Yal v Mission of the Holy Ghost (New Guinea) Property Trust [2020] PGNC 132; N8342 (5 June 2020)

N8342

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO 479 OF 2015

PATRICK YAL FOR HIMSELF AND ON BEHALF OF BAMAIA WAN CLAN OF REMPI, MADANG DISTRICT, MADANG PROVINCE
First Plaintiffs

PAIS KOB FOR HIMSELF AND ON BEHALF OF ALOPAMASUALAUG CLAN OF MEDIBA, MADANG DISTRICT,
MADANG PROVINCE
Second Plaintiffs

JOSEPH KUBALI FOR HIMSELF AND ON BEHALF OF SAREPI CLAN OF BUDUP, MADANG DISTRICT, MADANG PROVINCE
Third Plaintiffs

WILLIE KAITOK FOR HIMSELF AND ON BEHALF OF BARPI CLAN OF BUDUP, MADANG DISTRICT, MADANG PROVINCE
Fourth Plaintiffs

ALBERT KOLI FOR HIMSELF AND ON BEHALF OF ALEODIK CLAN OF BUDUP, MADANG DISTRICT, MADANG PROVINCE
Fifth Plaintiffs

V

MISSION OF THE HOLY GHOST (NEW GUINEA)
PROPERTY TRUST
First Defendant

RD FISHING PNG LIMITED
Second Defendant

JOHN ANDRIAS,
SECRETARY FOR COMMERCE, TRADE AND INDUSTRY
Third Defendant

MADANG MARINE PARK HOLDINGS LIMITED
Fourth Defendant

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fifth Defendant

Madang: Cannings J
2019: 3^rd & 4^th September, 17^th October, 22^nd November
2020: 3^rd March, 5^th June

LAND – compulsory acquisition – liability of expropriating authority to pay just compensation on just terms to traditional owners of land – assessment of just compensation on just terms –Constitution, Section 53 (protection from unjust deprivation of property).

The Court determined at an earlier hearing that the fifth defendant, the State, was liable under s 53(2) of the Constitution, as the expropriating authority, to pay each of the five plaintiffs “just compensation ... on just terms” for compulsory acquisition of their traditional land. There was then a separate hearing on assessment of compensation. The plaintiffs, relying primarily on reports by two registered valuers, argued that they should be paid a total of K54 million, to be distributed equally amongst themselves and the clans they represent. The State argued that the plaintiffs should be awarded nothing, as they had: (a) improperly asserted interests in customary land, inviting the Court to invoke jurisdiction it did not have; (b) improperly commenced the proceedings by originating summons; (c) failed to disclose a cause of action; (d) not proved that they were the traditional owners;(e) not proved that they were the nominated clan representatives;(f) not proved any property losses; (g) not presented independent evidence showing the boundaries of each of the plaintiff’s clan’s land within the area that was valued.

Held:

(1) The State’s arguments (a) to (e) were summarily dismissed as they were relevant only to liability, which had already been determined.

(2) In determining what is “just compensation” for the purposes of s 53(2) of the Constitution, a two-step method should be applied. Step 1: assess compensation in the conventional sense by assessing the value to the plaintiffs of the land expropriated. Step 2: adjust the amount of conventional compensation by taking account of the National Goals and Directive Principles, the national interest, expression of the national interest by the Parliament, the interests of the person affected, and subject to the overriding and enforceable right vested in the person affected to an amount of compensation that is “just”, in the sense that justice must be done in the circumstances of that person’s particular case.

(3) In determining what are “just terms”, the Court ought to determine conditions on which the compensation is payable so that due regard is had to the effect of the order for compensation on the defendant, and to any customary or legal obligations to which the recipient of the compensation is subject, to ensure that is distributed fairly and appropriately to the rightful beneficiaries.

(4) Here, as to step 1, the only evidence relevant to assessment of compensation in the conventional sense was given by the plaintiffs’ witnesses, two registered valuers who assessed the value of the whole portion of land that had been compulsorily acquired as being in the range of K50 million to K54 million. Despite the absence of contradictory evidence, those values ought to be discounted by 90%. Compensation in the conventional sense for all plaintiffs was assessed as K5 million.

(5) As to step 2, adjusting the conventional assessment by taking account of the qualifying considerations in the Constitution, s 53(2) (including the National Goals and Directive Principles, the national interest, the interests of the plaintiff and the plaintiffs’ right to an amount of compensation that is “just”), resulted in compensation in the conventional sense being doubled, to K10 million.

(6) As to “just terms”, it was appropriate that the compensation be payable in four equal instalments over a period of three years, commencing several months after the date of judgment and that the plaintiffs be required to distribute it in accordance with custom.

(7) Ordered: the State shall pay just compensation in the sum of K2 million to each of the five plaintiffs in four instalments of K500,000.00 on a yearly basis commencing in 2020, and ending in 2023; and each plaintiff is obliged to distribute the compensation justly and fairly in accordance with customary principles to the members of the clan he has represented in these proceedings.

Cases Cited

David Mota v Albert Camillus (2017) N6810
Frame v Minister for Lands [1979] PNGLR 626
Louis Medaing v Ramu Nico Management (MCC) Ltd (2011) N4340
Malewo v Faulkner & Ok Tedi Mining Ltd (2009) SC960
Minister for Lands v Frame [1980] PNGLR 433
Mission of the Holy Ghost (New Guinea) Property Trust v Administration of the Territory of Papua and New Guinea [1969-70] PNGLR 365
Patrick Yal & 4 Ors v Mission of the Holy Ghost (New Guinea) Property Trust & 4 Ors (2017) N6530

ASSESSMENT OF COMPENSATION

This was an assessment of “just compensation” on “just terms” that the State was liable to pay to the plaintiffs in respect of compulsory acquisition of their traditional land.

Counsel

G Pipike, for the Plaintiffs
S Maliaki, for the Fifth Defendant

5^th June, 2020

1. CANNINGS J: This Court determined by its order of 27 October 2017, following a trial on liability, that the fifth defendant, the State, is liable under s53(2) of the Constitution, as the expropriating authority, to pay each of the five plaintiffs “just compensation ... on just terms” in respect of compulsory acquisition of their traditional land. The parties have returned to Court for a separate trial on assessment of compensation, so the issues are:

• what is the amount of “just compensation” that the State is required to pay to the plaintiffs? and
  
• what are the “just terms” that ought to apply?
  

LAND

2. The land is in the Vidar area of Madang District, known for a long time as Portion 625, an area of 359.67 hectares. The plaintiffs are five local men who represent various clans who are amongst the traditional owners of the land. Some of them live on an area of five hectares around Budup village, which lies within the boundaries of Portion 625.

3. The modern history of Portion 625 is complex and fascinating and is set out in the judgment of 27 October 2017: Patrick Yal & 4 Ors v Mission of the Holy Ghost (New Guinea) Property Trust & 4 Ors (2017) N6530. I point out that in that judgment, the area of Portion 625 was said to be 860 hectares. It has been clarified in the trial on assessment of compensation that the correct area is 359.67 hectares.

4. The traditional owners lost their land in 1901 when it was compulsorily acquired by the German New Guinea Company on behalf of the German colonial administration. Ownership of Portion 625 has never been restored to them. This is in contrast to other portions of land in the same part of Madang District, for example land around Rempi village, which was restored to customary ownership by virtue of an order of the Land Titles Commission in 1974.

5. In 1927, in the period after the collapse of the German colonial administration due to World War I, the Mission of the Holy Ghost (New Guinea) Property Trust (the first defendant, “the Mission”) acquired freehold title to Portion 625. In 1993-1994 an application was made, under the Land (Ownership of Freeholds) Act Chapter 359, to the Minister for Lands to convert the land to leasehold land. The application was granted and a State Lease over the land over Portion 625 was granted to the Mission. The State Lease was subsequently transferred to a number of other parties before it was transferred to RD Fishing Ltd (the second defendant, “RD Fishing”).

6. RD Fishing later surrendered the lease to the State. Portion 625 was then subdivided into two new portions, Portion 1349 (known as “Maiwara”) and Portion 1350 (known as “Vidar”). RD Fishing was granted a State Lease over Portion 1349, while a State Lease over Portion 1350 was granted to Madang Marine Park Holdings Ltd (the fourth defendant). These transactions were effected as part of the National Government-sponsored Pacific Marine Industrial Zone (“PMIZ”) project.

TRIAL ON LIABILITY

7. At the trial on liability I upheld the plaintiffs’ two fundamental propositions:

• first the conversion of Portion 625 from freehold to leasehold title in 1993-1994 was affected by illegality in that the defendants, in particular the Mission and the State, failed unlawfully, contrary to the Land (Ownership of Freeholds) Act Chapter 359, to acknowledge or take into account the plaintiffs’ interests in the land arising from their traditional ownership of it; and
  
• secondly, the effect of that illegality was that the plaintiffs’ interests in Portion 625 were adversely affected and compulsorily acquired by the State, giving rise to a right to just compensation on just terms under s 53(2) of the Constitution, which provides:
  

Subject to this section, just compensation must be made on just terms by the expropriating authority, giving full weight to the National Goals and Directive Principles and having due regard to the national interest and to the expression of that interest by the Parliament, as well as to the person affected.

8. The following order was made:

(1) It is declared that the grant of a Substitute Lease in respect of the subject land, Portion 625, Milinch of Kranket, Fourmil of Madang, Madang Province, to the first defendant on 23 February 1994 under the Land (Ownership of Freeholds) Act and subsequent transactions concerning the subject land, including its subdivision into Portions 1349 and 1350, Milinch of Kranket, Fourmil of Madang, Madang Province, have resulted in the plaintiffs’ interests in the subject land, arising from their being amongst its traditional owners and in continuing occupation and use of parts of the land, being adversely affected, contrary to the obligations imposed on the first defendant and the fifth defendant under Part IV (conversion of interests to avoid frustrations) of the Land (Ownership of Freeholds) Act, those interests being adversely affected to the extent that those interests have been compulsorily acquired by the State, as an expropriating authority, giving rise to an entitlement in the plaintiffs to just compensation, payable by the State, on just terms under Section 53(2) of the Constitution.

(2) It is ordered that the fifth defendant is liable as expropriating authority to pay just compensation to the plaintiffs on just terms for compulsory acquisition, in the manner and to the extent declared, of the plaintiffs’ interests in the subject land.

(3) It is ordered that in the absence of agreement as to the amount of just compensation, there shall be a trial on assessment of just compensation.

(4) The determination of the question of costs of the proceedings is deferred to the end of any trial on assessment of compensation.

9. An appeal to the Supreme Court against the order of 27 October 2017 was dismissed.

EVIDENCE AND ARGUMENTS AT THIS TRIAL

Plaintiffs

10. Each of the five plaintiffs gave affidavit evidence and was available for cross-examination. They deposed to their respective clan’s long-term interest in and traditional ownership of different parts of Portion 625. They expressed their grievances over being shut out of major developments occurring on their traditional land. The plaintiffs adduced affidavits and reports by two registered valuers, one of whom valued Portion 625 at K50 million; the other valued it at K54 million. The plaintiffs argue that compensation should be assessed at K54 million, which would be divided equally amongst themselves.

The State

11. The State adduced one affidavit, by John Andrias, the then Secretary of the Department of Commerce, the National Government Department responsible for the PMIZ project. The affidavit set out the background of the project and the land transactions involved. It was relevant to the trial on liability but of little relevance to the current trial. There was no other evidence for the State.

12. The State argued that the plaintiffs should be awarded no compensation, as they had:

(a) improperly asserted interests in customary land, inviting the Court to invoke jurisdiction it did not have;

(b) improperly commenced the proceedings by originating summons;

(c) failed to disclose a cause of action;

(d) not proved that they were the traditional owners;

(e) not proved that they were the nominated clan representatives;

(f) not proved any property losses;

(g) not presented independent evidence showing the boundaries of each of the plaintiff’s clan’s land within the area that was valued.

THE STATE’S PRELIMINARY ARGUMENTS

13. Arguments (a) to (e) are preliminary arguments which are a rehash of matters raised at the trial on liability or new arguments that ought to have been raised at the trial on liability, which are being raised now, belatedly and without notice to the plaintiffs. I will deal with them quickly.

14. The State has misconceived the nature of the plaintiffs’ case, which is not a claim for ownership of customary land or a claim that the land be returned to them. It is a claim for compensation based on enforcement of human rights under s 53 (protection from unjust deprivation of property) of the Constitution. It was not necessary to commence the proceedings by writ of summons. The originating summons was not so poorly drafted that it, read together with the evidence, failed to disclose a cause of action. The originating summons did not fail to meet the standards set by the Supreme Court in Malewo v Faulkner & Ok Tedi Mining Ltd (2009) SC960. The plaintiffs have presented sufficient evidence that they are descendants of the traditional owners of the land and that they are genuine representatives of the clans who traditionally owned the land. For those reasons, arguments (a) to (e) are rejected. Arguments (f) and (g) carry more weight and are addressed below.

WHAT IS THE AMOUNT OF “JUST COMPENSATION”?

15. This is an unusual case in that compensation has not been ordered under any Act of Parliament, so there is no statutory formula (such as that found in the Land Act) to apply. Compensation has been ordered as an enforcement of the plaintiffs’ human right to protection against unjust deprivation of property, conferred on them as citizens by s 53 of the Constitution. They are entitled to “just compensation” on “just terms”. The assessment of “just compensation” must be made directly under s 53(2) of the Constitution.

Method of assessment of “just compensation”

16. What does “just compensation” mean? Section 53 does not contain an arithmetic formula, but it does provide some guidelines as to what has to be taken into account. As to previous cases that would provide a precedent, there appear to be none; at least none that have involved an assessment of just compensation directly under s 53 of the Constitution. This case seems the first of its kind.

17. I have nevertheless found dicta of the learned Judges who constituted the Supreme Court (Greville Smith J, Kapi J and Pratt J) in Minister for Lands v Frame [1980] PNGLR 433 of great assistance in developing an appropriate method of calculating “just compensation” under s 53(2).

18. That case was an appeal against the decision of Raine ACJ in the National Court in Frame v Minister for Lands [1979] PNGLR 626, which was a statutory appeal by Mr Frame, a naturalised citizen, to the National Court under the Lands Acquisition Act 1974 against the determination by the Minister of the amount of compensation payable by the State to Mr Frame for compulsory acquisition of his coffee estate in Eastern Highlands Province. While both the Supreme Court and the National Court were focussed on the correct interpretation and application of a statutory formula for assessment of compensation, all of the Judges alluded to the concept of “just compensation” and what it means in s 53(2) of the Constitution.

19. Guided by what was said by the Judges in both the Supreme Court and the National Court in the Frame cases, I have developed the following two-step method of assessing compensation under s 53(2) of the Constitution.

Two-step method

20. Step 1 involves assessing compensation in the conventional sense. In the Frame cases it was recognised that whenever a statute, including the Constitution, confers a right to compensation, there is a requirement – subject to any specific formula that might be imposed by the statute – to make an assessment according to what ‘compensation’ means in a conventional, common law context.

21. Greville Smith J drew upon the conventional meaning of ‘compensation’ applied in a number of leading British and Australian cases. His Honour stated ([1980] PNGLR 433, at 440-441):

The ordinary meaning of "to compensate" is "to counter-balance, make up for, make amends for, to make equal return for" (Shorter Oxford English Dictionary (1950) vol 1, p 354) and the word "compensation" has of course a corresponding meaning. From the foregoing it will be seen that in its ordinary meaning the word connotes adequacy.

Additionally, the meaning first given for the term "compensation" in Jowitt's Dictionary of English Law, (2nd ed), vol 1, p 400, is "making things equivalent".

Furthermore the meaning and import of the word "compensation" when used in statutes such as the Act with which the court is now concerned have been the subject of a long line of authoritative judicial exposition. In Re An Arbitration between Lucas and the Chesterfield Gas and Water Board [1908] UKLawRpKQB 128; [1909] 1 KB 16 at p 29Lord Moulton (then Fletcher Moulton LJ), in a passage which was later adopted by the Privy Council in Cedars Rapids Manufacturing and Power Co v Lacoste [1914] AC at p 569and Corrie v MacDermott [1914] UKLawRpAC 36; [1914] AC 1056 at p 1062, said:

"The principles upon which compensation is assessed when land is taken under compulsory powers are well settled. The owner receives for the lands he gives up their equivalent, ie, that which they were worth to him in money. His property is therefore not diminished in amount, but to that extent it is compulsorily changed in form."

In Australian Apple and Pear Marketing Board v Tonking [1942] HCA 37; (1942) 66 CLR 77 at pp 98, 102, Latham CJ states: "... reg 12 gives a right to compensation — which means fair and adequate compensation" and again, "As already stated, compensation means adequate compensation — an amount which really is compensation."

And in Nelungaloo Pty Ltd v The Commonwealth (1948) 75 CLR 495 at p 571 Dixon J (as he then was) said:

"... 'compensation' is a very well understood expression. It is true that its meaning has been developed in relation to the compulsory acquisition of land. But the purpose of compensation is the same, whether the property taken is real or personal. It is to place in the hands of the owner expropriated the full money equivalent of the thing of which he has been deprived.

Compensation prima facie means recompense for loss, and when an owner is to receive compensation for being deprived of real or personal property his pecuniary loss must be ascertained by determining the value to him of the property taken from him. As the object is to find the money equivalent for the loss or, in other words, the pecuniary value to the owner contained in the asset, it cannot be less than the money value into which he might have converted his property had the law not deprived him of it."

Thus, in step 1, the task of the Court is to assess the value to the plaintiff of the land that has been expropriated, ie to fix an amount of money that is adequate to compensate the particular plaintiff.

22. Step 2 recognises that s 53(2) of the Constitution stipulates that the plaintiff has a right not only to compensation, but to “just compensation” and that in assessing what is “just compensation”, the Court must take into account a number of special factors, additional to those falling within the conventional meaning of the term compensation, which give “just compensation” a distinctly Papua New Guinean flavour.

23. It is useful at this point to restate s53(2) and highlight the additional factors I am now referring to, and also to cite s 53(3).

Section 53(2): Subject to this section, just compensation must be made on just terms by the expropriating authority, giving full weight to the National Goals and Directive Principles and having due regard to the national interest and to the expression of that interest by the Parliament, as well as to the person affected. [Emphasis added]

Section 53(3): For the purposes of Subsection (2), compensation shall not be deemed not to be just and on just terms solely by reason of a fair provision for deferred payment, payment by instalments or compensation otherwise than in cash.

24. Pratt J in the Supreme Court in Frame highlighted the importance of these additional factors ([1980] PNGLR 433, at 490-491):

Such compensation must by subsection (2) be "just compensation" made on "just terms" but subject to certain important restrictions which clearly indicate that one can no longer interpret "just terms" merely as just from the point of view of the person dispossessed.

[In] arriving at a figure which the courts would regard as "just compensation", the following guidelines are imposed:

1. Full weight must be given to the National Goals and Directive Principles.

2. Due regard must be given to the national interest.

3. Due regard must be given to the expression of the national interest by Parliament.

4. Due regard must be had to the person affected.

5. Terms shall not be deemed to be unjust merely because there is a "fair provision for deferred payment, payment by instalments or compensation otherwise than in cash" (subsection (3)).
   

As regards point 1, the part of the National Goals and Directive Principles, which would appear relevant for consideration by a court, are Goal Number 2(1) emphasizing equal opportunity; 2(3) an equitable distribution of incomes; and 2(6) the maximization of the number of citizens participating in every aspect of development. I also note that Goal 3(4) directed to national sovereignty and self-reliance is cast in terms that "citizens and governmental bodies to have control of the bulk of economic enterprise and production". Paragraph 7 of that third Goal states that economic development shall be "by the use of skills and resources available in the country, either from citizens or the State and not in dependence on imported skills and resources". In none of these goals does it state that such goals will be achieved by means of expropriation or force.

What may be regarded as "the national interest and to the expression of that interest by the Parliament", may well be a little more difficult to define, but certainly within those phrases, bearing in mind the terms used in the National Goals, it is in the national interest that all citizens participate in the economic development of the country, despite the inescapable fact that the per capita income of citizens in this country is not great.

Thus, in step 2, the task of the Court is, having calculated under step 1 an amount of compensation according to conventional principles, to examine whether it is appropriate to adjust that amount, in the light of the factors set out in ss 53(2) and 52(3), viz:

• giving full weight to the National Goals and Directive Principles; and
• having due regard to the national interest; and
• having due regard to the expression of the national interest by the Parliament; and
• having due regard to the person affected; and
• recognising that “just compensation” can be provided by a fair provision for deferred payment, payment by instalments or compensation otherwise than in cash;
• subject to the overriding and enforceable right vested in the person affected to an amount of compensation that is “just” (in the sense that justice must be done in the circumstances of that person’s particular case).
  

Applying the two-step method to this case

Step 1: assessment of compensation in the conventional sense

25. The plaintiffs rely on expert evidence in the form of valuation reports prepared by two registered valuers:

• Zebedee Zongur of Zehdland Real Estate who valued Portion 625 (now Portions 1349 and 1359) as at 8 April 2019 in the sum of K50,358,000.00 (ie approximately K50 million); and
  
• Patrick W Seso of Seso Valuation Services who valued Portion 625 as at 10 October 2018 in the sum of K54 million.
  

26. It was submitted by Ms Maliaki, for the State, that no weight should be attached to their evidence as both valuers had prepared their reports for a company called Sapado Ltd, which is said to be a ‘landowner umbrella company’, which is not a party to these proceedings. Also it was pointed out that Mr Seso had not given oral evidence.

27. I have decided that it is irrelevant that the valuers’ reports were prepared formally for a non-party as there is sufficient evidence in the plaintiffs’ affidavits as to how these reports came to be prepared. The genuineness of the substance of each valuation has been verified by Mr Zongur, who gave oral evidence and was subject to cross-examination,and by Mr Seso who explained in an uncontested affidavit (exhibit P13) that he had been engaged by landowning clans in the Vidar and Maiwara areas who had combined to form the company, Sapado Ltd, for which his report was formally prepared. I refuse the submission that no weight at all should be attached to the valuations.

28. For other reasons, however, despite the absence of contradictory evidence, I have decided that those valuations ought to be discounted considerably for purposes of assessment of calculation of compensation in the conventional sense, for two reasons (which relate to the State’s arguments (g) and (h)):

(i) the valuers were engaged by the plaintiffs and their valuations must necessarily be treated, not with suspicion or scepticism, but healthy circumspection; and

(ii) there is insufficient evidence that the five plaintiffs and the clans they represent and their ancestors are the only traditional owners of the whole portion of land that was compulsorily acquired.

29. As the State is the legal embodiment of the People of Papua New Guinea and the amount of compensation sought will be a significant burden on the public purse, it is appropriate to use the lesser of the two valuations, approximately K50 million, as a starting point and to discount it by 90%. Therefore compensation in the conventional sense for all plaintiffs is assessed at K5 million.

Step 2: taking account of the additional factors in Constitution, ss 53(2) and (3)

30. The next step is to subject the conventional assessment in step 1, to the governing considerations in the Constitution, s 53(2): the National Goals and Directive Principles, the national interest, any expression of national interest by the Parliament, the interests of the plaintiffs and the plaintiffs’ right to an amount of compensation that is “just”.

31. In Papua New Guinea land is a critical natural resource required by National Goal Number 4 to be conserved and used for the benefit of the present generation and for the benefit of future generations (David Mota v Albert Camillus (2017) N6810). National Goal No 4 (natural resources and environment) of the Constitution and its accompanying Directive Principles state:

We declare our fourth goal to be for Papua New Guinea's natural resources and environment to be conserved and used for the collective benefit of us all, and be replenished for the benefit of future generations.

WE ACCORDINGLY CALL FOR—

(1) wise use to be made of our natural resources and the environment in and on the land or seabed, in the sea, under the land, and in the air, in the interests of our development and in trust for future generations; and

(2) the conservation and replenishment, for the benefit of ourselves and posterity, of the environment and its sacred, scenic, and historical qualities; and

(3) all necessary steps to be taken to give adequate protection to our valued birds, animals, fish, insects, plants and trees.

32. As pointed out by Pratt J in the Supreme Court’s decision in Frame:

• National Goal 2(1) emphasizes equal opportunity,
• National Goal 2(3) requires an equitable distribution of incomes; and
• National Goal 2(6) implores the maximization of the number of citizens participating in every aspect of development;
• National Goal 3(4) is directed to national sovereignty and self-reliance and is cast in terms that "citizens and governmental bodies to have control of the bulk of economic enterprise and production";
• National Goal 3(7) states that economic development shall be "by the use of skills and resources available in the country, either from citizens or the State and not in dependence on imported skills and resources"; and
• in none of these goals does it state that such goals will be achieved by means of expropriation or force.
  

33. Under Section 25(2) (implementation of the National Goals and Directive Principles) of the Constitution all governmental bodies are obliged to apply and give effect to the National Goals and Directive Principles as far as lies within their respective powers. As I commented in Louis Medaing v Ramu Nico Management (MCC) Ltd (2011) N4340, the National Goals and Directive Principles are in the Preamble to the Constitution. They underlie the Constitution. They are the proclaimed aims of the People of Papua New Guinea. They cannot be ignored. They must be taken into account by the Court when interpreting laws and when deciding what relief should be granted to persons such as the plaintiffs who have proven that statutory obligations and legal processes regarding land in which traditional owners have enduring interests, have been breached. Section 25(3) of the Constitution states:

Where any law, or any power conferred by any law (whether the power be of a legislative, judicial, executive, administrative or other kind), can reasonably be understood, applied, exercised or enforced, without failing to give effect to the intention of the Parliament or to this Constitution, in such a way as to give effect to the National Goals and Directive Principles, or at least not to derogate them, it is to be understood, applied or exercised, and shall be enforced, in that way.

34. The National Goals and Directive Principles acknowledge the importance of land in all societies in Papua New Guinea. This assessment of compensation must recognise the continuing interests of traditional owners of land, even when they no longer own the land in a legal sense, and when there is no claim – such being the situation in the present case – to ownership. They have enduring traditional interests in the land and it is their right under s 37(1) of the Constitution to have the full protection of the law in ensuring that those enduring interests are protected and enforced.

35. I am also obliged to take into account, in an objective assessment of just compensation, the unique circumstances of the plaintiffs and their uncontradicted evidence that they feel a genuine grievance in that they are traditional landowners who are virtually landless in their own ples.

36. It is evident from the inquiry into the history of Portion 625 undertaken by Minogue CJ in the pre-Independence Supreme Court in Mission of the Holy Ghost (New Guinea) Property Trust v Administration of the Territory of Papua and New Guinea [1969-70] PNGLR 365 (which was referred to in the judgment on liability in this case) that the land was expropriated by the German Colonial Administration in 1901 from the plaintiffs’ ancestors for a pittance. The land was then acquired by the Rabaul-based accountant, Mr Solomons, in the 1920s, who sold it to the first defendant a short time later for more than double what he paid for it. Mr Solomons made a profit of more than 100%. The traditional owners received nothing.

37. The State had the opportunity to correct the injustice done to the plaintiffs and their ancestors in the 1990s when the application was made, under the Land (Ownership of Freeholds) Act Chapter 359, to the Minister for Lands to convert the land to leasehold land. The application was granted and a State Lease over the land over Portion 625 was granted to the Mission. The State Lease was subsequently transferred to a number of other parties before it was transferred to RD Fishing Ltd (the second defendant). RD Fishing later surrendered the lease to the State. Portion 625 was then subdivided into two new portions, Portion 1349 (known as “Maiwara”) and Portion 1350 (known as “Vidar”). RD Fishing was granted a State Lease over Portion 1349, while a State Lease over Portion 1350 was granted to Madang Marine Park Holdings Ltd (the fourth defendant). These transactions were effected as part of the National Government-sponsored Pacific Marine Industrial Zone (“PMIZ”) project.

38. The interests of the traditional owners of Portion 625 have been neglected over many years. Transactions have been taking place, ignoring the fact of their traditional ownership and shutting them out of decision-making. Since 1901, when the plaintiffs’ land was expropriated by the Germans for a pittance, to recent years when this land has been earmarked for the PMIZ project, their interests have been ignored.

39. For those reasons I have decided that the plaintiffs will only receive “just compensation” if the amount of compensation for all plaintiffs in the conventional sense (assessed as K5 million) is doubled, to K10 million.

WHAT ARE THE “JUST TERMS” THAT OUGHT TO APPLY?

40. In determining what are “just terms” in a particular case, the Court should determine conditions on which the compensation is payable (including allowing compensation to be paid in instalments) so that due regard is had to the effect of the order for compensation on the defendant, particularly if public money is involved, and the need to ensure that it is distributed fairly and appropriately to the rightful beneficiaries

41. I will order that the just terms on which the State will pay just compensation of K2 million to each of the five plaintiffs will be that:

• the just compensation shall be paid in four instalments of K500,000.00 on a yearly basis commencing in 2020 and ending in 2023; and
  
• each plaintiff is obliged to distribute the compensation justly and fairly in accordance with customary principles to the members of the clan he has represented in these proceedings.
  

CONCLUSION

42. I have assessed “just compensation” for the plaintiffs in the sum of K2 million each, a total of K10 million, and set “just terms” in accordance with the following order. Costs will follow the event.

ORDER

(1) The fifth defendant, the State, shall discharge its liability, pursuant to Section 53(2) of the Constitution and the order of 27 October 2017, to pay just compensation on just terms to the plaintiffs by paying the plaintiffs the total sum of K10 million, apportioned equally amongst the plaintiffs, on behalf of their respective clans, in instalments in accordance with the following schedule of payments:

• (a) each plaintiff to be paid K500,000.00 by 30 November 2020; plus
• (b) each plaintiff to be paid a further K500,000.00 by 30 November 2021; plus
• (c) each plaintiff to be paid a further K500,000.00 by 30 November 2022; plus
• (d) each plaintiff to be paid the final instalment of K500,000.00 by 30 November 2023.
  

(2) Each plaintiff is obliged to distribute the compensation paid to him justly and fairly in accordance with customary principles to the members of the clan he has represented in these proceedings.

(3) The fifth defendant shall pay the plaintiffs’ costs of the proceedings on a party-party basis, which shall, if not agreed, be taxed.

Judgment accordingly.
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GP Lawyers: Lawyers for the Plaintiffs
Solicitor-General: Lawyer for the Fifth Defendant