Rafflin v Richard Gault Industries Pty Ltd [1997] PGLawRp 721; [1998] PNGLR 394 (3 November 1997)

[1998] PNGLR 394

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

RAFFLIN & ORS

V

RICHARD GAULT INDUSTRIES PTY LTD;
KERAWARA PTY LTD;
EAST NEW BRITAIN PROVINCIAL GOVERNMENT;
PAPUA NEW GUINEA FOREST AUTHORITY; AND
THE STATE

KOKOPO: WOODS J
11 August and 3 November 1997

Facts

The plaintiffs were lawful owners of land, which were awarded to them under valid State Leases for agricultural purposes. These State Leases were issued to the plaintiffs by the Agriculture Bank. These portions of land contained merchantable trees.

The first and second defendants moved onto the plaintiffs’ land and started logging activities based on a Timber Licence issued to it by the Forestry Department.

The plaintiffs had demanded the first and second respondents to cease its logging activities and also pay compensation but the defendants refused both requests because they claimed that they were operating under a valid licence.

Held

1. The plaintiffs had a prior valid and lawful ownership and possession over the portions of land and therefore had a right to be consulted and their consent obtained before the National Forest Authority issued the Timber Licence to the first defendant.
   
2. The lack of consent by the block holders meant that the first defendant had unlawfully entered the plaintiffs’ land and caused extensive damage to their land.
   
3. Timber located on State Leases are not subject to the Forestry Act because they are private property and therefore the State through the National Forests Authority has no right to issue licences over these trees.
   

Counsels

P Harricknen & B Killian, for the plaintiffs.
No appearances for the first, second, third and fourth defendants.
Ms P Kiele, for the fifth defendant.

3 November 1997

WOODS J. The plaintiffs in these actions are seeking certain declarations concerning the rights of the defendants to licence and conduct logging operations on their lands and they are also seeking damages for trespass and breach of the conditions of State Leases for quiet enjoyment.

The writ of summons seeks:

1. A declaration that the 1st and 2nd defendants are not entitled to enter the land and to carry on logging operations thereon.
   
2. A declaration that the 1st and/or 2nd defendants logging operations on the land was unlawful in respect of the 1st and 3rd plaintiffs since the grant of the State Leases and in respect of the 2nd plaintiff since the commencement of the logging operations.
   
3. An injunction to restrain the 1st and 2nd defendants by their servants and agents from entering and carrying on logging operations on the land.
   
4. An order that the 1st, 2nd, 3rd, 4th, 5th defendants give a full and accurate account of timber harvested from the land at all material times.
   
5. Damages against the 1st and 2nd defendants for trespass and/or conversion.
   
6. Damages against the 5th defendant in favour of the plaintiffs for breach of contract.
   
7. Interest.
   

Whilst the 1st and 2nd defendants did respond with pleadings early in this matter they have failed to continue with pleadings or appear at mentions over the past year or more in spite of being served with the process and the court has been forced to accept that they are not interested in defending the claims.

The proceedings were discontinued against the 3rd defendant. The 4th defendant has shown no interest in attending at the hearing of the matter. One of the plaintiffs, Steven Rafflin, had settled his claim with the defendants and thereupon discontinued his claim.

The case briefly concerns the alleged trespass of logging companies namely the 1st and 2nd defendants onto the lands of the plaintiffs under a Timber Licence given by the State. The plaintiffs were holders of State Leases for agricultural purposes, except for one plaintiff who was the customary owner of certain land. Most of the plaintiffs held State Leases which were granted under the Warongoi Cocoa Block Scheme, which was a project, planned by the Department of Primary Industry, the Provincial Government and the Agriculture Bank for the economic development of the area into cocoa production by way of smallholder blocks. The plaintiffs had applied in the normal fashion under the Land Act for their blocks and in due course they were granted State Leases over the land and in most cases were granted loans by the Agriculture Bank for the development of their blocks. This therefore, resulted in the State Leases being issued subject to mortgages to the Agriculture Bank. These State Leases were granted in March 1991, and I refer here to Government Gazette G27 of 14 March 1991.

The State Leases were in the usual form of an Agricultural Lease under s 49 of the Land Act and issued on various dates between March and July 1991 and they contained the usual reservations implied in State Leases, which would be by virtue of s 39 the reservations of minerals, and they included the usual style of terms and conditions for cultivation and development for in these cases cocoa, and a residential condition. There is no mention of any reservation of timber and of course any such a reservation would not make any sense as the Leases were leases to plant and grow certain tree crops.

In 1992, the then Minister for Forests granted a Timber Licence (No 15-8) relating to the Warongoi Timber Area, East New Britain Province to the 1st defendant. This timber licence purported to include the lands owned by the plaintiffs. In 1993, the 1st and 2nd defendants entered the lands of the plaintiffs and cut down and removed trees. There was no separate consent from the plaintiffs for this action by the 1st and 2nd defendants. The defendants admitted in their defence and cross-claim filed in July 1994 that they had a Timber Licence issued under the Forestry Act 1991 over the plaintiffs’ lands. However, they asserted that they were under no obligation to treat with the lessees or landowners. And the Department of Forests agreed in June 1993 that the subject licence did purport to include the Agricultural Blocks, and refer here to a letter from the then Secretary of the Department of Forests dated 1st June, 1993. The 1st and 2nd defendants relied on this Timber Licence to give them the right to enter onto the land the subject of these agriculture leases and remove timber and further it appeared that the defendants relied on the terms of this licence that they were in no way answerable to the plaintiffs as leaseholders of these agriculture leases but only answerable to the State and only had to pay any licence fees or royalty fees to the State or its instrumentalities.

I note here that the 4th defendant, the Papua New Guinea Forest Authority, is the successor to the responsibilities and obligations of the Department of Forests, (note the Forestry Act 1991 and in particular s 140).

It is clear that all defendants agree that there was a Timber Licence granted over the lands owned by the plaintiffs and that under that licence the 1st and 2nd defendants entered onto the lands of the plaintiffs and removed trees and any payments for that licence and for those trees was made to the State or its agent.

The first question is therefore, how and by what right did the State grant a licence to the 1st defendant to remove trees from the plaintiff’s lands. The plaintiff Rowan Kilian is the owner of some customary land and no one has produced any document to prove that the State had acquired his land or any rights to his land for any purposes. I must note here that whilst the Timber Licence refers to a Timber Rights Purchase of 1952 there is no evidence before me to support any suggestion that this purchase included this particular plaintiff or the lands belonging to this plaintiff. I must therefore, find that the State had no right to grant a licence over his land and therefore the 1st and 2nd defendants had no right to enter the lands of the second plaintiff and are therefore liable in trespass for any loss or damage done to the plaintiff’s lands. The other plaintiffs held properly issued and registered State Leases. There were the usual reservations of minerals. But there was no reservation of trees, and of course such a reservation of trees would make no sense of such a lease as the lease was for the purpose of planting and cultivating certain specified trees. The land the subject of these leases was thereupon not government land following the granting of the leases, note here the definition of government land in the definition section of the Land Act which makes it clear that land that is the subject of a State Lease is not government land.

Therefore, the only right or authority the State had over these lands was by virtue of the terms and conditions imposed on the lease. The lawyer for the State refers to s 67 of the Land Act for the power of the State to grant the Timber Licence. But note that s 67 only refers to such a right over government land, and these leases clearly take the land out of that category. The lawyer for the State has submitted that these State Leases contained implied terms for the reservation of all trees to the State however; she has been unable to refer the court to any particular provision of the Land Act to support such a submission. As indicated above, there is no such reservation on the leases, nor is there any provision of the Land Act which reserves such a right, and as I have already noted such reservation would make nonsense of any such lease being as it is a lease to cultivate a certain type of tree.

I note that the Timber Licence makes reference to a Timber Purchase Agreement of 1952. However, as the land has now been subdivided and granted under agricultural leases then there has been a further complete acquisition of customary land by the State which would supercede such a limited timber purchase and that therefore, such timber purchase itself has been superceded and merged into the full State title to the land.

I find it extremely disturbing that there has been no help offered to the court in this case from the Department of Forests or its successor the National Forest Authority to explain how this situation has arisen, what was the nature of this old Timber Rights Purchase and how they say they still have rights in the timber when there has been a further acquisition for leasing for agricultural purposes. They appear to have a very naïve understanding of land rights. It appears that the relevant officers in the Forest Department or the National Forest Authority have been grossly careless or negligent in the advice they gave to the Minister for Forests that the State owned trees on what was in effect private land.

Agriculture leases and for general purposes, State Leases, do not include reservations of such things as trees to the State unless such a reservation is expressly stated. There is evidence that the Lands Department officers in East New Britain had queried the right of the defendant companies to enter onto and log the subject land, but they were overruled by officers of the Department of Forests. Whilst according to certain customary rules of property, trees were often regarded as the personal property of the person who planted them; this rule had only existed where the customary practices prevailed. It is noted that the State did at one time recognise that right and went to a great deal of trouble to negotiate over the rights to trees and thus, entered into Timber Rights Purchases. However, once the State acquired the land for modern development purposes and leased the land, then trees became part of the land that was leased or granted. On the one hand, of course the State could never claim to still own the trees because the State had not planted them according to the traditional system with the agreement of the group for the use of the land to so plant them. The State by its acquisition and grant of State Leases cannot then be seen as a customary user of the land. And now of course, once the State started issuing documents of title or in this case lease documents with reservations and conditions then it was important that any reservations and condition on the use of the land so leased had to be clearly spelt out. So trees have now become part of the land according to modern concepts that what is attached to the soil becomes part of the land.

It is suggested that under the Forestry Act there is a right in the State to grant licences over timber on land held under lease from the government. Unfortunately, as I have already noted no one has appeared to assist the court in any understanding of how this provision can operate over what is in effect private land. How does the State give a title to land with no specific reservations of trees on the one hand and then assert it has rights over the trees on the other hand? There may be some overriding power in the State to control logging in the country, but any logging on private land must still require the consent of the owner of that private land. Whilst the Forestry Act 1991 clearly shows that for example in s 46: ‘The rights of customary owners of a forest resource shall be fully recognised and respected in all transactions affecting the resource,’ it is noted that the Timber Licence here was issued a day before the Forestry Act 1991 came into operation. The Forestry Act 1991 came into operation on the 25th June 1992 whilst the Timber Licence was signed on the 24th June 1992. So this means the licence was originally issued under the terms of Forestry Act (Ch. No. 216). Is there any difference in the effect of a licence issued under the original Act? The Forestry Act (Ch. No. 216) is less specific about rights timber on private land. Section 10 of that Act seems to allow the taking of timber from private land. It reads: "Subject to this Act, the Minister may grant permits and licences to take and contract for the sale of forest produce on:

1. any Government land...
   
2. land held under lease from the Government...."
   

But what do the words ‘take and contract’ mean? We must always note the implications of s 53 of the Constitution (unjust deprivation of property). And how can a licence be a grant of an interest in land? To do so, it must accord with the provisions of the Land Act. As already noted, land the subject of State Leases is no longer ‘government land’ under the Land Act. By authorising logging companies to go onto these State Leases, the State has derogated from the grant of the State Leases. It must have been implied in the Forestry Act (Ch. No. 216) that, even if the State could grant licences over land held under lease from the government, there would have to be the consent of and negotiations from the lessee. Otherwise, there would be a clear breach of the rights of ownership of land whether the implied right of quiet possession under the Land Act or the rights granted under the Constitution that a person couldn’t be deprived of their property without proper procedures. And it must be implied that such proper procedures must include consent or proper negotiation. The Forestry Act 1991 which replaces the Forestry Act (Ch. No. 216), and which came into force the day after this Timber Licence was granted, makes it clear in s 55 that a lessee of State land must consent to any logging on his land so any Forest Licence is still subject to the lessee’s right of ownership. Neither the State nor the Forest Authority has any title to the trees. And the court must note here that prior to the 1991 Act, there was the requirements for Timber Rights Purchase Agreements to be concluded with traditional owners before logging could be conducted. This process therefore recognised the constitutional rights of landowners to things that grew or were attached to the land as well as the land.

It must be clear that a Timber Licence is only a means of controlling the logging industry, it does not give title to land or even trees and in particular title to trees that the State does not have.

There is neither evidence of any consent by the plaintiffs for logging to be conducted on their lands nor any contracts between the defendants and the plaintiffs for such logging to take place. And the defendant companies clearly acknowledge that they had no agreement with the lessees to enter and log the land. The evidence suggests that the directors and other officers of the two defendant companies colluded with officers of the Forest Authority to ignore the concerns of the Lands Department officers and deliberately ignored the rights of the landowners and took timber belonging to the plaintiffs.

I find that the first and second defendants were not entitled to enter onto the land of the plaintiffs and carry on logging operations thereon.

I declare that the first and second defendants logging operations on the lands of the plaintiffs were unlawful.

I order that the first and second defendants are restrained from entering and carrying on logging operations on the plaintiffs’ lands.

I find that there has been a trespass by the first and second defendants, with the active encouragement and support of the Department of Forests and the National Forest Authority, onto the lands of the plaintiffs and that the first and second defendants are liable to pay damages to the plaintiffs for this trespass.

I find that there has been a breach by the State and its instrumentality whether the Department of Forests or the National Forest Authority of implied covenants for quiet possession in the granting of agricultural leases to the plaintiffs in granting the Timber Licences to the 1st and 2nd defendants and supporting and encouraging the actions of those defendants in trespassing onto the lands of the plaintiffs and causing loss and damage in derogation of their agricultural leases without prior agreement or contracts with the plaintiffs. I find that the State whether by itself or through its responsible agent is liable in damages for any loss and damage suffered by the plaintiffs and one can only hope that the State ensures that the relevant agent and their officers take the responsibility for this.

Assessment of damages

The only evidence presented to the court for the assessment of damages has been the evidence presented on behalf of the plaintiffs. There has been no assistance from the defendants and in particular none from the National Forest Authority through their supervisory role over logging operations in the country to corroborate or contradict the evidence. So I am left with the evidence and assessments presented on behalf of the plaintiffs. Much of the evidence is from a Mr Steven Mombi an agricultural scientist with the Rural Development Bank in Rabaul and some of the evidence is from a Mr D Hollis a supervising appraiser with the Agricultural Bank of PNG. I have no reason to question their credentials and ability and expertise to make assessments of loss in regard to natural timber.

I consider one assessment of each plaintiff as follows:

The first plaintiffs.

1. Francis Walaun attested to be the owner of Block 2002 with a State Lease granted in 1991. However, there is no assessment of damages to his Block
   
2. Sam Beni Kakailai attested to be the owner of Block 2183 with a State Lease granted in June 1991. There is an assessment of the damages for destruction and removal of trees of K144,704.28.
   
3. Gerson Ria attested to be the owner of Block 2171 with a State Lease granted in 1991. However, there has been no assessment of damages to his Block.
   
4. Donia Warabe attested to be the owner of Block 1973 with a State Lease granted in April 1991. There is an assessment of damages for destruction and removal of trees of K11,550.00. I cannot accept a further amount claimed here of K8,160.00 as there is no adequate explanation of the suggested overlap of the assessments.
   
5. Esau Wesley attested to be the owner of Block 1980 with a State Lease granted in 1991. There is an assessment of the damages for the removal of trees of K7,200.00.
   
6. Elizah Passingan attested to be the husband of Akea Elizah the owner of Block 2188 with a State Lease granted in 1991. There is an assessment of damages for the removal of trees of K144,000.00.
   
7. Thomas Valar attested to be the owner of Block 2168 with a State Lease granted in July 1991. There is an assessment of damages for loss of timber and destruction of K36,065.63.
   
8. Nobert Dick attested to be the owner of Block 2180 with a State Lease granted in 1991. There is an assessment of damages for loss of timber and destruction of K90,418.28.
   
9. John Mei attested to be the owner of Block 2184 with a State Lease granted in 1991. There is an assessment of loss of timber and destruction of K67,580.88. I cannot accept a further amount claimed of K26,880.00 as there is no adequate explanation of the suggested overlap of the assessments.
   
10. Lote Romulus Gegelo attested to be the owner of Block 1997 with a State Lease granted in April 1991. There is an assessment of loss of timber of K55,200.00.
    
11. Michael Eremas attested to be the owner of Block 2003 with a State Lease granted in 1991. There is an assessment of loss of trees of K16,320.00.
    
12. Amos Gimgim attested to be the owner of Block 2007 with a State Lease granted in April 1991. There is an assessment of loss of trees of K55,200.00.
    
13. Rowan Kilian is the second plaintiff and the owner of some customary land. There is an assessment of damages for the loss of trees from his land of K96,000.00. There is no evidence that his timber was purchased or otherwise acquired by the state under any Timber Rights Purchase.
    

The third plaintiffs.

14. Scholastica Manaka attested to be the owner of Block 2176 with a State Lease granted in 1991. There is an assessment of loss of trees and destruction of K101,716.60.
    
15. Fredda Turakit attested to be the owner of Block 1913 with a State Lease Volume 2 Folio 190 granted in March 1991. There has been no assessment of damages or loss.
    
16. Stanley Vuvu attested to be the owner of Block 1995 with a State Lease Volume 2 Folio 209 granted in May 1991. There has been no assessment of damages or loss.
    
17. Linet Kara attested to be the owner of Block 1964 with a State Lease granted in March 1991. There is an assessment of loss of trees and destruction of K26,461.76.
    
18. Jimmy Febuar attested to be the owner of Block 2011 with a State Lease granted in May 1991. There has been no assessment for damages or loss.
    
19. John Guria attested on behalf of Kapania Waninara as the owner of Block 1925 with a State Lease granted in 1991. There is an assessment of loss of trees of K48,960.00.
    
20. Henry John attested to be the owner of Block 2182 with a State Lease granted from October 1991. There is an assessment of damages for loss of trees of K48,000.00.
    
21. Serri Bola attested to be the owner of Block 2001 with a State Lease granted in June 1991. There is an assessment of damages for loss of trees of K12,597.01.
    
22. John Tobata attested to be the owner of Block 1924 with State Lease Volume 2 Folio 193 granted in March 1991. There is an assessment of damages for loss of trees of K95,599.50. I cannot accept a further amount of K72,000.00 claimed, as there is no adequate explanation for the suggested overlap of the assessments.
    
23. Sam Pinia attested to be the owner of Block 1968 with a State Lease granted in April 1991. There is an assessment of damages for loss of trees of K130,486.98.
    
24. Kilala Waninara attested to be the owner of Block 1969 with a State Lease granted in April 1991. There is an assessment of damages for loss of trees of K156,770.82.
    
25. Elsie Joyce attested to be the owner of Block 2186 with a State Lease granted in 1991. There is an assessment of damages for loss of trees of K19,243.08. I cannot accept a further amount of K23,040.00 as there is no adequate explanation of the suggested overlap of assessments.
    
26. Romulus Toiwat attested to be the owner of Block 2000 with a State Lease granted in 1991. There is an assessment of loss of trees of K22,560.00.
    
27. Augustine Bele attested to be the owner of Block 1996 with a State Lease granted from May 1991. There is an assessment of damages for loss of trees of K42,240.00.
    
28. Nancy Tade attested as the husband of Moses Tade the owner of Block 1978 with a State Lease granted in 1991. There is an assessment of damages for loss of trees of K23,040.00.
    
29. Itinge Vanalur attested to be the owner of Block 1914 with a State Lease granted in April 1991. There has been no assessment of damages for any loss.
    
30. Kalan Meli attested to be the owner of Block 1956 with a State Lease from 1991. There has been no assessment of damages for any loss.
    
31. Sophie Tobain attested to be the owner of Block 1967 with a State Lease granted in March 1991. There is an assessment of damages for loss of trees of K87,837.21.
    
32. Francis Entini attested to be the owner of Block 1966 with a State Lease granted in 1991. There is an assessment of damages for loss of trees of K62,400.00.
    
33. Sunaim Amos attested to be the owner of Block 1972 with a State Lease granted in April 1991. There is an assessment of damages for loss of trees of K62,683.76.
    
34. Anton Taralima attested to be the owner of Block 1965 with a State Lease granted in April 1991. There is an assessment of damages for loss of trees of K41,280.00.
    
35. Billy Pirit attested to be the owner of Block 2187 with a State Lease granted in 1991. There is an assessment of loss of trees of K14,400.00.
    
36. December Raita attested to be the owner of Block 2181 with a State Lease granted in 1991. There is an assessment of damages for loss of trees of K80,127.89.
    
37. John Willimon attested to be the owner of Block 1912 with State Lease Volume 2 Folio 241 granted in March 1991. There has been no assessment of damages.
    
38. Oscar Dokta attested to be the owner of Block 2167 with a State Lease granted in 1991. There is an assessment of damages for loss of trees of K29,760.00.
    

I allow interest on these amounts at the rate of 8 percent from the date of the consolidation of the proceedings on 3 August 1994.

The calculation of the damages and the interest is as follows:

Name Damages Interest Total

Sam Beni Kakailai K144,704.28 K37,646.89 K182,351.17

Donia Warabe 11,550.00 3,004.90 14,554.90

Esau Wesley 7,200.00 1,873.18 9,073.18

Akea Elizah 144,000.00 37,463.67 181,463.67

Thomas Valar 36,065.63 9,383.00 45,448.63

Norbert Dick 90,418.28 23,523.60 113,941.88

John Mei 67,580.88 17,582.12 85,163.00

Lote Romulus 55,200.00 14,361.07 69,561.07

Michael Eremas 16,320.00 4,245.88 20,565.88

Amos Gimgim 55,200.00 14,361.07 69,561.07

Rowan Kilian 96,000.00 24,975.78 120,975.78

Scholastica Manaka 101,716.00 26,466.88 128,182.88

Linet Kara 26,461.76 6,884.40 33,346.16

Kapania Waninara 48,960.00 12,737.64 61,697.64

Henry John 48,000.00 12,487.90 60.487.90

Serri Bola 12,597.01 3,277.29 15,874.30

John Tobata 95,599.50 24,870.78 120,470.28

Sam Pinia 130,486.98 33,948.05 164,435.03

Kilala Waninara 156,770.82 40,786.18 197,557.00

Elsie Joyce 19,243.08 5,006.35 24,249.43

Romulus Toiwat 22,560.00 5,869.30 28,429.30

Augustine Bele 42,240.00 10,989.34 53,229.34

Moses Tade 23,040.00 5,994.18 29,034.18

Sophie Tobain 87,837.21 22,852.11 110,689.32

Francis Entini 62,400.00 16,234.25 78,634.25

Sunaim Amos 62,683.76 16,308.07 78,991.83

Anton Taralima 41,280.00 10,739.58 52,019.58

Billy Pirit 14,400.00 3,746.36 18,146.36

December Raita 80,127.89 20,846.41 100,974.30

Oscar Dokta 29,760.00 7,742.50 37,502.50

TOTAL: K2,306,611.81

The total of the final judgement including interest is the sum of K2,306.611.81.

I order judgement against Richard Gault Industries Pty Ltd, Kerewara Pty Ltd, and the State in the sum of K2,306,611.81.

Lawyers for the plaintiffs: Parkop and Harricknen Lawyers.
Lawyer for the fifth defendant: Solicitor General.