Tarsie v Ramu Nico Management (MCC) Ltd [2010] PGNC 77; N3987 (14 April 2010)

N3987

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 202 OF 2010

EDDIE TARSIE FOR HIMSELF AND IN HIS CAPACITY AS
WARD COUNCILLOR OF WARD 3,
SAIDOR LOCAL-LEVEL GOVERNMENT
First Plaintiff

FARINA SIGA, FOR HIMSELF AND IN HIS CAPACITY AS
WARD SECRETARY OF WARD 3,
SAIDOR LOCAL-LEVEL GOVERNMENT
Second Plaintiff

PETER SEL
Third Plaintiff

POMMERN INCORPORATED LAND GROUP NO 12591
Fourth Plaintiff

SAMA MELAMBO FOR HIMSELF AND AS CHAIRMAN OF
POMMERN INCORPORATED LAND GROUP NO 12591
Fifth Plaintiff

V

RAMU NICO MANAGEMENT (MCC) LIMITED
First Defendant

MINERAL RESOURCES AUTHORITY
Second Defendant

DR WARI IAMO IN HIS CAPACITY AS
DIRECTOR OF ENVIRONMENT
Third Defendant

DEPARTMENT OF ENVIRONMENT AND CONSERVATION
Fourth Defendant

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fifth Defendant

Madang: Cannings J
2010: 12, 14 April

INJUNCTIONS – interim injunctions – application to set aside – considerations to take into account when determining application to set aside interim orders.

The defendants applied to set aside an interim injunction previously granted by the National Court on various grounds, their principal contention being that in light of the true factual and legal situation there is no serious question for trial and the plaintiffs do not have an arguable case. In support of that contention the defendants argued that the interim injunction had been granted on an erroneous legal basis and relied on previously undisclosed material facts. Other contentions of the defendants included that the facts and legal issues on which they rely to set aside the interim injunction were not argued before the court earlier as they had no opportunity to do so; that the court was misled by the plaintiffs when it granted the interim injunction; and that a reconsideration of discretionary matters should result in the conclusion that the interim injunction be set aside.

Held:

(1) The National Court has power under the Constitution, Sections 163(2), 155(3)(a) and 155(4), and the National Court Rules, Order 8, Rule 8(4) to set aside its own interim orders.

(2) The question of whether to set aside an interim injunction is a matter of discretion, to be exercised after taking account of various considerations, in particular: whether there has been a material change in circumstances; whether the subsequent conduct of the parties warrants the interim injunction being set aside; whether there are any previously undisclosed material facts; whether the interim injunction was granted on an erroneous legal basis; whether the grounds being relied on to set aside the interim injunction were not relied on earlier as there was no opportunity to do so; whether the court was misled when it granted the interim injunction (Mainland Holdings Ltd v Stobbs (2003) N2522; Mark Ekepa v William Gaupe (2004) N2694).

(3) Here, the defendants validly raised significant legal arguments that deserve thorough consideration at trial but they were not sufficiently compelling to demonstrate that the interim injunction had been granted on an erroneous legal basis or that there were no serious questions to be tried or that the plaintiffs did not have a prima facie case. Likewise, the previously undisclosed facts relied on by the defendants were not such as to show that there is no serious question for trial.

(4) The other contentions of the defendants did not warrant the court in the exercise of its discretion in setting aside the interim injunction and the applications were refused.

Cases cited

The following cases are cited in the judgment:

Mainland Holdings Ltd v Stobbs (2003) N2522
Mark Ekepa v William Gaupe (2004) N2694
Tarsie v Ramu Nico (MCC) Ltd (2010) N3960
Tarsie v Ramu Nico (MCC) Ltd WS No 202 of 2010, 02.04.10 unreported

Counsel

T Nonggorr, for the plaintiffs
I Molloy & G Gileng, for the first defendant
D Aikung-Hombhanje,for the second defendant
L Kandi for the third, fourth & fifth defendants

14 April, 2010

1. CANNINGS J: On 19 March 2010 I granted an interim injunction requiring the defendants to cease all preparatory or construction work on the Ramu Nickel Mine deep sea tailings placement system that involves directly or indirectly damage or disturbance to the offshore environment (Tarsie v Ramu Nico (MCC) Ltd (2010) N3960). That interim injunction was granted following an application by the plaintiffs who claim to be customary landowners or land groups in the Rai Coast area of Madang Province. They are concerned about the environmental impact of the Ramu Nickel Project, in particular the proposed method of tailings disposal. Their application was brought under proceedings in which they are seeking permanent injunctions to restrain the first defendant, Ramu Nico Management (MCC) Ltd ("MCC") from committing various alleged nuisances arising from a deep sea tailings placement system. They say that even though MCC has an environment permit which purports to authorise the proposed deep sea tailings placement system, that permit was granted under the repealed Environmental Planning Act, and does not as a matter of law authorise the torts of private and public nuisance that will be committed if the deep sea tailings placement system is allowed to proceed.

2. MCC and the second defendant, the Mineral Resources Authority, have by separate notices of motion applied to the court to have the interim injunction set aside. They are supported by the other defendants: the Director of Environment, the Department of Environment and Conservation and the State. The two applications have been heard together as they are in almost identical terms. They are opposed by the plaintiffs.

3. On 2 April 2010 I upheld a motion by MCC which clarified the application of the interim injunction (Tarsie v Ramu Nico (MCC) Ltd WS No 202 of 2010, 02.04.10 unreported).

THE LAW ON SETTING ASIDE INTERIM INJUNCTIONS

4. The parties agree that the National Court has power under the Constitution, Sections 163(2), 155(3)(a) and 155(4), and the National Court Rules, Order 8, Rule 8(4) to set aside its own interim orders.

5. The parties also agree that the question of whether to set aside an interim injunction is a matter of discretion, to be exercised after taking account of various considerations, in particular: whether there has been a material change in circumstances; whether the subsequent conduct of the parties warrants the interim injunction being set aside; whether there are any previously undisclosed material facts; whether the interim injunction was granted on an erroneous legal basis; whether the grounds being relied on to set aside the interim injunction were not relied on earlier as there was no opportunity to do so; and whether the court was misled when it granted the interim injunction (Mainland Holdings Ltd v Stobbs (2003) N2522; Mark Ekepa v William Gaupe (2004) N2694).

ISSUES

6. What the parties do not agree on, and what has to be decided now, is whether after applying those relevant considerations the court should exercise its discretion by setting aside the interim injunction of 19 March 2010.

7. The defendants' principal contention is that in light of the true factual and legal situation there is no serious question for trial and the plaintiffs do not have an arguable case. In support of that contention the defendants argue that the interim injunction was granted on an erroneous legal basis and that there are a number of previously undisclosed material facts that reveal fundamental flaws in the plaintiffs' case. They also contend that many of the facts and legal issues on which they rely to set aside the interim injunction were not argued before the court earlier as they had no opportunity to do so; that the court was misled by the plaintiffs when it granted the interim injunction; and that a reconsideration of discretionary matters required to be taken into account by the court when it decides whether to grant an interim injunction should result in the conclusion that the interim injunction be set aside.

IS THERE A SERIOUS QUESTION FOR TRIAL?

8. The defendants argue that, though the court considered on 19 March that the plaintiffs had raised serious questions to be tried and had an arguable case, a more thorough consideration of this issue leads to the opposite conclusion: there is no serious question for trial and the plaintiffs are running a speculative case. The defendants base this principal contention on two propositions. First, that the interim injunction was granted on an erroneous legal basis. Secondly, that there are a number of previously undisclosed material facts that reveal fundamental flaws in the plaintiffs' case.

Erroneous legal basis

9. The defendants argue that the plaintiffs' case is based on a flawed interpretation of Section 136(3) of the Environment Act 2000. This is one of the savings provisions of the Act, which states:

Where, immediately before the coming into operation of this Act—

(a) a person was lawfully carrying on an activity pursuant to a permit, licence or approval under the repealed Acts which is deemed to be a permit by virtue of Subsection (1); and

(b) the activity would constitute an offence under this Act,

the person is entitled, subject to this section and to the permit, to carry on the activity and the carrying on of the activity does not constitute an offence.

10. In my ruling of 19 March I indicated that I considered that the elements of private nuisance and public nuisance are adequately pleaded in the statement of claim and there are serious issues to be tried, particularly concerning whether the environmental approval for the deep sea tailings placement system is lawful. I noted that the plaintiffs allege that, though the deep sea tailings placement system is ostensibly sanctioned by the Ramu Nickel Environmental Plan 1999, and that plan is apparently "saved" by Section 136 of the Environment Act 2000, the environmental harm caused by the activity in question – the disposal of waste into Basamuk and Astrolabe Bays via the deep sea tailings placement system – is not saved, as immediately before the coming into operation of the Environment Act 2000, MCC was not lawfully carrying on that activity pursuant to an approval under the repealed Acts. The statement of claim appears to be asserting that paragraph (b) applies (as operation of the deep sea tailings placement system would constitute an offence under the Act), but paragraph (a) does not apply. Therefore, the plaintiffs wish to argue that the operation of the deep sea tailings placement system is not saved and that it is contrary to the Act and that the defendants ought to be permanently injuncted from doing anything to allow its construction or operation.

11. The defendants argue that the plaintiffs' interpretation of Section 136(3) is skewed and erroneous. Section 136(3), they argue, is irrelevant to this case as MCC's proposed deep sea tailings placement system has been authorised by the repealed Environmental Planning Act and saved under Section 136(1) of the Environment Act 2000, and therefore the carrying on of that activity cannot constitute an offence under the Environment Act.

12. Mr Molloy, for MCC, raised a number of significant legal arguments concerning Section 136 that seem to cast doubt on the sustainability of this aspect of the plaintiffs' case. Ms Aikung, for the Mineral Resources Authority, added weight to the argument by referring to the Environment (Permits) Regulation 2002, particularly Section 28 (transitional arrangements). However, I am not dissuaded from the view I expressed when ruling on the motion for an interim injunction that important questions of interpretation of the Environment Act 2000 are raised through the statement of claim and that the prospects of the plaintiffs succeeding cannot be dismissed as bleak and that an arguable case exists.

Previously undisclosed material facts

13. The court now has before it a lot of affidavit material deposing to the statutory approval relied on by MCC to authorise the operation of its deep sea tailings placement system. Mr Molloy emphasised that MCC was not just relying on the statutory approvals given under the repealed Environmental Planning Act. There has been a series of approvals and amendments of approvals and a consistent course of interaction and consultation between MCC and the Director of Environment and the Department of Environment and Conservation. The defendants point in particular to a permit issued by the Director of Environment in November 2007 which specifically authorises the construction of a deep sea tailings placement system. The consultation has continued to as recently as 10 March 2010 with a letter from the Department to MCC's project director, Dr James Wang. The defendants therefore argue that there is no case for saying that MCC's conduct could be regarded as unlawful. There can be no private nuisance or public nuisance established (they being the principal causes of action relied on by the plaintiffs) as MCC is acting under statutory authority.

14. Mrs Nonggorr, for the plaintiffs, counters those arguments by submitting that, though the plaintiffs still wish to argue that MCC does not have statutory approval under the Environment Act, if the court finds against them on that issue, they will argue that the existence of statutory approval does not necessarily provide a complete defence to a claim of private nuisance or public nuisance. They want to rely on the common law of nuisance – which they say has been adopted as part of the underlying law of Papua New Guinea – and the principle that statutory approval of a nuisance-generating activity is only a defence to a nuisance claim if the nuisance is an 'inevitable consequence' of the activity that has been authorised by statute.

15. I consider that this is an arguable issue, especially as there appears to be no provision in the Environment Act that says that the granting of an environment permit or other statutory approval indemnifies or protects the person undertaking that activity against all common law-based claims for damages arising from it. It is certainly not something that has been decided previously by the National Court or the Supreme Court. In fact there are very few reported PNG cases on the law of nuisance, just as there are very few cases in which the courts have been required to interpret and apply the provisions of the environmental laws.

16. The existence of the statutory approvals are indeed relevant facts that go to the question of whether the plaintiffs have through their statement of claim raised serious issues to be tried and whether they have an arguable case.

17. However, I conclude my assessment of the defendants' principal contention in support of their applications to have the interim injunction set aside by saying that though they have validly raised significant legal arguments, those arguments deserve thorough consideration at a trial and they are not sufficiently compelling to demonstrate that the interim injunction was granted on an erroneous legal basis or that there were no serious questions to be tried or that the plaintiffs do not have a prima facie case. Likewise, the previously undisclosed facts relied on by the defendants are not such as to show that there is no serious question for trial.

DO OTHER MATTERS RAISED BY THE DEFENDANTS WARRANT SETTING ASIDE THE INTERIM INJUNCTION?

18. There was some debate at the hearing of these applications as to whether the defendants had been given sufficient notice of the original application for the interim injunction. They were served with the motion on 8 March, it was originally set down for hearing on 11 March and then adjourned to 12 March. They say that they were given no opportunity to prepare properly. Mrs Nonggorr submitted in reply that the defendants had just not got their act together in time. I don't think it is necessary to make a ruling on this other than to say that I think Mrs Nonggorr has been harsh in her assessment of the defendants' state of preparedness. Whether or not the defendants had sufficient opportunity last time, however, they have now had the opportunity. They have brought to the court an array of legal arguments and facts that were not previously before the court. Nevertheless, a consideration of those new matters does not drive me towards setting aside the interim injunction.

19. I reject the submission (made principally by Ms Aikung) that the court was misled by the plaintiffs when they applied for the interim injunction.

20. As to the discretionary matters that the defendants want me to reconsider, I have done that but I consider that not much new material has come to light.

21. Dr Wang deposes that the interim injunction is costing MCC millions of kina each day, as the effect of the interim injunction is to postpone the start-date of production at the mine. I considered this matter in my earlier ruling and accepted that MCC and others would be prejudiced and inconvenienced by the interim injunction. On the other hand, I took into account that the plaintiffs had already filed a number of affidavits from various environmental scientists who are saying quite clearly that the proposed deep sea tailings placement system will have substantial negative effects on the marine environment.

22. Mr Molloy raised the question of delay and this was a point reaffirmed by Mr Kandi in his submissions for the Director, the Department and the State. They pointed out that the environmental plan for the Ramu Nickel project was originally granted in 1999 and that it has been well known for some years that the deep sea tailings placement system was the preferred and proposed method of tailings disposal from the mine, so why have the plaintiffs left it until the last moment to commence these proceedings? These are pertinent questions to raise but I consider that Mrs Nonggorr – for present purposes – covered them sufficiently by asserting that the plaintiffs' grievance is that they have been kept in the dark; they have been waiting for another environmental report on the deep sea tailings placement system, which was promised by government representatives and that the promise has not come to fruition. I am not concluding that that is an adequate explanation for the apparent delay. It is an explanation, however, which will need to be tested at a trial.

23. On the issue of the adequacy of the plaintiffs' undertaking as to damages, Mr Molloy made the same argument that was put at the original hearing: that the undertakings should not be taken seriously as there is no evidence that the plaintiffs would be able to meet their undertakings in the event that they lose the case. My determination of this issue is the same as it was previously. If the court were to insist on the plaintiffs being adjudged financially capable of meeting all undertakings that are given, before allowing them to argue a case for an interim injunction, there is a danger that the National Court would be closing its doors to many citizens of Papua New Guinea. The court should largely be focussed on the genuineness of a plaintiff's motives; and insisting on an undertaking as to damages is a sufficient way of determining that.

24. None of the discretionary matters highlighted by the defendants warrant setting aside the interim injunction.

OTHER MATTERS

25. I will now state my assessment of the matters outlined in the Mainland Holdings case and in Ekepa v Gaupe (cited above). There has been no material change in circumstances since the interim injunction was granted. The subsequent conduct of the parties does not warrant the interim injunction being set aside. Though there are previously undisclosed material facts, a consideration of them does not lead to the conclusion that the interim injunction should be set aside. The interim injunction was not granted on an erroneous legal basis. Though some of the grounds being relied on to set aside the interim injunction were not relied on earlier as there was insufficient opportunity to do so, their consideration, now, does not drive the court to conclude that the interim injunction should be set aside. The court was not misled when it granted the interim injunction.

26. I remain of the view, expressed in the earlier ruling, that in all the circumstances a safety first approach is warranted. The interests of justice would not be served by allowing construction of the deep sea tailings placement system to continue while serious and apparently genuine concerns and questions being raised by customary landowners are unresolved.

27. The defendants' applications will be therefore refused.

ORDERS

(1) The applications to set aside the interim injunction of 19 March 2010, pursuant to notices of motion filed by the first defendant on 24 March 2010 and by the second defendant on 8 April 2010, are refused.

(2) The question of costs is reserved.

(3) Time for entry of this order is abridged to the date of settlement by the Registrar which shall take place forthwith.

Rulings accordingly.

__________________________________________________
Nonggorr William Lawyers: Lawyers for the Plaintiffs
Posman Kua Aisi Lawyers: Lawyers for the First Defendant
Dianne Aikung-Hombhanje: Lawyer for the Second Defendant
Solicitor-General: Lawyer for the Second, Third, Fourth & Fifth Defendants