Tasukolak Pty Ltd v The State [1986] PGNC 13; N568 (22 December 1986)

Unreported National Court Decisions

N568

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]
TASUKOLAK PTY LIMITED
-PLAINTIFF-
-V-
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
-FIRST NAMED DEFENDANT-
MR TED DIRO MINISTER FOR FORESTS
-SECOND NAMED DEFENDANT-
MR GALEVA KWARARA MINISTER FOR TRADE AND INDUSTRY
-THIRD NAMED DEFENDANT-
MR FRANK MIRO
-FOURTH NAMED DEFENDANT-

Waigani

McDermott AJ
11 December 1986
22 December 1986

CONTRACT - Absence of signature by a party - conduct of party supply want of it.

EVIDENCE - Customary ownership - Evidence of by affidavit.

REAL PROPERTY - Ownership and Disposal of customary land - Right of Clan Leader to dispose of on behalf of absent persons.

STATUTE - Forestry Act Ch No 216 - Sale of Timber Rights by customary owners - No conflict between Act, Timber Rights Purchase Agreement and Custom.

Cases cited:

Brogden v Directors of the Metropolitan Railway Company (1876-7) 2 AC 666

Leeman v Stocks (1951) 1 Ch 941

Robophone Facilities Ltd v Blank (1966) 3 All ER 128.

Counsel:

Mr C. Coady for Plaintiff

Mr J Goodman for Defendants

MCDERMOTT, AJ: This matter comes before the court as an Application for Judicial Review. It arose from a refusal by the Export Licensing Officer in the Department of Trade and Industry to approve of 3 ports for log exports, on 5 November 1986 which effectively stopped the plaintiff's operations.

The plaintiff is a logging company which on 3 September 1985 received from the Office of the Ministry of Forests a letter headed 'Conditional Approval for Operations - Danfu Extension Timber Area.' This letter acknowledged that the preparation of a 'formal Timber Permit is now nearing completion so I am prepared to allow commencement of operations ...' thereafter were set out three conditions upon whose fulfillment operations could commence. (These conditions were satisfied and are irrelevant to the case). The terms and conditions of the permit were then set out in detail. The area referred to as the 'permit area' is 'Danfu Extension TRP of 25,400 ha. The permit runs for 5 years from a commencement date specified as 'immediately upon completion of TP16-17.' (a previously granted Permit area). The letter was signed by the Minister and the company countersigned on 4 September 1985, as accepting the terms and conditions until 'a formal Permit Document issued.' This document has still not issued.

The plaintiff company then entered into a logging agreement with Gaisho Company (New Guinea) Pty Ltd to exploit the timber permit area. It is a specialist company. Gaisho not only does the operation work but has a Special Export Licence and arranges for the export of the logs to buyers overseas in the timber industry.

A special licence under s 7(3) Exports (Control and Valuation) Act Ch 108 allows the licence holder to export for extended period obviating the need to obtain a licence for each consignment (an ordinary licence). With large scale and continuing operations, such as logging, a special licence must have many administrative advantages.

Logging operations commenced and approximately 1,500 cubic metres of round logs were on the beach awaiting export when refusal to approve the ports (beaches) was made known. No explaination apart from 'as advised by Department of Forest' was given. On 16 November 1986 the District Forest Officer, Department of New Ireland Province advised the plaintiff in a letter entitled 'cease Logging - Dangu Ext. TRP";

"As you may care to know that your company movement to the area was illegal prior to incompletion of TRP documents. Besides the area has not yet being purchased and declared as TRP area".

The plaintiff was forbidden to extract further logs and told to leave the extracted logs where they were.

This surprise turnaround created all sorts of difficulties for the company: the deterioration of the valuable logs on the beach, the demurrage costs for the vessel expected to load the logs, the inability to ship further logs already arranged and the inability to simply carry on business and meet commitments.

A count order was necessary before reason prevailed and these logs were exported.

The plaintiff now requests substantive relief by way of an order for mandams and declarations and on 21 November 1986, the matter was set down for hearing on 12 December, by consent it came before me on 11 December.

In support of its case the company has filed many affidavits, concerning the dealings with the Minister and obtaining the Permit, its agreement with Gaisho, the views of some of the local landowners and directors of the company as to the custom relating to the power of clan leaders over land.

Nothing has been filed in reply. The State has 'run dead'. The State is content to say on the one hand, that there is now no dispute but will not consent to the orders sought by the plaintiff, on the other. I accept Mr Coady's submission that this is unsatisfactory. There are large scale operations in progress with a great amount of capital investment involved. Forward planning to secure sales and delivery is essential. The State will not give the undertaking which I suggested ie the agreement with the plaintiff run its course with the State making no issue of the Timber Rights Purchase (TRP) being possibly invalid.

Thus, the State, whilst producing no evidence to the contrary will not admit that the TRP is valid. This reluctance has wide repercussions for the Company. The whole basis of their operations is in jeopardy. The refusal to grant a permit or the prevention of access could happen in the future.

The Company has filed five affidavits in which the landowning customs and rights are set out in some detail. The affidavits are impressive. They are entitled to weight. It is clear to me that they are capable of stating what the custom is. I am entitled to assume in the absence of evidence and in the light of what has transpired, that no objection has been made by a clan leader to the TRP. In the light of this evidence, the claims by the Forestry Officer that some absentees have not signed the Timber Rights Purchase becomes irrelevant. It is sufficient if the clan leaders sign on their behalf. On the strength of these affidavits it is clear to me that there is no conflict with the requirements of s 8 Forestry Act Ch No 216;

'Where the customary owners are willing to dispose of the timber growing on any land, the State may acquire the right ... on such terms as are agreed on between it and the owners.'

The act doesn't particularise 'customary owners' presumably for the good reason that that is a matter for custom. The State has produced the Agreement upon subpoena. It is dated 5 August 1985. Schedule 1 names the persons listed as vendors. Paragraph one apears to dispell any doubts about the effect of absentees.

"The Vendors on their own behalf and on behalf of each of the persons if any who are listed as in Schedule 1 hereto hereby dispose of and the State hereby acquires pursuant to Section 89 the Forestry Act ... ("The Timber Rights Purchase Area".)"

This is further reinforced by Paragraph 9;

"The Vendors on behalf of the owners, being all the persons set out in Schedule 1 (hereinafter called 'the owners'), of the timber and forest produce the subject of this Agreement hereby declare that they are entitled by the custom of their village or villages to dispose of the said timber and other forest produce, gravel etc., and no one other than the owners has any right or interest in the said timber or produce."

There are numerous absentees listed but each has a designated Agent,as do the signatories. The Agents are appointed pursuant to the agreement to simplify payments and communication.

The Timber Rights Purchases document is not signed by the Minister for Forests or the Secretary for Forests, though provision is made for their signatures 'on behalf of the Independent State of Papua New Guinea.' The many vendor signatures were obtained between 21 May 1984 and 11 April 1985. The agreement is dated 5 August 1985, presumably the date on which it was intended to have been signed on behalf of the State. Certainly the negotiations with the company were concluded after that date - and on the basis that the State had necessary rights over the Timber. There are two agreements involved; between (1) the State and the Landowners and (2) the State and the Company. Both agreements were put into operation simultaneously, once the logging operations commenced. In my view the commencement of the operations acknowledged the existence of a TRP and acknowledged the company's right to exploit the TRP area.

The agreement of the parties was put into operation as though all conditions proceedent on the part of the State were completed. In view of this, does the absence of the Minister's signature matter?

I have been referred to a number of authorities on this point. The first is Brogden v Directors of the Metropolitan Railway Company (1876-7)2 AC 666. The contract at issue was one to supply coal. The parties had done business for some years previously before Brogden requested a written contract. One was prepared and sent to him. He made some alterations and signed it as 'approved'. The agent of the company received it and put it in his desk without formal execution. The business continued but when disputes arose Brogden denied that there was a contract. The Lord Chancellor, with whom the other Lords agreed said at 680;

' ... That there having been clearly a consensus between these parties arrived at and expressed by the document signed by Mr Brogden, subject only to approbation, on the part of the company, of the additional term which he had introduced with regard to an arbitrator, that approbation was clearly given when the company commenced a course of dealing which is referable in my mind only to the contract, and when that course of dealing was accepted and acted upon by Messrs Brogden & Co. in the supply of coals.'

On an evidentiary matter Lord Blackburn was of the view that the onus of showing that both parties had acted on the terms of an agreement which had not been, in due form, executed by either, lies on the party which asserts it. That is the course taken by the plaintiff. The evidence adduced relates to the two agreements, the first dovetails with the second. In Leeman v Stocks (1951) 1 Ch at 941 a contract following the auction sale of premises was called into question - it was not signed by the vendor or auctioneer. For present purposes it is only necessary to refer to one part of that case namely, when the auctioneer (the vendor's agent) put the document before the purchaser for signature, the vendor's name was in it in relation to a contract which had come into being and was enforceable. And following on Robophone Facilities Ltd v Blank (1966) 3 All ER 128, the only reasonable inference is that the State by its further agreement with the Company regarded the TRP as complete.

I am thus unable to see why the company is not entitled to the orders which it seeks. If the orders are not made the company's position is tenuous. In my view it has been established that according to custom, the TRP is not in conflict with it. Likewise there is no conflict between the Act and the TPR document itself. The orders which the Company seeks are designed to ensure that the present agreement continues. In view of the States attitude they are necessary;

ORDERS

1. In the form of Mandamus directed to the Minister for Trade and Industry and or alternatively to Frank Miro in their capacity as Export Licensing Officers to consider according to Law a Special Export Licence pursuant to the Exports (Control and Valuation) Act, Ch 108 to the Plaintiff, alternatively to the Plaintiff's agent Gaisho Company (New Guinea) Pty Limited for logs from the ports of Hibaling Hilalon and Kudukudu in the Danfu Extension TRP of New Ireland.

2. A Declaration that the refusal dated 5 November 1986 and the continuing refusal of the State and/or the Minister for Trade and Industry or Frank Miro to issue, alternatively to amend Export Licence S-86078, an Export Licence Pursuant to Exports (Control and, Valuation Act, Chapter 108 to the Plaintiff, alternatively to the Plaintiff's agent Gaisho Company (New Guinea) Pty Limited for logs from the ports of Hibaling, Hilalon and Kudukudu is unlawful.

3. A declaration that the Timber Rights Purchase Agreement between the customary land owners of certain land in the New Ireland Province and known as the Danfu Extension and between the Independent State of Papua New Guinea is a valid agreement pursuant to section 8 of the Forestry Act in it's present form binding all of the customary land owners of the said land.

4. A declaration that a document in the form of a letter and dated the 3rd of September 1985 and signed by the Minister for Forests and addressed to the Plaintiff, a copy of which is annexure "A" in the Affidavit of Alphonse Tani sworn the 5th November 1986 and filed herein is a contract binding the Independent State of Papua New Guinea to grant to the Plaintiff a Timber Permit.

5. That the First Defendant pay the Plaintiff's costs in this Action.

6. Time abridged to todays date.

Lawyer for the Plaintiff: Elliott, Stubbs & Bonutto

Lawyer for First, Second, Third and Fourth Defendants: The State Solicitor