Eru v Interoil (PNG) Ltd [2016] PGNC 152; N6352 (1 June 2016)

N6352

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (COMM) NO. 274 OF 2016

BETWEEN:
JOHN ERU – Chairman representing the Hovoio Clan
Plaintiff

AND:
KAVAKORE AMOA – Chairman representing the Horomiro Lavaipi Clan
Second Plaintiff

AND:
PETER MAVORE – Chairman representing the Horomiro Clan
Third Plaintiff

AND:
UPPER AHIA LANDOWNERS ASSOCIATION
Fourth Plaintiff

AND:
INTEROIL (PNG) LTD
First Defendant

AND:
TOTAL E&P PNG LIMITED
Second Defendant

AND:
DEPARTMENT OF PETROLEUM & ENERGY
Third Defendant

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Defendant

Waigani: Hartshorn J.
2016: 26^th May
: 1^st June

Application to dismiss this proceeding

Cases cited:

Ainsworth v. Criminal Justice Commission [1992] HCA 10; (1991-1992) 175 CLR 564
Bauf and Lavoi Nodai v. Poliamba Pty Ltd [1990] PNGLR 278
Dr. Onne Rageau v. Kina Finance Ltd (2015) N6175
Independent State of Papua New Guinea v. Central Provincial Government (2009) SC977
Kerry Lerro v. Stagg & Ors (2006) N3050
Mt Hagen Urban Local Level Government v. Sek No. 15 (2009) SC1007
National Fisheries Authority v. New Britain Resources Development Ltd (2009) N4068
Ok Tedi Mining Ltd v. Niugini Insurance Corporation and Others (No 2) [1988-89] PNGLR 425
Peter Makeng & Ors v. Timbers (PNG) Ltd & Ors (2008) N3317
Pius Pundi v. Chris Rupen (2015) SC1430
Placer Dome (PNG) Ltd v. Yako (2011) N4691
Rex Paki v. Motor Vehicles Insurance (PNG) Ltd (2010) SC1015
Siu v. Wasime Land Group Incorporated (2011) SC1107
Takori v.Yagari & Ors (2008) SC905
Timothy Patrick v. Pepi Kimas (2010) N3913
The Russian Commercial and Industrial Bank v. British Bank for Foreign Trade Ltd [1921] 2 AC 438

Counsel:

Mr. D. Korowa, for the Plaintiffs
Mr. M. Mukwesipu, for the First Defendant
Mr. J. Brooks, for the Second Defendant
Ms. M. Elisha, for the Third and Fourth Defendants

1^st June, 2016

1. HARTSHORN, J: This is a decision on an application to dismiss this proceeding. The application is made by the second defendant, supported by the other defendants and opposed by the plaintiffs. The application is made pursuant to Order 12 Rule 40(1) (a), (b) or (c), Order 12 Rule 1 National Court Rules, s. 155(4) Constitution and the inherent jurisdiction of this court.

Background

2. The first three plaintiffs are each described as Chairman representing a particular Clan. The fourth plaintiff is described as a Landowners Association. In their Originating Summons that commenced this proceeding, the substantive relief that is sought by the plaintiffs’ is a declaration that it is a mandatory requirement pursuant to s. 47 Oil and Gas Act, prior to a Petroleum Development Licence being issued, that the defendants undertake social mapping and landowner identification studies. An order that the defendants “be compelled” in that regard, is also sought. This is in respect of an area known as Petroleum Retention Licence No. 15 (PRL 15). From the affidavit evidence filed on behalf of the plaintiffs’, it appears that they claim that they are landowners within PRL 15.

This Application

3. The second defendant submits that the proceeding should be dismissed as:

a) The plaintiffs’ lack the requisite standing to seek the substantive relief that they do and so the proceeding is frivolous;

2. There is no controversy as to the requirements of s. 47 Oil and Gas Act that this court needs to determine and so the proceeding is an abuse of process;
   

c) The declaration sought does not relate to any legal right that the plaintiffs’ are seeking to protect;

d) None of the defendants dispute the validity, application or interpretation of s. 47 Oil and Gas Act. There is no controversy between the parties – the issue raised being merely of academic interest;

e) The statutory rights of the plaintiffs’ and whatever rights the plaintiffs’ may have to be beneficiaries of the PRL 15 project, which are yet to be determined, will not be affected even if this court were to make the orders sought;

f) The declaratory relief sought is beyond hypothetical and is in fact pointless, futile and a waste of the court’s time;

g) This proceeding is frivolous, vexatious and an abuse of process;

h) As the plaintiffs’ are purporting to make representative actions, they must meet the necessary requirements for such actions but have not.

4. The plaintiffs’ contend that this proceeding should not be dismissed as amongst others:

a) The plaintiffs’ have already been recognised as landowners by the Department of Minerals & Energy;

b) The plaintiffs’ are merely seeking that the legitimate landowners be identified. That process has not occurred and so s. 47 Oil and Gas Act has not been complied with;

c) The various plaintiffs’ have given their necessary consent to this proceeding.

Law

s. 155(4) Constitution

5. As to s. 155(4) Constitution, it is settled law that it is only to be relied upon to protect the primary rights of parties in the absence of other relevant law. In addition, s. 155(4) cannot be applied to do anything contrary or inconsistent with the provisions of the National Court Rules: Peter Makeng & Ors v. Timbers (PNG) Ltd & Ors (2008) N3317 per Injia DCJ (as he then was). Consequently, as the defendants are able to have recourse to Order 12 Rule 40 National Court Rules, there is not an absence of other relevant law and so I will not consider s. 155(4) Constitution further.

Order 12 Rule 40 National Court Rules

6. There are numerous authorities in respect of the principles which apply to applications under Order 12 Rule 40 National Court Rules and I refer to the following cases in this regard: Kerry Lerro v. Stagg & Ors (2006) N3050, Takori v.Yagari & Ors (2008) SC905, Mt Hagen Urban Local Level Government v. Sek No. 15 (2009) SC1007 and Siu v. Wasime Land Group Incorporated (2011) SC1107. The Court in Mount Hagen v. Sek (supra) in paragraphs 27 to 30 conveniently sets out the requirements of Order 12 Rule 40 (1) (a), (b) and (c) as follows:

䜬. >27 tehe terms &#ms “vexatious”, “frivolous”, “abuse of the process of the Court” and “reasonable cause of action” under O.12 r.40 of theonal Rulee been been judicjudiciallyially considered, defined and expounded in a number of decisions in both the National and Supreme Courts. These cases include Ronny Wabia v. BP Exploration Co. Limited & 2 Others [1998] PNGLR 8 (N1697); PNG Forest Products Pty Ltd and Another v. The State and Genia [1992] PNGLR 85; Gabriel Apio Irafawe v. Yauwe Riyong (1996) N1915; Eliakim Laki and 167 Others v. Maurice Alulaku and Others (2002) N2001; Kiee Toap v. The Independent State of Papua New Guinea & Another (2004) N2766; Kerry Lerro trading as Hulu Hara Investments Limited v. Philip Stagg, Valentine Kambori & The State (2006) N3050; Philip Takori & Others v. Simon Yagari & 2 Others (2008) SC 905. These cases say the same thing.

28. The law with regard to an application for dismissal of proceedings based on O.12 r.40 is settled in our jurisdiction. We note that the principles are succinctly set out in Kerry Lerro’s case (supra) and which has more recently been approved and applied by the Supreme Court in Philip Takori’s case (supra).
    
29. The phrase ‘disclosing a reasonable cause of action’ consists of two parts; cause of action and form of action. A cause of action is defined as a legal right or form of action known to law whereby a plaintiff in a statement of claim must plead all necessary facts and legal elements or ingredients to establish or prove his claim. The principles stated by these cases can be summarized as follows:
    

(i) A plaintiff or claimant should not be driven from the judgment seat in a summary manner and that the Court should be cautious and slow in exercising its discretionary power.

(ii) The Court has an inherent jurisdiction to protect and safeguard its processes from abuse.

(iii) The purpose of O.12 r.40, is to give the Court power to terminate actions or claims which are plainly frivolous or vexatious or untenable.

(iv) A frivolous claim is one that is characterized as a claim that is plainly and obviously untenable, that cannot possibly succeed and bound to fail if it proceeds to trial.

(v) A vexatious claim is one that is said to be a sham and cannot succeed where it seeks to merely harass the opposing party and put that party to unnecessary trouble and expense in defending or proving the claim.

30. In an application under O.12 r.40 of the NCR, the Court may dismiss a proceeding or action where it is satisfied that the pleading in the statement of claim is seriously wanting where a necessary fact or legal element has not been pleaded.”
    

Declaratory relief

9. As the plaintiffs’ seek declaratory relief, it is necessary to consider the factors that are required to be established before a declaratory order can be made. These factors are set out in The Russian Commercial and Industrial Bank v. British Bank for Foreign Trade Ltd [1921] 2 AC 438. This case has been referred to in various cases including Ok Tedi Mining Ltd v. Niugini Insurance Corporation and Others (No 2) [1988-89] PNGLR 425; Placer Dome (PNG) Ltd v. Yako (2011) N4691; Independent State of Papua New Guinea v. Central Provincial Government (2009) SC977; Dr. Onne Rageau v. Kina Finance Ltd (2015) N6175 and National Fisheries Authority v. New Britain Resources Development Ltd (2009) N4068.

10. The factors are:

a) There must exist a controversy between the parties;

b) The proceedings must involve a right;

c) The proceedings must be brought by a person who has a proper or tangible interest in obtaining the order;

d) The controversy must be subject to the court’s jurisdiction;

e) The defendant must be a person having a proper or tangible interest in opposing the plaintiff’s claim;

f) The issue must be a real one. It must not be merely of academic interest, hypothetical or one whose resolution would be of no practical utility.

11. In the High Court of Australia decision, Ainsworth v. Criminal Justice Commission [1992] HCA 10; (1991-1992) 175 CLR 564, Brennan J. referred to the Russian Commercial case (supra) and said that notwithstanding the wide discretion that exists in deciding whether a declaration should be made, it was not appropriate to grant a declaration if there was no real controversy to be determined.

12. Also, recently, the Supreme Court in considering the issue of standing to seek declaratory orders in Pius Pundi v. Chris Rupen (2015) SC1430 held amongst others that:

“A declaration is a discretionary remedy that should only be granted where there exists a real controversy between the parties to the proceedings, a legal right is at issue, the party seeking it has a proper or tangible interest in obtaining it, the controversy is within the court’s jurisdiction, the defendant has a proper or tangible interest in opposing the plaintiff’s claim and the issues involved are real, and not merely of academic interest or hypothetical.”

Consideration

13. The plaintiffs’ seek the following declaration:

&#822A de>laration that it t it is a mandatory requirement for the Respondent/Defendants to undertake social mapping and carry out landowner identification studies ohe Extion ce arown as Petroleum Retention Lion Licencecence Numb Number 15er 15 (PRL 15) comprising of the Nine Blocks in what is known as the Papua LNG pursuant to Section 47 of the Oil and Gas Act, 1998 prior to the issuance of the Petroleum Development Licence.”

14. Section 47 Oil and Gas Act sets out the requirements of social mapping and landowner identification studies for various licences. Section 47(3) Oil and Gas Act is as follows:

“(3) It shall be a condition of every petroleum development licence that the licensee undertake social mapping studies and landowner identification studies in accordance with this section, to the extent that such studies have not been undertaken pursuant to a petroleum prospecting licence or petroleum retention licence out of which the petroleum development licence was granted.”

15. The defendants’ do not dispute that as a matter of law social mapping and landowner identification studies must be undertaken prior to the grant of a Petroleum Development Licence. As the validity of the Oil and Gas Act or the interpretation of s. 47 are not disputed by any of the parties to this proceeding, there is no controversy as to the requirements of s. 47 that this court needs to determine.

16. Further, the declaration sought by the plaintiffs’ does not assert any legal right that the plaintiffs’ are seeking to protect, or refer to any complaint about any injury suffered or likely to be suffered to any alleged right that the plaintiffs’ may have. Counsel for the plaintiffs’ submitted that the plaintiffs are merely seeking that the legitimate landowners be identified. That however, is not what is sought by way of declaration in the Originating Summons. What the plaintiffs appear to be seeking is for this court to declare what the requirements are of s. 47 Oil and Gas Act. As to whether the affidavits that have been filed in support of the Originating Summons make the claim to which counsel for the plaintiffs’ referred, as I referred to in Rageau v. Kina Finance (supra) at [11], as stated by Sheehan J. in Bauf and Lavoi Nodai v. Poliamba Pty Ltd [1990] PNGLR 278, it is no answer to say that the affidavits in support make such a claim.

17. I concur with the submission of the second defendant that as none of the defendants’ dispute the validity, application or interpretation of s. 47 Oil and Gas Act, the plaintiffs’ are seeking that this court invoke its discretionary jurisdiction to no end or for no good purpose as the declaration and consequential orders sought will not settle any dispute or any controversy. This is because there is no dispute or controversy to settle. What the plaintiffs’ are seeking is for the court to make a declaration about an issue that, at best, is able to be described as hypothetical, of academic interest only and one whose resolution would have no practical utility.

18. Further, any rights that the plaintiffs’ may have to be beneficiaries of the PRL 15 project, which are yet to be determined, cannot be affected in any way even if the court were to make the orders sought.

19. Consequently, for the above reasons and after considering the cases to which reference is made, I am satisfied that the plaintiffs’ claim should be dismissed as an abuse of process. Given this it is not necessary to consider the other submissions of counsel apart from as to costs.

Costs

20. The second defendant seeks its costs on a solicitor client basis as it is submitted that there is no basis whatsoever for the plaintiffs’ to have commenced this proceeding. The requirements of s. 47 Oil and Gas Act are clear and there is no controversy in that regard.

21. Evidence has been given on behalf of the second defendant that as the Operator of PRL 15, the second defendant is well aware of its legal obligations and will comply with all applicable laws, including those specifically included under the Oil and Gas Act which require a comprehensive social mapping and landowner identification study to be completed before making application for a Petroleum Development Licence.

22. There is also evidence of a letter being sent to the lawyers for the plaintiffs’ from the lawyers for the second defendant. The letter explains why the proceeding should be withdrawn and invites the plaintiffs’ to discontinue the proceeding failing which the second defendant would apply to dismiss the proceeding and would seek solicitor client costs for so doing.

23. Notwithstanding that the second defendant has given the said reasons to the lawyers for the plaintiffs’ and prior notice of its intention to seek solicitor client costs, the second defendant has still had to come to court to defend a proceeding which has no merit. In such circumstances it is submitted that the second defendant is entitled to its costs on a solicitor client basis.

24. Further, it is submitted that as the plaintiffs’ are purporting to bring a representative action, but have clearly failed to comply with the requirements of representative actions, and in this regard reference is made to the Supreme Court cases of Tigam Malewo v. Keith Faulkner (2009) SC960 and Simon Mali v. Independent State of Papua New Guinea [2002] PNGLR 15, the second defendant submits that this court ought to consider an award of solicitor client costs against the first three named plaintiffs and/or the lawyers acting for the plaintiffs’.

25. I have had regard to what was said by Gavara Nanu J in Timothy Patrick v. Pepi Kimas (2010) N3913, as to costs being awarded on a solicitor client basis:

“...the applicant mumt demonstrate that there are grounds upon which such award may be made; for instance, the applicant having to defend proceedings which are frivolous and vexatious and are use ocess. Gulf Provincial cial GoverGovernmentnment -v- Baimuril Trading Pty Ltd [1998] PNGLR 311; or that the applicant is being dragged into the Court and is made to suffer and incur unnecessary costs. See, Concord Pacific Ltd -v- Thomas Nen [2000] PNGLR 47.”

26. Also, in Rex Paki v. Motor Vehicles Insurance (PNG) Ltd (2010) SC1015, the Supreme Court stated that:

&㺔T2e awae award of d of costs on an indemnity basis is discretionary. An order for costs on an indemnity basis may be made where the conduct of a lawyer or a party to the proceedings is so improper, unreasonable or blameworthy that he should be so punished by such an order. The question is whether the conduct of the appellant in this matter is such that it caused the respondent to incur unnecessary costs.”

27. Counsel for the plaintiffs’ did not make any submissions as to why costs should not be awarded on a solicitor client basis against the plaintiffs’ in the event that this application for dismissal was successful.

28. In this instance, for the reasons submitted by the second defendant, I am satisfied that costs should be awarded as sought. It is clear in my mind that the conduct of the plaintiffs’ or their lawyer is such that it caused the second defendant to incur unnecessary costs. If the lawyer for the plaintiffs’ was for whatever reason unaware of the deficiencies of his clients’ claim in this proceeding the letter written on 20^th May 2016 to him by the lawyers for the second defendant should have left him in no doubt as to those deficiencies. The conduct of the plaintiffs’ or their lawyer in continuing with the proceeding notwithstanding the content of the letter of 20^th May 2016, has led, in my view to the second defendant incurring unnecessary costs.

29. Notwithstanding the submissions of counsel for the plaintiffs’, given the limited content of annexure “G” to the affidavit of Mr. John Eru, to which counsel referred, I am not satisfied that Stevens Lawyers has the proper authority to bring this proceeding and so they also shall be liable for the costs of the defendants.

Orders

30.

a) This proceeding is dismissed;

b) The first three named plaintiffs and Stevens Lawyers shall pay the costs of and incidental to this proceeding to be taxed if not agreed:

i) of the second defendant on a solicitor client basis; and

ii) of the first, third and fourth defendants on a party party basis.

c) Time is abridged.

____________________________________________________
Stevens Lawyers: Lawyers for the Plaintiffs
Gadens Lawyers: Lawyers for the First Defendant
Ashurst Lawyers: Lawyers for the Second Defendant
Office of the Solicitor General: Lawyers for the Third and Fourth &##60;&<;ɘʔ< ـʔ ـ &ـ#160&;҈&&60;&ـ &#160  #160; #160;< #1600;  Defe;Defendants