms and equipment. The Certificate of Inexpediency was issued, relying on these reasons.

Held

1. The NEC did not have the authority or the power to approve the quotations;

2. The tender process under the Public Finance Management Act was not complied with;

3. Preference must be given to National Tenderers when Tenders are being considered to be done in accordance with the Public Finance Management Act and the Financial Instructions;

4. The Public Finance Management Act includes the Financial Instructions.

5. The Public Finance Management Act, the Public Finance Management Regulations and Financial Instructions must all be read together and considered by Departmental Heads and the Tenders Board when considering quotations and tenders because the Public Finance Management Act includes the Rules, Regulations and Financial Instructions.

6. The Certificate of Inexpediency must clearly identify, amongst others, the reasons why a certificate should be issued.

Cases cited:

Papua New Guinea Cases

Dr Rose Kekedo v Burns Philp (PNG) Ltd [1988–89] PNGLR 122;

Application of Demas Gigimat [1992] PNGLR 322;

Application by Posai [1995] PNGLR 350;

Air Niugini Limited v Beverly Doiwa – as Chairperson of the Industrial Relations Tribunal (2000) N1972;

The Independent State of Papua New Guinea v Barclay Brothers (PNG) Ltd (2001) N2090.

Overseas Cases:

Associated Provincial Picture Houses v Wednesbury Corporation [1948] 1 KB 223;

Chief Constable of North Wales Police v Evans [1982] 1 WLR 1155 at 1160;

Council of Civil Services Unions v Minister for the Civil Service [1984] 3 All ER 935;

ABC v Redmore Pty Ltd [1988 – 89] 166 CLR 454;

Counsel:

G. Poole, for the plaintiff

B. Bakau, for first, second and third defendants

DECISION

14 May, 2008

1. DAVANI .J: The plaintiff, Robmos Limited (Robmos), applies for judicial review seeking orders in the nature of Declarations and Mandamus against the National Executive Council’s (‘NEC’) decision of 22nd July, 2005, No. 157/2005, meeting No. 35/2005, as being ultra vires the powers of the NEC in that it purported to authorize a breach of a public statute being the Public Finance (Management) Act 1995 (‘PFMA’). The plaintiff also seeks an order of prohibition forbidding the Central Supply and Tenders Board from awarding or approving any tender to a non-national tenderer otherwise then strictly in accordance with the provisions of the PFMA and the Financial Instructions issued under s. 117 of the PFMA. Section 117 of the PFMA reads;

“117. Financial instructions.

The Departmental Head of the Department responsible for financial management may issue Financial Instructions, not inconsistent with this Act, as to any matter prescribed by this Act to be so provided for, or that are necessary or desirable for carrying out or giving effect to this Act and in general for the better control and management of public moneys and public property.”

“This Act” is defined by s. 2 of the PFMA as;

“includes the Regulations, Rules and Financial Instructions” (my emphasis). Therefore, the Financial Instructions must always be considered and read together with the PFMA. (my emphasis)

2. The defendants oppose the application and rely on the affidavit of Lieutenant-Colonel Joe Ben sworn on 27th September, 2007 and filed on the same day.

Background

3. The plaintiff is a national company which is 100 percent Papua New Guinean owned and has from time to time tendered for and awarded contracts to supply goods and materials to the Papua New Guinea Defence Force (‘PNGDF’) and other government bodies.

4. In support of its application, the plaintiff relies on the affidavit of P. J. Ward sworn on 9th November, 2005 and filed 27th November, 2005.

5. Leave for judicial review was granted on 24th April, 2007. The decisions sought to be reviewed are the following;

- The decision of the Secretary of the Department of Defence to provide authority to pre-commit a closed tender to an Australian company known as the Australian Defence Apparels Limited (ADA), for uniforms for the PNGDF for PNG’s 30th Independence Anniversary celebrations.

- The decision of the Secretary for the Department of Treasury (Finance) to fund the procurement of ceremonial uniforms from Australian Defence Apparels Limited for the PNGDF for the 30th Independence Anniversary celebrations, for the sum of K2,217,833.19.

6. Robmos was contacted by the Director of Supplies for the Defence Force on 8th April, 2005 and requested to supply and provide a quotation to the PNGDF for the supply of ceremonial uniforms and accessories for the Defence Force to be used during the 30th Independence anniversary celebrations. On 21st April, 2005, Robmos submitted a quotation for the amount of K1,766,250.00.

7. Three other companies also submitted quotations for the supply of ceremonial uniforms and accessories for the PNGDF. They were International Exports Limited of Cairns, Australia; Australian Defence Apparels Limited of Coburg, Australia and Combat Clothing Limited of South Port, Australia. Robmos was the only national tenderer.

8. On 22nd July, 2005, the NEC at its special meeting No. 35/2005, awarded the contract for supply of uniforms and accessories to Australian Defence Apparels Limited. The NEC also directed the Secretary for Department of Finance to provide authority to pre-commit funds for a closed tender to that company. This was its Decision No. 157/2005.

9. By his letter of 18th August, 2005, the Secretary for Finance gave approval and his authority to pre-commit K2,217,833.19 for the purchase of those uniforms and accessories from Australian Defence Apparels Pty Limited.

10. Upon the Secretary for Finance’s advice, the PNGDF went the next step by writing to the Chairman of the Central Supply and Tenders Board requesting a Certificate of Inexpediency to be issued to it. Such a request was done by the Secretary for Defence by his letter of 22nd August, 2005, which was received by the Central Supply and Tenders Board Office on 23rd August, 2005.

11. By letter of 10th August, 2005, signed by the Chairman of Central Supply and Tenders Board, the said board approved and issued to the PNGDF a Certificate of Inexpediency approving the amount committed for the purchase of the uniforms and apparels and also approved the supplier Australian Defence Apparels Pty Limited. This letter was received by the Department of Defence on 31st August, 2005.

12. The plaintiff seeks to review all the above actions.

Issues

13. I note these to be the issues for my consideration. These are;

i. Whether the National Executive Council acted ultra vires on the 22nd July, 2005 when reaching its decision no. 157/2005.

ii. Whether the Central Supply and Tenders Board is bound by the provisions of the Public Finance (Management) Act 1995 and the Financial Instructions in its procedures and decisions in the awarding of tenders.

iii. Whether the Secretary for the Department of Defence’s actions in providing the authority to pre-commit funds for a closed tender to a non-national tenderer has authorized a breach of the PFMA relating to the calling,...