Musa Century Ltd v O'Neil [2013] PGNC 152; N5334 (23 August 2013)

N5334

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (JR) NO 889 OF 2011

MUSA CENTURY LIMITED
Plaintiff

V

HON PETER O'NEIL MP, PRIME MINISTER & CHAIRMAN OF NATIONAL EXECUTIVE COUNCIL
First Defendant

THE NATIONAL EXECUTIVE COUNCIL
Second Defendant

PAPUA NEW GUINEA FOREST AUTHORITY
Third Defendant

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Defendant

Waigani: Cannings J
2013: 17, 23 April, 23 August

JUDICIAL REVIEW – ultra vires – whether National Executive Council exceeded powers – acting under dictation – whether National Forest Board abdicated statutory responsibilities – Forestry Act, Section 90B (dealing with applications for a forest clearing authority for agriculture or other land use).

The plaintiff sought judicial review of the decision of the National Executive Council (NEC) to impose a "temporary suspension" of processing or granting of forest clearing authorities by the PNG Forest Authority and the decision of the Forest Authority, through the National Forest Board, to comply with the NEC decision and to not determine an application by the plaintiff for a forest clearing authority. The plaintiff argued (1) that the NEC decision was: (a) ultra vires (beyond its powers), (b) tainted by bias, (c) unreasonable, (d) harsh and oppressive and (e) contrary to the principle of legitimate expectations; and (2) that the Forest Authority had abdicated its statutory responsibilities by acting under the dictation of the NEC. The plaintiff sought an order in the nature of certiorari quashing the NEC decision and an order in the nature of mandamus directing the Forest Authority to process its application for a forest clearing authority.

Held:

(1) The grounds of review alleging that the NEC decision was tainted by bias, unreasonable, harsh and oppressive and contrary to the principle of legitimate expectations were dismissed as being not proper grounds of review or unsupported by the facts.

(2) The ground of review alleging that the NEC decision was ultra vires was upheld as the decision whether to approve an application for a forest clearing authority rested exclusively with the National Forest Board under Section 90B of the Forestry Act 1991. Though the NEC is responsible in accordance with the Constitution for the executive government of Papua New Guinea it has no power of direction or control over governmental bodies in relation to the exercise by them of specific decisions required to be made under statutory provisions.

(3) The Forest Authority, through the National Forest Board, erred in law by failing to perform its duty under Section 90B of the Forestry Act to consider the plaintiff's application for a forest clearing authority on its merits, instead abdicating its statutory responsibility by acting under the dictation of the NEC.

(4) There being errors of law by both the NEC and the Forest Authority it was appropriate as a matter of discretion for remedies to be granted generally in the terms sought by the plaintiff, except that in relation to the decision of the NEC a declaration of unlawfulness rather than an order quashing the decision was the more appropriate remedy.

(5) Accordingly it was declared that the NEC decision was unlawful and null and void and the Forest Authority through the National Forest Board was ordered to consider and determine the plaintiff's application for a forest clearing authority on its merits forthwith.

Cases cited

The following cases are cited in the judgment:

Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223
Dale Christopher Smith v Minister for Lands (2009) SC973
Dopsie v Tetaga & Apeng (2009) N3722
Hanjung Power Ltd v Dr Allan Marat, Attorney-General (2009) N3751
Isaac Lupari v Sir Michael Somare (2008) N3476
Paul Saboko v Commissioner of Police (2006) N2975
SCR No 1 of 1982; Re Phillip Bouraga [1982] PNGLR 178
Wingti v Rawali (2008) N3286

JUDICIAL REVIEW

This was a review of a decision of the National Executive Council to temporarily suspend granting of forest clearing authorities by the Forest Authority.

Counsel

B Lai, for the plaintiff
S Wanis, for the first and second defendants
S Mitige, for the third defendant
I Mugugia, for the fourth defendant

23rd August, 2013

1. CANNINGS J: The plaintiff Musa Century Ltd applies for judicial review of a decision of the National Executive Council (NEC) to impose a "temporary suspension" of granting of forest clearing authorities by the PNG Forest Authority and the decision of the Forest Authority, through the National Forest Board, to comply with that decision and to not determine an application by the plaintiff for a forest clearing authority.

2. The NEC decision, No 101/2011, was made on 29 June 2011 (recorded on 6 July 2011) as part of the decision to establish a Commission of Inquiry into the granting of Special Agricultural and Business Leases over customary land. In paragraph 4(ii) of the decision the NEC:

noted and approved a temporary suspension on ... the further processing and/or granting of any forest clearing authorities by the PNG Forest Authority.

3. A forest clearing authority is a type of licence that needs to be obtained by a person who wishes to clear natural forest on land designated for agricultural development. An application for a forest clearing authority is made to the Forest Authority under Section 90A of the Forestry Act and determined by the National Forest Board under Section 90B of the Forestry Act.

4. The plaintiff is the developer of the Musa-Bareji Agro-Forestry Project in Oro Province, which was granted in-principle approval in 2007 by the Oro Provincial Executive Council and in 2008 by the National Executive Council. In the period from 2009 to 2011 a number of other administrative approvals were granted. During 2010 a Special Agricultural and Business Lease was granted to a landowner company, Musa Valley Management Company Ltd, over the customary land on which the project is to take place, described as Portion 17C, an area of 320,060 hectares. That company on 1 November 2010 sub-leased the land to the plaintiff.

5. The plaintiff claims that it has obtained all approvals necessary for the project to proceed, with one exception: it has not been granted a forest clearing authority. It applied for one in 2008 and has been told by the Acting Chairman of the National Forest Board, in a letter dated 8 June 2011, that it has complied with the necessary requirements. However, the Forest Authority's position is that it cannot deliberate on the plaintiff's application as it is subject to the NEC decision of 29 June 2011 which in effect imposes a moratorium on granting of forest clearing authorities, which is not expected to be lifted until the Commission of Inquiry completes its report.

6. In these circumstances the plaintiff seeks judicial review of:

• the decision of the National Executive Council to suspend the further processing or granting of forest clearing authorities by the Forest Authority;
  
• the decision of the Forest Authority, through the National Forest Board, not to determine the plaintiff's application for a forest clearing authority.
  

7. The plaintiff seeks an order in the nature of certiorari quashing the NEC decision and an order in the nature of mandamus directing the Forest Authority to process its application for a forest clearing authority.

8. Each decision will now be reviewed according to the grounds of review set out in the plaintiff's statement under Order 16, Rule 3(2)(a) of the National Court Rules. In the event that one or more grounds are upheld the question of remedies will be considered.

DECISION TO SUSPEND PROCESSING OR GRANTING OF FOREST CLEARING AUTHORITIES

9. The plaintiff argues that the NEC decision was:

(a) ultra vires (beyond its powers),

(b) tainted by bias,

(c) unreasonable,

(d) harsh and oppressive, and

(e) contrary to the principle of legitimate expectations.

10. Of the five grounds of review, four can be disposed of quickly. The argument in (b) that the NEC decision was "tainted by bias in that it was made under pressure from environmental lobbyists and pressure groups and proper and deliberate judgment was impaired and hence not executed as required under Section 62 of the Constitution" is vague, unsupported by the evidence and not a proper ground of judicial review. It is entirely without merit and is dismissed.

11. The unreasonableness argument in (c) is a proper ground of review under the principles laid down in the classic case of Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223. However the plaintiff has not demonstrated that the NEC decision was so absurd or irrational that no reasonable decision-maker could have made it (Paul Saboko v Commissioner of Police (2006) N2975, Dopsie v Tetaga & Apeng (2009) N3722). The first defendant, Prime Minister Hon Peter O'Neil MP, deposes in an affidavit (exhibit D1) that:

The reason for the NEC decision to temporarily suspend the processing and/or granting of the forest clearing authorities was for the establishment of the Commission of Inquiry to look into the irregularities, abuses and breaches of the law in the granting of forest clearing authorities. The decision of the [NEC] was made without bias in that the decision is for the benefit of Papua New Guinean resource owners and to prevent their exploitation and to prevent the violations of Papua New Guinean law.

12. I accept that as a genuine statement of the motive for establishing the Commission of Inquiry and the ancillary decision to suspend the processing and granting of forest clearing authorities. I find that the NEC decision was not absurd, irrational or unreasonable and dismiss ground (c).

13. The argument in (d), that the NEC decision was harsh and oppressive, is like the argument in (b), not based on any recognisable and proper ground of judicial review. It would have been acceptable to argue a breach of Section 41 (proscribed acts) of the Constitution as a ground of judicial review. Section 41 provides that even if done under a valid law and notwithstanding anything to the contrary in any law, an act is unlawful if it is, in the particular case, amongst other things, harsh or oppressive (Hanjung Power Ltd v Dr Allan Marat, Attorney-General (2009) N3751). But there is no mention of Section 41 in the plaintiff's originating statement or in counsel's submissions so ground (d) is dismissed.

14. Ground (e) must also be given short shrift. An argument about denial of a person's legitimate expectations might be relevant (as in Hanjung Power) to the question whether the person is entitled to protection of the principles of natural justice, in particular whether the person has a right to be heard on a decision affecting their interests. But here the plaintiff attempts to invoke the concept of legitimate expectations in another way. It wants to argue that having obtained all other approvals it had a legitimate expectation that it would be granted a forest clearing authority. This is not a conventional or proper ground of review and it is dismissed.

15. That leaves ground (a), ultra vires, which is a much more straightforward and recognisable ground of review than the others. The argument is simple: the NEC had no power to suspend the processing or granting of forest clearing authorities, and it exceeded its powers by doing so. The only body with such powers was the PNG Forest Authority, or more particularly the National Forest Board, and then only if done for good reason. I uphold this argument. The National Executive Council is established by Section 149 of the Constitution, which states:

(1) A National Executive Council is hereby established.

(2) The Council shall consist of all the Ministers (including the Prime Minister when he is present as Chairman).

(3) The functions of the Council are—

(a) to be responsible, in accordance with this Constitution, for the executive government of Papua New Guinea; and

(b) such other functions as are allocated to it by this Constitution or any other law.

(4) Except where the contrary intention appears, nothing in this Constitution prevents the powers, functions, duties or responsibilities of the Council from being exercised, as determined by it, through a Minister.

(5) Subject to any Organic Law or Act of the Parliament, the procedures of the Council are as determined by it.

16. The fact that its primary function is to be responsible for the executive government of the country does not give the National Executive Council any power of direction or control over any other governmental body, at least not where another governmental body is given specific statutory powers, functions, duties or responsibilities. The principle that a Minister has no power of direction or control over the bodies for which he or she is politically responsible except to the extent that such powers are conferred by law, which was explained authoritatively by the Supreme Court in SCR No 1 of 1982; Re Phillip Bouraga [1982] PNGLR 178, applies equally to the National Executive Council. It cannot, unless a law provides for it, direct another governmental body as to how to make a decision if the other governmental body is given specific authority under an Act of the Parliament to make the decision. Ground (a) is upheld.

DECISION OF NATIONAL FOREST BOARD NOT TO DETERMINE PLAINTIFF'S APPLICATION FOR FOREST CLEARING AUTHORITY

17. The plaintiff argues that the Forest Authority, through the National Forest Board, has abdicated its statutory responsibilities by acting under the dictation of the National Executive Council. This is a proper ground of review. It amounts to an allegation that the decision-maker has failed to exercise a discretion that it was bound by statute to exercise. I explained this important principle in Wingti v Rawali (2008) N3286 by reference to two authoritative administrative law texts. In De Smith's Judicial Review of Administrative Action Stevens & Sons Ltd, 4th edition 1980, page 309, the learned author, J M Evans, states:

An authority entrusted with a discretion must not, in the purported exercise of its discretion, act under the dictation of another body or person. ... It is enough to show that a decision which ought to have been based on the exercise of independent judgment was dictated by those not entrusted with the power to decide, although it remains a question of fact whether the repository of discretion abdicated it in the face of external pressure. And it is immaterial that the external authority has not sought to impose its policy.

18. In Principles of Australian Administrative Law, 6th edition, Law Book Company 1985, S D Hotop explains at pp 238-239:

A public authority, entrusted with a statutory discretionary power, must generally exercise its discretion independently and not under the dictation or at the behest of some other body. ... It is, however, not necessary for an external body to exert pressure or seek to impose its own view. It is not the conduct of the external body that is decisive, but rather the state of mind of the repository of the discretion. It will be sufficient if that authority automatically defers to the view of an external body, or feels compelled because of the stated, or even, assumed, view of an external body, or some other circumstance, to decide in a particular way (Bread Manufacturers of NSW v Evans [1981] HCA 69; (1981) 56 ALJR 89, at 95).

19. The National Forest Board is the body that has the ultimate power under the Forestry Act to decide whether to grant a forest clearing authority. An application for such an authority is made under Section 90A (a large scale conversion of forest to agricultural or other land use), which states:

(1) A person may make application in the prescribed form and accompanied by the prescribed application fee for a forest clearing authority for the purpose of clearing of natural forest on areas designated for agriculture or other land use development (other than roadline clearing on an existing forested area) designated by the relevant authorities where the size of the area proposed for the natural forest clearing for the project is greater than 50 hectares.

(2) An application under Subsection (1) shall not be made where the proposed project is within a Forest Management Agreement Area, Timber Rights Purchase Agreement Area or Local Forest Area except with the approval of the Board and, where applicable, the holder of any relevant Timber Permit.

(3) An application under Subsection (1) shall contain—

(a) a detailed development plan, evaluation report and certificate of approval from the Secretary of the Department responsible for agriculture and livestock matters or the Secretary of any relevant Government Department or such other evaluation reports and certificates as the Board considers necessary; and

(b) a copy of the relevant State Lease or other documentation relating to other type of land tenure appropriate for the project; and

(c) an implementation schedule for the complete agricultural or other land use project showing the precise areas and proposed rate of harvesting to be carried out and successive land use development approved in writing by the Departmental Head of the Department responsible for agriculture and livestock matters or the Secretary of the relevant Government Department or, where relevant, the Provincial Government including detailed start and completion dates of all activities associated with the project; and

(d) details of costs of the agricultural or other land use project and a certificate from a bank or financial institution which is satisfactory to the Managing Director certifying that the full costs of funding the project will be available to the applicant; and

(e) a map and description of the project area in respect of which the application is made showing any areas of slope in excess of 30o or any other areas which are unsuitable for agricultural or other land use development and any areas important for conservation; and

(f) a verification of ownership and the consent of each resource owning clan agent (or incorporated Land Groups if they have been formed) within the project area, which has been signed in the presence of a Village Court Magistrate or land mediator in the prescribed form in relation to customary land, and otherwise the consent in writing of the Board, lessee or owner of the land, as the case may be; and

(g) supporting letters from any other relevant Department authorities or relevant industry body regarding the appropriateness of the design and implementation of the proposed project; and

(h) an approval in writing from the office or Department responsible for environment and conservation matters of the environment impact statement submitted by the applicant to that office or Department; and

(i) details of equipment and manpower suitable for the development of the proposed project and evidence of past experience in such developments; and

(j) a report by the Department responsible for agriculture and livestock matters or other relevant Government Department on a public hearing conducted by it at or near as practicable to the proposed agriculture or other land use site at which government bodies landowners and the private sector were heard on the proposed project; and

(k) an agreement or agreements between the landowners and the proposed development of the agriculture or other land use project; and

(l) the prescribed form signed by the Secretary of the Department responsible for agriculture and livestock matters or the Secretary of the relevant Government Department certifying that the matters set out in the preceding paragraphs are satisfactory; and

(m) the prescribed sales and purchase agreement with the customary owners in relation to customary land, and in relation to other land with the Board, lessee or owner of the land as the case may be, which agreement shall provide for the purchase, harvesting, processing or marketing of timber and other forest produce and which agreement shall be subject to the grant of a forest clearing authority by the Board; and

(n) such other particulars as are prescribed.

20. An application under Section 90A is to be determined by the National Forest Board under Section 90B (dealing with applications for a forest clearing authority for agriculture or other land use) which states:

(1) If the Board determines that an application under Section 90A is in the prescribed form and contains all relevant particulars it shall prepare a report of the application and refer the application and report to the Provincial Forest Management Committee who shall consider and evaluate the application and make recommendations to the Board.

(2) An evaluation of an application by the Provincial Forest Management Committee under Subsection (1) shall be made taking into account—

(a) the National Forest Policy and National Forest Plan; and

(b) any relevant Provincial Government policies provided they are not inconsistent with the National Forest Policy; and

(c) any relevant National and Provincial Government policies relating to agriculture or the proposed land use; and

(d) the financial resources of the applicant to undertake the forest clearing, the past performance of the applicant in forest industry, analysis of the projected cash flows and the anticipated net benefit to the resource owners and the State; and

(e) any other matters that the Provincial Forest Management Committee considers relevant.

(3) In making an evaluation under Subsection (2), the Provincial Forest Management Committee shall request the assistance of the National Forest Service and of any relevant Department.

(4) Where the Provincial Forest Management Committee, after having considered and evaluated an application, is of the opinion that it is satisfactory, it shall recommend to the Board to approve the application for a forest clearing authority for agriculture or other land use.

(5) If the Provincial Forest Management Committee is not satisfied with the application, it shall inform the Board accordingly together with reasons for its decision and the application shall be rejected.

(6) The Board shall in form the applicant of the rejection of the application and the reasons thereof.

(7) If the Board is satisfied with the recommendation under Subsection (4) it shall approve the application and advise the applicant accordingly.

(8) The Board shall, on approval of the application, grant to the applicant a forest clearing authority to carry out a agriculture or other land use development which authority shall—

(a) be in the prescribed form; and

(b) require a performance bond in accordance with Section 98 for an amount specified in the authority; and

(c) specify such other conditions as are determined by the Board.

(9) A forest clearing authority shall—

(a) in order to ensure that the planned agriculture or other land use actually takes place, provide that any forest clearing operation shall be authorized in four phases, each phase—

(i) shall represent approximately one quarter of the total area to be cleared under the forest clearing authority; and

(ii) contain such conditions as are determined by the Board; and

(iii) shall be subdivided into blocks for clearing of a maximum 500 hectares unless the Board considers that the maximum of 500 hectares is inappropriate in the circumstances in which case it may increase or decrease the maximum clearing figure; and

(b) provide that the holder of a forest clearing authority shall comply with the implementation schedule under Section 90A(3)(c); and

(c) provide that a further phase under the same forest clearing authority may only be granted for the same purposes of forest clearing for agriculture or other land use where all conditions relating to the development plan under Section 90A(3)(a) and implementation schedule under Section 90A(3)(c) have been satisfied; and

(d) provide that the rights under the forest clearing authority may be suspended—

(i) where the planned land use by the applicant for which a forest clearing authority is granted is not progressing according to, or meeting the set standards of the Department responsible for agriculture and livestock matters or other relevant Government Department agency or instrumentality, or the development plan under Section 90A(3)(a) or the implementation schedule under Section 90A(3)(c); or

(ii) where any condition of the forest clearing authority or a provision of the Act is breached.

21. I find that in the present case the National Forest Board felt compelled by the NEC decision of 29 June 2011 not to determine any applications for forest clearing authorities, including the plaintiff's, until clearance was given by the NEC that it may do so. It has therefore been acting under the dictation of the NEC. There is no evidence before the Court that the NEC or any other person or body such as the Minister for Forests has done anything else by way of directing the National Forest Board to adhere to the NEC decision. But it is not necessary for the plaintiff to prove that that has happened. It is sufficient that the Board acted under the dictation of the NEC and thereby abdicated its statutory responsibility. I am satisfied that those facts have been proven and that the Board failed to exercise its discretion under Section 90B of the Forestry Act. The ground of review based on acting under dictation and abdication of statutory responsibility has been established.

RECAP

22. As to the decision of the NEC of 29 June 2011 the plaintiff has proven only one of five grounds of review – ultra vires – however, that in itself amounts to a significant error of law.

23. As to the decision of the Forest Authority, through the National Forest Board, not to deliberate on the plaintiff's application, lodged in 2008, for a forest clearing authority, the plaintiff has established the sole ground of review relied on, that the Board acted under the dictation of the NEC and abdicated its statutory responsibility. That also amounts to a significant error of law.

WHAT DECLARATIONS OR ORDERS SHOULD THE COURT MAKE?

24. As two grounds of review have been upheld and significant errors of law have been established the decisions of the NEC and the Forest Authority, through the National Forest Board, are susceptible to judicial review. It does not necessarily follow that the court will make the orders sought by the plaintiff. In any judicial review the court's determination of the review proceeds in two stages: (a) determining whether the plaintiff has proven one or more grounds of review, and if he has (b) deciding as a matter of discretion what remedies, if any, should be granted (Dale Christopher Smith v Minister for Lands (2009) SC973; Isaac Lupari v Sir Michael Somare (2008) N3476).

25. The plaintiff seeks (through its notice of motion under Order 16, Rule 5 of the National Court Rules filed on 19 March 2012) two substantive remedies:

(a) an order in the nature of certiorari to quash the decision of the National Executive Council (para 1(a));

(b) an order in the nature of mandamus directing the Forest Authority to process the plaintiff's application for a forest clearing authority (para 1(b)).

26. I have no difficulty in granting the second type of relief sought. By failing to exercise the discretion under Section 90B of the Forestry Act the Forestry Authority, through the National Forest Board, has acted under the dictation of the NEC and significantly erred in law, and it needs to be directed to perform its statutory duty in accordance with law.

27. I will not grant an order in the nature of certiorari in relation to the NEC decision. It was not a judicial or quasi-judicial decision that immediately and directly affected any particular person's interests, so I do not think that it is the type of decision that needs to be quashed by an order in the nature of certiorari. Although the decision was made in good faith and represents a legitimate expression of government policy the NEC had no power to temporarily suspend "processing and/or granting of any forest clearing authorities by the PNG Forest Authority". That power belonged to the National Forest Board. If the NEC decision had been expressed in the form of a request or a suggestion, which could have been considered along with other relevant considerations by the Forest Board, it would not have deserved judicial disapprobation. It is more appropriate for the Court to make a declaration as to the effect of the NEC decision, so that is the relief that will be granted.

28. Though a number of the plaintiff's grounds of review were misconceived and have failed the ultimate relief that it was seeking – to have its application for a forest clearing authority determined on its merits – will be granted, and therefore costs should follow the event.

ORDER

(1) It is declared that the decision of the National Executive Council, No 101/2011, made on 29 June 2011, recorded on 6 July 2011, as part of the decision to establish a Commission of Inquiry into the granting of Special Agricultural and Business Leases over customary land, in paragraph 4(ii), whereby the National Executive Council "noted and approved a temporary suspension on ... the further processing and/or granting of any forest clearing authorities by the PNG Forest Authority", was made ultra vires (beyond power) and is wrong in law and null and void.

(2) The Papua New Guinea Forest Authority and in particular the National Forest Board is ordered as if by the prerogative writ of mandamus to comply with its duties under Section 90B of the Forestry Act 1991 and determine forthwith the application for a forest clearing authority made by the plaintiff in respect of the Musa-Bareji Agro-Forestry Project, Oro Province.

(3) The defendants shall pay the plaintiff's costs of these proceedings on a party-party basis which shall if not agreed be taxed.

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

Judgment accordingly.
________________________________________________________

B S Lai Lawyers: Lawyers for the Plaintiff
Warner Shand Lawyers: Lawyers for the First and Second Defendants
S Mitige: Lawyer for the Third Defendant
Solicitor-General: Lawyer for the Fourth Defendant