Dengnenge Resources Development Ltd v Vanimo Jaya Ltd [2018] PGNC 31; N7108 (23 February 2018)

N7108

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 997 OF 2017

BETWEEN:
DENGNENGE RESOURCES DEVELOPMENT LIMITED
Plaintiff

AND
VANIMO JAYA LIMITED
First Defendant

AND
PAPUA NEW GUINEA FOREST AUTHORITY
Second Defendant

Kokopo: Anis J
2018: 19 & 23 February

MOTION TO DISMISS – Order 12 Rule 40 of the National Court Rules - motion based on want of reasonable cause of action, frivolity and vexatious and abuse of court process - whether wrong mode of proceeding used - whether appropriate mode should have been judicial review - whether second defendant not the correct party to the controversy

Cases cited:
Papua New Guinea Cases

Ok Tedi Mining Ltd v. Niugini Insurance Corporation and Ors (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
National Fisheries Authority v. New Britain Resources Development Ltd (2009) N4068.
Amos Ere v. National Housing Corporation (2016) N6515

Overseas cases:

Russian Commercial and Industrial Bank v. British Bank for Foreign Trade Ltd [1921] 2 AC 438

Counsel:

Mr T. Tape, for the Plaintiff
Mr N. Saroa, for the 1^st Defendant
Mr Mitige, for the 2^nd Defendant

RULING

23^rd February, 2018

1. ANIS J: On 19 February 2018, the first defendant moved its notice of motion (application) filed on 31 January 2018. The motion seeks to dismiss the proceeding based on three (3) grounds, namely, (i) want of reasonable cause of action, (ii) frivolous and vexatious and (iii) abuse of the court process.

2. The plaintiff contested the application. As for the second defendant, counsel informed the Court that he was never served with the application. As such, counsel said the second defendant would neither support nor object the application.

3. I heard the application that day and reserved my ruling to a date to be advised.

4. Parties have been notified so I will rule on it now.

Background

5. The plaintiff says that it is landowner company. It is not disputed that it presently holds a current Forest Clearance Authority licence. The licence is described as FCA No. 15-10 (FCA licence). The second defendant granted the plaintiff the licence on 9 May 2016. The FCA licence covers 18,000 hectares of land over an area known as Inland Lasul, Baining LLG, Gazelle District, East New Britain Province. The plaintiff commenced its business operations after the grant of the said licence.

6. About a year after, the first defendant it seems fronts up with its equipment at the plaintiff's operation site and tries to operate or harvest timber there as well. When queried, the first defendant presented the plaintiff with two (2) timber permits. They are, Timber Permit No. TP15-50 that covers an area described as Loi TRP Area, and Timber Permit No. 15-53, that covers an area described as Dengnagi & Simbali TRP Area (timber permits). The second defendant appeared to have granted the timber permits to the first defendant on 29 August 2017, for a period of three (3) years for each permit. According to the timber permits, they were issued as extensions rather than as new timber permits.

7. The plaintiff was aggrieved and of course filed this proceeding.

Source

8. In the application, the first defendant relies on Order 12 Rule 40 of the National Court Rules. It states and I read:

40. Frivolity, etc. (13/5)

(1) Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings —

(a) no reasonable cause of action is disclosed; or

(b) the proceedings are frivolous or vexatious; or

(c) the proceedings are an abuse of the process of the Court,

the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.

9. The source of the application was not contested.

Issues

10. But it seems obvious that the main contest relates to the mode of proceeding and the name of the second defendant, which then raised questions of whether the proceeding was frivolous, vexatious or an abuse of court process.

11. The issues are:

(i) Whether the plaintiff has commenced proceeding using a wrong mode, that is, whether the correct mode should have been by way of judicial review; and

(ii) Subject to the above, whether the plaintiff has failed to correctly name the second defendant within the meaning or requirement under the Forestry Act 1991.

Relief

12. Let me begin by looking at the relief that is sought in the originating summons. The originating summons reads in part and I quote:

THE PLAINTIFF CLAIMS:-

1. A declaration that Dengnagi & Simbali Timber Rights Purchase (TRP) which is TP No. 15-53, East New Britain Province has been extended on the 29^th of August 2017 over an existing Forest Clearance Authority (FCA) No. 15-10 where the latter was issued to the Plaintiff first in time on the 09^th of May 2016 before the purported extension of the said TRP.
2. A declaration that Loi Timber Rights Purchase (TRP) which is No. 15-50, East New Britain Province has been extended on the 29^th of August 2017 over an existing Forest Clearance Authority (FCA) No. 15-10 where the latter was issued to the Plaintiff first in time before the purported extension of the said TRP.
3. A declaration that the initial TRP Permit Holder was Open Bay Timbers Limited under consolidated TP No. 15-53 (which includes TP No. 15-50) and thereafter the extension granted to the First Defendant is contrary to Sections 136 and 137 of the Forestry Act 1991 (as amended) which is intended for an existing Timber Permit Holder and not a new applicant such as the First Defendant.
4. An order that the extension of consolidated Dengnagi & Simbali TRP which is TP No. 15-53, East New Britain Province which includes Loi /TRP which is TP No. 15-50 is void and of no effect.
5. Alternatively, if the Court does not grant the order sought to in item 4 above, the Second Defendant be ordered to cancel, within 21 days from the date of this order, the said extended consolidated Dengnagi & Simbali TRP, TP No. 15-53, East New Britain Province which includes Loi TRP, TP No. 15-50 forthwith.
6. An order that the first Defendant, within twenty-one (21) days from the date of this order, vacate, with its machineries and equipment, the consolidated Dengnagi & Simbali TRP area (TP No. 15-53) including Loi TRP area (TP No. 15--50), East New Britain Province.
7. Pursuant to Order 14, Rule 10 of the National Court Rules, an order that the First Defendant, its servants and agents whosoever be restrained in the interim from conducting any logging or related activity within the consolidated Dengnagi & Simbali TRP area (TP No. 15--53) including Loi TRP area (TP No. 15-5-0), East New Britain Province until further orders from this Court.
8. An order for Costs of this proceedings against the Defendants.
9. Any other order this Court deems fit.
   

13. The main relief are relief 1, 2, 3, and 4. Relief 5 is an alternative relief. Relief 6 and 7 are consequential. Relief 8 and 9 are general relief.

Originating summons

14. At first glance at the relief, they seem to imply that the plaintiff is attempting to challenge the decision of the second defendant in granting the timber permits to the first defendant without regard to the plaintiff's existing FCA licence. I note that I had implied that to counsel for the plaintiff at the hearing. The plaintiff's counsel vigorously opposed that and responded with submissions and case law, and in the end, I advised the parties that I would reserve my decision and consider carefully the arguments and the case law as presented.

15. I have had that benefit. So let me begin by asking myself this. "Did the plaintiff assert a primary right(s) in the originating summons?" My answer to that is, "yes, the plaintiff has asserted a primary right". Looking at the relief itself, it is not difficult to see that the plaintiff is seeking declaratory orders to protect its FCA licence and its business interests and operations against the purported actions of the first defendant at the site or the area where the FCA licence covers or permits. These are the primary rights, are they not? What does the case law say on primary rights or to proceedings that are filed using the normal originating summons (Order 4, Division 4 of the National Court Rules)? Is primary right the only consideration? If not, what are the other considerations or tests a plaintiff must meet to justify or qualify under, when filing a proceeding by way of an originating summons?

16. Let me refer to the following cases: The Russian Commercial and Industrial Bank v. British Bank for Foreign Trade Ltd [1921] 2 AC 438, 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. Justice Hartshorn best summarises the tests or considerations that are to apply, in reference to these cases, in the case of Amos Ere v. National Housing Corporation (2016) N6515. At paragraphs 11 and 12, His Honour said in part and I quote:

Declaratory relief

11. 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.

12. The factors are:

1. There must exist a controversy between the parties;
2. The proceedings must involve a right;

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

4. The controversy must be subject to the court’s jurisdiction;
5. The defendant must be a person having a proper or tangible interest in opposing the plaintiff’s claim;
6. 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.
   

17. I adopt and apply them here as my own.

18. To me, it seems that all the six (6) elements as stated above (that are required for a party to file an originating proceeding) tend to favour the plaintiff. Let me explain. Firstly, I note that the controversy here concerns three (3) licences that were issued by the second defendant to the plaintiff and the first defendant. The licence that was issued first in time is the FCA licence, which was granted to the plaintiff on 9 May 2016. The remaining two (2) licences namely the two (2) timber permits were issued to the first defendant about one (1) year three (3) months later. Secondly, I note that I have discussed above in my judgment the plaintiff's rights, which it is now seeking to protect, namely its interest in the FCA licence and its business operation where it is operating within the terms of the licence. Thirdly, I note that the plaintiff is a person who has a tangible interest in obtaining the orders that it is seeking in this proceeding. It has a valid FCA licence so the relief it is seeking is consistent with its tangible interest. Based on the FCA licence, the plaintiff has operated its agro-forest activities at the site that is covered or permitted by the FCA licence. Of course, that said, if there are arguments against that then that would be a matter for trial. Fourthly, does this Court have jurisdiction to hear the controversy? I would say and find that the matter is properly before the Court and the Court has the jurisdiction to hear the controversy. In regard to the fifth element, I note that the first defendant is of course a relevant person who is required to resolve the controversy. It appears that the first defendant's two (2) timber permits were issued over land where the plaintiff's FCA licence is situated or covers. As such, that would obviously be a matter for trial in this proceeding. The second defendant is the party that had issued the licences and is responsible for their management and control so it is also a relevant party to the proceeding. As for the sixth element, which is that the issue must be a real one, the answer to that is obvious. At trial, if both parties are said to hold valid licences over the same area or land, this Court may have to consider which licence or interest shall precede the other. Would it be the plaintiff's FCA licence, which was issued first in time or would it be the first defendant's two (2) timber permits that were issued a year or so later? Other issues may also follow for determination by the Court.

19. With that, I reject the first defendant's claim that there is no reasonable cause of action. I also find that the claim is not frivolous or vexatious. And I find that the claim is not an abuse of court process.

Judicial review?

20. I note that my ruling above effectively dismisses the judicial review argument.

21. But it is perhaps useful to say this. The plaintiff appears to have a clear primary right. It has filed proceeding under originating summons to assert and obtain orders including declaratory orders, to enforce and protect that right.

22. The first defendant tends to argue on a wrong premise or assumption that because its timber permits were also issued over the same area as the plaintiff's FCA licence, the plaintiff should seek judicial review against the decision of the second defendant for its actions. But the obvious question is this. Why would the plaintiff commence judicial review proceeding to challenge the second defendant's decision in awarding the two (2) timber permits to the first defendant when the plaintiff has no interest whatsoever on those timber permits or on whether or not the second defendant had followed due process when it granted the timber permits to the first defendant?

Name of the second defendant

23. The first defendant alleges that the second defendant was incorrectly named in the proceeding. I notice that the second defendant has made no submissions on this issue. It makes me wonder whether the second defendant is at all concerned. But having said that, I do acknowledge counsel's point that they were never served with the application which was why counsel said that he was not in a position to respond.

24. That aside, I find the first defendant's argument on point misconceived. The second defendant is correctly named in this proceeding. I uphold the plaintiff's submission that the second defendant is a legal entity that is duly established under section 5 of the Forestry Act 1991. The section reads in part:

5. Establishment, etc., of Papua New Guinea Forest Authority.

(1) The Papua New Guinea Forest Authority is hereby established.

(2) The Authority—

(a) is a corporation with perpetual succession; and

(b) shall have a seal; and

(c) may acquire, hold and dispose of property; and

(d) may sue and be sued in its corporate name.

Summary

25. In regard to the first issue, whether the plaintiff has commenced proceeding using a wrong mode, that is, whether the correct mode should have been by way of judicial review, my answer is that the plaintiff has commenced the correct mode of proceeding. In regard to the second issue, whether the plaintiff has failed to correctly name the second defendant within the meaning or requirement under the Forestry Act 1991, my answer is, "no it has not".

26. I will refuse the first defendant's notice of motion.

Cost

27. The parties agreed at the close of the hearing that cost should be reserved until after the decision is made. The first defendant had insisted on that because it said it had forewarned the plaintiff that it would be asking the Court to award cost on a solicitor/client basis if the proceeding was to be dismissed.

28. Given my decision not to dismiss the proceeding, I think that it would be an unnecessary exercise if I were to delay or prolong the issue of cost. I will exercise my discretion and award the cost of the application to be awarded against the first defendant in favour of the plaintiff on a party/party basis, which may be taxed if not agreed.

THE ORDERS OF THE COURT

29. I make the following orders:

1. I dismiss the first defendant's notice of motion filed on 31 January 2018.
   
2. Cost of the application is awarded against the first defendant in favour of the plaintiff on a party/party basis, which may be taxed if not agreed.
   
3. Time for entry of these orders is abridged to the date of settlement by the Registrar of the National Court which shall take place forthwith.
   

The Court orders accordingly.

________________________________________________________________

Kandawalyn Lawyers: Lawyers for the Plaintiff
Nelson Lawyers: Lawyers for the First Defendant
PNG Forest Authority In-house Lawyer: Lawyers for the Second Defendant