EFFECT OF THE RECENT SUPREME COURT RULING WARTOTO VS STATE IN THE CONTEXT OF PM'S EXISTING COURT CHALLENGES
BY BRYAN KRAMER
A post and detailed article have since been published canvassing this issue both were authored by prominent PNG lawyers and well expounded to those who have a legal mind. Due to the fact most don't I thought I'd provide a layperson's interpretation.
Background facts
Mr. Eremas Wartoto was arrested and charged in 2011 for two counts misappropriation relating to awarding of a contract to his company SWT to carry out repair and maintenance work at the Kerevat National High School in the East New Britain Province.
The contract was processed and awarded through the office of the Department of Planning and Monitoring and not through the Central Supply and Tenders Board process under the Public Finance (Management Act) 1995.
The State (Prosecution) alleges that SWT had inside knowledge and was able to quote for the lowest of the three quotations in the sum of K7.99m which the Department of Planning and Monitoring accepted.
Of the contracted amount, SWT managed to get paid an advance of about 85% or K6.79m on 20th January 2008. The balance of around K1.2m got paid on 14th October 2008.
The Prosecution alleged that it was without a proper certificate of completion and the provision of a proper invoice as is normally the case. The payments were contrary to normal practice which requires provision of goods and or services first and then payment made upon provision of invoice.
Except only for a small amount, no goods or material required for the Kerevat works where indeed purchased. Instead, most of the funds were applied to meet Mr. Wartoto's personal and his companies' own expenses which included the payment of bank loans and purchase of other property unrelated to the Kerevat works.
"Furthermore, the advance was purportedly on the authority or instructions of the then Chairman of the Central Supply and Tenders Board, Mr. Brian Kimmins, through a letter dated 28th November 2008, facsimiled from Mr. Wartoto' rent a car business located in Cairns, Australia. The State alleges, that letter was a forgery as it did not come from Mr. Kimmins."
"Finally, only some of the Kerevat works were carried out, at a total cost of about K700, 000.00. This effectively means that about K7.2 million was spent and or applied to Mr. Wartoto' own and or his companies personal use and purpose and not for the purpose for which they were paid."
Following his arrest and charges Wartoto's case was first heard in the District Court to determine there was sufficient evidence before it was committed to trial in the National Court.
Wartoto then filed an application in the National Court seeking to invoke civil jurisdiction (powers) of the Court to permanently stay (stop) the criminal proceedings against him on the grounds it was an abuse of process.
His lawyer argued that State had legal contract with SWT to carry out repair and maintenance services. He submitted that once the contract price was paid to SWT the money became the property of SWT and no longer the property of the State. State is only able to bring civil proceedings (lawsuit) against SWT for breach of contract and not criminal charges against him.
Therefore technically he did not take funds directly from the Government he took it from the company he owned thus he was entitled to borrow such funds and never actually misapplied it.
Based on this argument Wartoto's lawyer contested the charges of misappropriation could not be proven nor lead to his conviction therefore the criminal proceedings against him were an abuse of process.
National Court Judge Administrator of Fraud and Corruption criminal cases Justice Salika dismissed Wartoto's application on the grounds it was an abuse of process. His Honour held the view Public Prosecutor has constitutional powers to bring or decline to bring prosecution against any person. His Honour saw no reason to prevent such lawful authorities from carrying out their lawful function. Nor did he see a very strong or exceptional case that the Court should exercise its discretion to stay the proceedings.
Wartoto then appealed (challenged the decision) to the Supreme Court.
Prosecution opposed the Wartoto's appeal arguing that there is due and proper process and procedure in the National Court's criminal jurisdiction under the Criminal Code and Criminal Practice Rules, which Mr. Wartoto should have used to raise these issues in his defence against the charges against him.
Further State still had an interest in the funds paid to SWT until there is proper and full application against the purpose for which the funds were paid.
The main issues Supreme Court considered were:
(1) Can a civil proceeding be employed to permanently stay criminal proceedings?
(2) Does the State lose all its interest or property rights in public funds paid to a private contractor for certain public works once it pays the funds over to the contractor?
On the first issue the Supreme Court was of the firm view:
It is an abuse of process for a person accused of criminal charges to invoke civil jurisdiction (powers) of the National Court seeking stay the criminal proceedings against him.
Such issues should have been raised and dealt with by the National Court in its criminal jurisdiction through the normal process rather than civil jurisdiction.
On the second issue the Supreme Court ruled the State has all its interest or property rights in public funds paid to a private contractor for certain public works, until the purpose for which the payments are made is achieved or accomplished.
So irrespective whether funds were paid to Wartoto's company the State (Govt) still had an interest in it until it is applied for its intended purpose. Thus Wartoto is still liable if proven he misapplied those funds to his personal use.
Based on the above reasons, the Supreme Court accordingly ruled that Wartoto's appeal was without any merit and ordered it be dismissed forthwith. Further that Wartoto's criminal proceedings should be expedited to a trial without further unnecessary applications or delays.
Where my view and that of the two other articles differ is that the Supreme Court did not state that civil proceedings must not be mounted to challenge and also seek temporarily or permanently stay against:
(a) The investigation conducted by the Ombudsman Commission and the referral;
(b) The referral by the Public Prosecutor of the leaders to the Leadership Tribunals;
(c) The Leadership Tribunals;
(d) The commission of inquiries; and
(e) The investigation and proceedings of the Lawyers Statutory Committee.
The Court merely highlight the observation of previous judgements who expressed that view.
The accepted principle is that Court's may exercise its inherent powers and discretion to stay any proceedings but only where there is an abuse of process and exceptional circumstances only and very rarely.
So the importance of recent SC ruling is that it closed off the legal avenue of those seeking to initiate civil proceedings to obtain temporary or permanent stay orders against criminal investigations or proceedings against them.
This ruling has a direct significance to the Prime Minister and Minister for Finance James Marape's Supreme Court appeal case. If you recall when Fraud and Anti-Corruption Directorate first obtained the arrest warrant against the Prime Minister he rushed to parliament and his lawyers rushed to court to join the civil proceedings filed by Marape vs Paul Paraka & Paraka Lawyers seeking to have the arrest warrant stayed.
Marape initiated those proceedings in an effort to have the legal bills paid by the state to Paraka Lawyers taxed (properly assessed) including the unlawful K71.8m payment allegedly facilitated by PM and Marape.
Marape was seeking orders from the Court to properly assess the bills and if it was found to be less than the amounts invoiced by and paid to Paraka Lawyers then any excess amount should be refunded by Paul Paraka Lawyers, and the payment of that excess amount shall be deemed lawful and legal.
In other words if they could someone how legalise the payments then they would avoid facing charges for allegedly unlawfully making the K71.8m payment to Paraka Lawyers.
Marape also filed a notice of motion in the same proceedings seeking an interim restraining order against the Police and the Taskforce Sweep Team from investigating him in relation to the payment of legal bills to Paul Paraka Lawyers.
At the time the warrant of arrest was served on the Prime Minister, Marape had not moved his motion for a stay. The moment the warrant was served both the PM and Marape rushed to court moving an urgent application for the Court to stay the warrant including efforts by the Task Force Sweep to arrest Marape.
In the end the National Court Judge Kariko dismissed both applications on the grounds it had no relevance to substantive (actual) proceedings that relates to taxation costs of Paraka legal bills.
Marape then filed an appeal in the Supreme Court making a further application for a stay against his arrest until the Supreme Court determined his appeal. After he was successful the PM later joint those same proceedings to obtain a stay against the National Fraud Squad Members from making further arrests against him.
They were able to convince the SC that the integrity and reputation of the Police Force has to be restored, that there are divisions in the Police Force, and that the Acting Police Commissioner is unable to perform his constitutional duties and functions, which includes commanding and controlling the Police Force, and that he himself has been charged with offences. The same grounds were argued in the PM's case alleging he was being harassed at gun point by Fraud Squad members.
In the end SC held the view that there is small justification thus exceptional circumstances to justify the stay.
Those proceedings relied on civil jurisdiction of the Court to successfully obtain a stay order against criminal investigations.
The recent Supreme Court ruling by five man bench chaired by the Chief Justice has now determined it to be an abuse of process. The ruling does not have a retrospective effect against the earlier Supreme Court's decision to grant a stay in favour of Marape and PM. However National Fraud & Anti-Corruption Director and his Deputy may now seek to file an application to join those proceedings and have the Supreme Court set aside the same orders relying the recent SC ruling. Which I'm been informed they have already taken steps to do.
The issue relating the Leadership Tribunal is a separate matter to be discussed in a later article.
A post and detailed article have since been published canvassing this issue both were authored by prominent PNG lawyers and well expounded to those who have a legal mind. Due to the fact most don't I thought I'd provide a layperson's interpretation.
Background facts
Mr. Eremas Wartoto was arrested and charged in 2011 for two counts misappropriation relating to awarding of a contract to his company SWT to carry out repair and maintenance work at the Kerevat National High School in the East New Britain Province.
The contract was processed and awarded through the office of the Department of Planning and Monitoring and not through the Central Supply and Tenders Board process under the Public Finance (Management Act) 1995.
The State (Prosecution) alleges that SWT had inside knowledge and was able to quote for the lowest of the three quotations in the sum of K7.99m which the Department of Planning and Monitoring accepted.
Of the contracted amount, SWT managed to get paid an advance of about 85% or K6.79m on 20th January 2008. The balance of around K1.2m got paid on 14th October 2008.
The Prosecution alleged that it was without a proper certificate of completion and the provision of a proper invoice as is normally the case. The payments were contrary to normal practice which requires provision of goods and or services first and then payment made upon provision of invoice.
Except only for a small amount, no goods or material required for the Kerevat works where indeed purchased. Instead, most of the funds were applied to meet Mr. Wartoto's personal and his companies' own expenses which included the payment of bank loans and purchase of other property unrelated to the Kerevat works.
"Furthermore, the advance was purportedly on the authority or instructions of the then Chairman of the Central Supply and Tenders Board, Mr. Brian Kimmins, through a letter dated 28th November 2008, facsimiled from Mr. Wartoto' rent a car business located in Cairns, Australia. The State alleges, that letter was a forgery as it did not come from Mr. Kimmins."
"Finally, only some of the Kerevat works were carried out, at a total cost of about K700, 000.00. This effectively means that about K7.2 million was spent and or applied to Mr. Wartoto' own and or his companies personal use and purpose and not for the purpose for which they were paid."
Following his arrest and charges Wartoto's case was first heard in the District Court to determine there was sufficient evidence before it was committed to trial in the National Court.
Wartoto then filed an application in the National Court seeking to invoke civil jurisdiction (powers) of the Court to permanently stay (stop) the criminal proceedings against him on the grounds it was an abuse of process.
His lawyer argued that State had legal contract with SWT to carry out repair and maintenance services. He submitted that once the contract price was paid to SWT the money became the property of SWT and no longer the property of the State. State is only able to bring civil proceedings (lawsuit) against SWT for breach of contract and not criminal charges against him.
Therefore technically he did not take funds directly from the Government he took it from the company he owned thus he was entitled to borrow such funds and never actually misapplied it.
Based on this argument Wartoto's lawyer contested the charges of misappropriation could not be proven nor lead to his conviction therefore the criminal proceedings against him were an abuse of process.
National Court Judge Administrator of Fraud and Corruption criminal cases Justice Salika dismissed Wartoto's application on the grounds it was an abuse of process. His Honour held the view Public Prosecutor has constitutional powers to bring or decline to bring prosecution against any person. His Honour saw no reason to prevent such lawful authorities from carrying out their lawful function. Nor did he see a very strong or exceptional case that the Court should exercise its discretion to stay the proceedings.
Wartoto then appealed (challenged the decision) to the Supreme Court.
Prosecution opposed the Wartoto's appeal arguing that there is due and proper process and procedure in the National Court's criminal jurisdiction under the Criminal Code and Criminal Practice Rules, which Mr. Wartoto should have used to raise these issues in his defence against the charges against him.
Further State still had an interest in the funds paid to SWT until there is proper and full application against the purpose for which the funds were paid.
The main issues Supreme Court considered were:
(1) Can a civil proceeding be employed to permanently stay criminal proceedings?
(2) Does the State lose all its interest or property rights in public funds paid to a private contractor for certain public works once it pays the funds over to the contractor?
On the first issue the Supreme Court was of the firm view:
It is an abuse of process for a person accused of criminal charges to invoke civil jurisdiction (powers) of the National Court seeking stay the criminal proceedings against him.
Such issues should have been raised and dealt with by the National Court in its criminal jurisdiction through the normal process rather than civil jurisdiction.
On the second issue the Supreme Court ruled the State has all its interest or property rights in public funds paid to a private contractor for certain public works, until the purpose for which the payments are made is achieved or accomplished.
So irrespective whether funds were paid to Wartoto's company the State (Govt) still had an interest in it until it is applied for its intended purpose. Thus Wartoto is still liable if proven he misapplied those funds to his personal use.
Based on the above reasons, the Supreme Court accordingly ruled that Wartoto's appeal was without any merit and ordered it be dismissed forthwith. Further that Wartoto's criminal proceedings should be expedited to a trial without further unnecessary applications or delays.
Where my view and that of the two other articles differ is that the Supreme Court did not state that civil proceedings must not be mounted to challenge and also seek temporarily or permanently stay against:
(a) The investigation conducted by the Ombudsman Commission and the referral;
(b) The referral by the Public Prosecutor of the leaders to the Leadership Tribunals;
(c) The Leadership Tribunals;
(d) The commission of inquiries; and
(e) The investigation and proceedings of the Lawyers Statutory Committee.
The Court merely highlight the observation of previous judgements who expressed that view.
The accepted principle is that Court's may exercise its inherent powers and discretion to stay any proceedings but only where there is an abuse of process and exceptional circumstances only and very rarely.
So the importance of recent SC ruling is that it closed off the legal avenue of those seeking to initiate civil proceedings to obtain temporary or permanent stay orders against criminal investigations or proceedings against them.
This ruling has a direct significance to the Prime Minister and Minister for Finance James Marape's Supreme Court appeal case. If you recall when Fraud and Anti-Corruption Directorate first obtained the arrest warrant against the Prime Minister he rushed to parliament and his lawyers rushed to court to join the civil proceedings filed by Marape vs Paul Paraka & Paraka Lawyers seeking to have the arrest warrant stayed.
Marape initiated those proceedings in an effort to have the legal bills paid by the state to Paraka Lawyers taxed (properly assessed) including the unlawful K71.8m payment allegedly facilitated by PM and Marape.
Marape was seeking orders from the Court to properly assess the bills and if it was found to be less than the amounts invoiced by and paid to Paraka Lawyers then any excess amount should be refunded by Paul Paraka Lawyers, and the payment of that excess amount shall be deemed lawful and legal.
In other words if they could someone how legalise the payments then they would avoid facing charges for allegedly unlawfully making the K71.8m payment to Paraka Lawyers.
Marape also filed a notice of motion in the same proceedings seeking an interim restraining order against the Police and the Taskforce Sweep Team from investigating him in relation to the payment of legal bills to Paul Paraka Lawyers.
At the time the warrant of arrest was served on the Prime Minister, Marape had not moved his motion for a stay. The moment the warrant was served both the PM and Marape rushed to court moving an urgent application for the Court to stay the warrant including efforts by the Task Force Sweep to arrest Marape.
In the end the National Court Judge Kariko dismissed both applications on the grounds it had no relevance to substantive (actual) proceedings that relates to taxation costs of Paraka legal bills.
Marape then filed an appeal in the Supreme Court making a further application for a stay against his arrest until the Supreme Court determined his appeal. After he was successful the PM later joint those same proceedings to obtain a stay against the National Fraud Squad Members from making further arrests against him.
They were able to convince the SC that the integrity and reputation of the Police Force has to be restored, that there are divisions in the Police Force, and that the Acting Police Commissioner is unable to perform his constitutional duties and functions, which includes commanding and controlling the Police Force, and that he himself has been charged with offences. The same grounds were argued in the PM's case alleging he was being harassed at gun point by Fraud Squad members.
In the end SC held the view that there is small justification thus exceptional circumstances to justify the stay.
Those proceedings relied on civil jurisdiction of the Court to successfully obtain a stay order against criminal investigations.
The recent Supreme Court ruling by five man bench chaired by the Chief Justice has now determined it to be an abuse of process. The ruling does not have a retrospective effect against the earlier Supreme Court's decision to grant a stay in favour of Marape and PM. However National Fraud & Anti-Corruption Director and his Deputy may now seek to file an application to join those proceedings and have the Supreme Court set aside the same orders relying the recent SC ruling. Which I'm been informed they have already taken steps to do.
The issue relating the Leadership Tribunal is a separate matter to be discussed in a later article.
