Saurio v Dau [2021] PGNC 402; N9164 (25 August 2021)

N9164

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 91 OF 2021

BETWEEN:
PIUS SAURIO and MATHEW ASIP for themselves and on behalf of clan members of Agwitno 1 and Augwitno 2 of Mukukly village, Kaliai Inland, Kimbe, West New Britain Province
First Plaintiffs

AND:
JOHN MONDO for himself and for and on behalf of Saikou Clan
Second Plaintiffs

AND:
FRANCIS MARA for and on behalf of members of Natunavua Clan of Kove Tribe, Kimbe, West New Britain Province
Third Plaintiffs

AND:
VINCENT DAU and STEVEN MOSES for and behalf of themselves and on behalf of members of Tarawa Wawa Clan of Kove Tribe, Kimbe, West New Britain Province
First Defendants

AND:
ZAMA BATANIU – Royalty Clerk – WNB Provincial Forest Authority
Second Defendant

AND:

WEST NEW BRITAIN FOREST AUTHORITY
Third Defendant

AND:
PAPUA NEW GUINEA FOREST AUTHORITY
Fourth Defendant

AND:
INDEPENDENT STATE OF PAPUA NEW GUINEA
Fifth Defendant

Kimbe: Numapo J
2021: 06^th June & 25^th August

CIVIL PRACTICE AND PROCEDURE – Application to extend and make permanent the interim restraining orders – Relevant applicable principles on interlocutory injunctions - Serious question to be tried – Arguable case exists - Balance of convenience favouring granting or refusal – Serious and irreparable damages – Preservation of status quo -– Application granted.

Cases Cited:
Papua New Guinea Cases

Tarsie v Ramu Nico Management (MCC) Ltd [2010] PGNC 75; N3960
Ramu Nico Management (MCC) Ltd v Tarsie [2010] PGSC 22; SC1075
Medaing v Ramu Nico Management (MCC) Ltd [2010] PGNC 149; N4127
Yama Group of Companies v PNG Power Ltd [2005] N2831
Lamiller Pawut v Gregory Tamberang & Ors [2016] N6394
Hon. Havila Kavo MP v Hon. Mark Maipaka MP (2010) N4094
Pastor Kitubung Mon & Ors v Assoc. of Local Churches of PNG & Ors [2019] N7992.
Wanema Trading v Civil Aviation [2006] N3058
Hotel Kokopo v National Development Bank [2013] N5111
Yakam Maleyaki & Ors v Judah Utin & Ors (2019) N8040
Lupia v ExxonMobil PNG Ltd [2016] PGNC; N6484
Simon Mali v. Independent State of Papua New Guinea (2002) PNGLR 15
Wilfred Mamkuni v. Ly Cuong-Long and Jant Ltd (2011) N4674.

Overseas Cases

Beecham Group Ltd n Bristol Laboratories Pty Ltd (1969) 118 CLR
Wakefield v Duke of Buccleugh (1865) 12 LT 628 at 629

Counsel:

Ms A Waviha, for the Plaintiffs

Mr L Baida, for the First Defendants

DECISION

25^th August, 2021

1. NUMAPO J: On the 16^th April, 2021, I granted an interim restraining order in favour of the Plaintiff/Applicant on an application made ex parte by way of a notice of motion pursuant to Order 14 Rule 10 (1) and (3) and Order 12 Rule 1 of the National Court Rules (NCR) to restrain the Second, Third and Fourth Defendants forthwith from releasing any payments of timber royalties and levies for the Gaho Malasa FMA (Forest Management Area) project in the West New Britain Province to the First Defendants, their servants, agents and whosoever, until further orders of this Court.

2. A further order was granted dispensing with the requirement for service of this application and supporting documents pursuant to Order 4 Rule 38 (2) (d) of the NCR.

3. The Plaintiffs/Applicant filed an undertaking as to damages on the 31^st March 2021 in support of the application pursuant to Order 4 Rule 49 (5) (ii) (c).

4. The interim restraining order was granted and made returnable after 14 days for inter-partes hearing. On the returnable date the Plaintiffs represented by Ms Alma Wahiva sought further orders to have the interim restraining order extended and made permanent until the substantive matter is determined. The First Defendants were represented by Counsel Mr Livingstone Baida whilst the Second, Third, Fourth and Fifth Defendants were not present in court either in person(s) or through their legal representatives.

On the day of the hearing, the Plaintiffs informed the Court that the Fourth Defendant (PNG Forest Authority) had complied with the interim restraining order of the 16^th April, 2021 and has not paid any timber levies or royalties from the Gaho Malasa FMA logging project to the first defendants.

5. Plaintiffs sought further extension of the interim orders made on the 16^th April, 2021 as it considers is necessary to preserve the status quo until the determination of the substantive matter. That is that, the Fourth Defendant is not to make any payments out from the timber levies and royalty funds held in favour of Gaho Malasa FMA logging project to any person, persons, agents or group including the first defendants until the substantive matter is concluded.

1. ISSUE
   

6. The issue is; ‘whether the ex parte interim order granted by the court can be extended and made permanent until the determination of the substantive matter’

2. BACKGROUND
   

7. The matter relates to payment of timber levies and royalties from a logging area known as the Gaho Malasa FMA project area in the Kandrian District of West New Britain Province. Plaintiffs alleged that they were entitled to the payments on timber royalties for the trees logged from their customary land under the “Supplementary Forest Management Agreement” the plaintiffs signed with the logging operator and contractor, Cakara Alam (PNG) Ltd. The Gaho Malasa FMA is divided into five (5) coupe areas. The first plaintiff owned coupe 4 and coupe 5 and it was on that basis that they signed the Consent Forms with the contractor Cakara Alam (PNG) Ltd for the harvesting of the logs. Although logging were harvested from coupe 4 and coupe 5, the fourth defendant (PNG Forest Authority) has not released the timber royalty payments due to a land dispute.

8. In 2019, the second plaintiffs and the first defendants were involved in a land dispute proceedings before the Local Land Court over the land boundary and ownership of the land called ‘Tarawa Wawa.’ The decision of the Local Land Court was appealed to the Provincial Land Court and is still pending determination. In the meantime, the first plaintiffs, in the interest of justice, representing all the parties involved in the dispute, sought restraining orders against the first defendants from claiming any timber royalties, levies or any other payments until the land dispute is resolved. All parties to this proceeding including the first defendants are beneficiaries of the Gaho Malasa FMA logging project.

C. PLAINTIFF’S APPLICATION

9. Counsel for the Plaintiffs, Ms Waviha submitted that the Court has the power to extend the interim restraining orders granted on the 16^th April, 2021 and issue a permanent order restraining the first defendants from receiving any timber royalties, levies or other payments for the Gaho Malasa FMA logging project pending the determination of the substantive matter.

10. Ms Waviha referred to the case of Wanema Trading v Civil Aviation [2006] N3958 which was later adopted and applied in Hotel Kokopo v National Development Bank N5111 (19^th March 2013) as the basis of the plaintiff’s application to extend the interim orders. The case laws sets out six (6) grounds that the defendant need to establish to convince the court not to grant the extension of the interim order issued on the 16^th April 2021 sought by the plaintiffs. These includes:

(i) Where the conditions or stipulations of the order have not been met and the order is no longer necessary;

(ii) If it is subsequently discovered by the court that the interlocutory order was formed on wrong principles of obtaining interim restraining order;

(iii) Changes in relevant circumstances including failure of the party to act responsibly after obtaining it;

(iv) It is shown that the party obtaining the orders had not come to court with clean hands;

(v) If the court finds that is was misled on the earlier application; and

(vi) On an ex parte interlocutory application there has been a failure to make a full disclosure of relevant materials both for and against the applicant’s case.

11. The plaintiff sought two (2) substantive relief in its originating summons seeking Declarations pursuant to Order 12 Rule 1 of the NCR and section 155 (4) of the Constitution of the Court’s inherent jurisdiction. The plaintiff’s application for continuation of the interim order is essentially to maintain status quo until the substantive matter seeking the relief is determined.

12. In this ex parte application, I am satisfied that the Plaintiff/Applicant had made a full disclosure of all relevant materials both for and against the applicant’s case necessary to enable the application to be fully determined on its merits.

4. DEFENDANT’S OBJECTIONS
   

13. The defendant objected to the application to extend the interim order issued on the 16^th April 2021 stating that it was irregularly obtained and should be set aside. Defendant raised locus standi as the main ground for its objection to the application by the plaintiff. Defendant claims that the plaintiffs do not have the standing to commence proceedings as they were not a signatory to the Supplementary Agreement with the logging operator. Secondly, that plaintiffs Pius Saurio and Mathew Asip did not have the consent of the other plaintiffs and therefore, were not properly authorized to represent them hence, do not have standing to commence this proceedings on their behalf. Thirdly, the first plaintiff is not a party to a land dispute with the first defendant and therefore, a mere busy body who does not have standing. The land dispute is between the second plaintiff and the first defendant.

I will address each of the grounds raised by the defence.

14. Firstly, with respect to the Agreement, the defendant has not produced any evidence to support its claim that the plaintiff was not a signatory to the Agreement and therefore, does not have standing to commence this proceedings. According to evidence, the plaintiff was at all times a recipient of the timber royalties for coupe 4 and coupe 5 under the Agreement until the land dispute arose between the second plaintiffs and the first defendants which then prompted the fourth defendant to stop the payment on timber royalties’ until the dispute is resolved. The plaintiff seeks orders that the stoppage of the timber royalty payments should apply equally to all parties to the Agreement until all issues pertaining to the Agreement and/or the land dispute are resolved. On face value, the application does make sense. It is only fair and reasonable that all beneficiaries to the Agreement are treated the same on any issues that may arise relating to the Agreement or the land on which the logging is carried out. Why should the plaintiffs be treated differently from the first defendants with regards to payment of royalties, after all, they are all landowners of the Gaho Malasa FMA project area. Although, the plaintiff is not a party to the land dispute, its pecuniary interest as a beneficiary is affected when the fourth defendant put a stop to all payments of timber royalties and therefore, he is entitled to be heard on application. For this reason, I am satisfied that the plaintiff has standing to commence this proceeding because its interest as a beneficiary has been affected by the actions of the first and the fourth defendants.

15. The second ground relates to the representation made by plaintiffs Pius Saurio and Mathew Asip on behalf of the other plaintiffs. Defendant argued that both did not have the consent of the other plaintiffs and therefore, have no standing to represent them and commenced this proceeding. The requirements of a representative action is set out under Order 5 Rule 13 (1) NCR which provides for representative action in the following terms:

“Where numerous persons have similar interest in any proceedings the proceedings may be commenced, and, unless the Court otherwise orders, continued, by or against any one or more of them as representing all or as representing all except one or more of them”.

16. The rules on representative action or representative proceedings is derived from equitable practice which permit a person to represent a group of plaintiffs or defendants having the same interest in the litigation hence, the person or persons representing the group must first obtained their consent prior to representing them. Such consent must be evidenced in writing as a proof of such authorization to act on behalf of others (Yakam Maleyaki & Ors v Judah Utin & Ors (2019) N8040; Lupia v ExxonMobil PNG Ltd [2016] PGNC; N6484, Simon Mali v. Independent State of Papua New Guinea (2002) PNGLR 15; Wilfred Mamkuni v. Ly Cuong-Long and Jant Ltd (2011) N4674.

17. Firstly, proof of consent and authorization requires substantive evidence to be presented in court such as proof of a written authorization and/or consent signed by each plaintiffs authorizing plaintiffs Pius Saurio and Mathew Asip to represent them. This will require normal pleadings to be completed that includes setting out the material facts the defendant intend to allege at the hearing. All these are matters for consideration when the matter returns for substantive determination. In interlocutory proceedings this is not necessary given that interim orders obtained by way of an ex parte application is only temporary until the matter is fully determined. Defence has not produced any evidence suggesting otherwise that consent has not been given or if indeed it was given that such consent was obtained by fraud or misrepresentation and therefore, plaintiffs Pius Saurio and Mathew Asip do not have the legitimate authority to represent the other plaintiffs and therefore, have no standing to commence this proceedings. Without any such evidence the assertion by the defendant on the lack of consent is baseless and without merit.

18. Secondly, whether the plaintiff is a signatory to the Agreement or not is a matter for evidence. The issue, amongst others, will be determined at an appropriate time when all the relevant evidence are in. The court will be required to carefully examine the contents of the Agreement that sets the rights and obligations of the parties before making any final determination. All these must come in a form of evidence which at this stage is not in yet. For this reason, I find this ground of objection premature and must be rejected in its entirety.

19. Thirdly, the allegation by the defendant that plaintiffs Pius Saurio and Mathew Asip forged a signature of a deceased person in the Agreement, is in itself, a serious criminal allegation that requires proper evidence to prove it. I fail to see how this allegation can be sustained in the absence of any cogent and credible evidence to support it. The defendant will be required to bring forth the necessary evidence required to prove that the signature was forged. The plaintiff must also be given the opportunity to defend itself against the allegation. All these are matters will be determined at the substantive hearing to determine whether or not the signature was forged.

20. Finally, on the issue on undertaking as to damages. Order 4 Rule 49 (5) (ii) (c) of the NCR is clear in that the power of the court to order for undertaking as to damages is “discretionary and may be required where appropriate.” The reason for undertakings is two-fold; firstly, to provide protection for the defendant by ensuring an available fund to defray costs incurred by the defendant in defending a frivolous claim; and secondly, to discourage the filing of unmeritorious and frivolous claims which may amount to vexatious harassment.

21. I accept, in the exercise of my discretion, the plaintiffs’ undertaking as to damages filed on the 31^st March 2021, is adequate to cover for any consequential costs relating to this proceeding.

22. The defendant further claimed that the plaintiff has not come to court with clean hands under the principles of equity and should therefore, be denied the orders it is seeking. However, defendant did not show what is it that the plaintiff has done or not done that he should not be granted the orders sought because he did not come with clean hands. I find no evidence supporting this assertion.

23. The defendant also raised the issue of Section 5 Notice under the Claims By and Against The State Act. The issue on Section 5 Notice is outside of the defendant’s jurisdiction as he does not represent the interest of the State in this proceeding. Only the fifth defendant can appropriately raise it if it has issues with it. The objection is therefore, misconceived and without basis.

24. All in all, I find that the defence, in objecting to the application to extend the interim order, descended quickly into discussing substantive issues where substantive law is concerned especially on matters pertaining to the Supplementary Agreement for the Gaho Malasa FMA project area when this is not an appropriate time to raise such issues and is therefore, totally irrelevant for purposes of this interlocutory proceedings. Defence has not made out a case to convince the court that the interim order obtained by the plaintiffs on the 16^th April 2021 is irregular, misleading or founded on the wrong principles and therefore, is defective and cannot be extended further and be made permanent based on the grounds set out in Wanema Trading (supra). In interlocutory proceedings parties are only required to address the court on the procedural laws dealing with interlocutory applications and if there are issues with an interim order the court must be alerted to it at the first instance and an appropriate application is then made to set it aside. The defence has not done that in this present case.

25. Let me make it clear that an interlocutory order is an order which does not finally determine the rights, duties and obligations of the parties. A final order does that. It would therefore, be a total waste of time for parties to raise substantive issues during interlocutory proceedings.

26. In the present case, I find the objections raised by the defendant on the plaintiff’s application to be without merit and cannot stand.

27. I now turn to the relevant applicable principles that gives the court the discretion to extend the interim restraining orders.

5. APPLICABLE PRINCIPLES
   

28. Injunctions are equitable remedies available at the discretion of the court and may be granted, extended or refused at any time on an application (Mainland Holdings v. Paul Stobbs (2003) N2552). To obtain an injunction the plaintiff must establish two things; firstly, there is a serious question to be tried and therefore, an arguable case exists and secondly, that the balance of convenience favours the granting of an injunction. In some cases an interlocutory injunction is granted to preserve the status quo and to do that the plaintiff must have a strong case that an irreparable and irrevocable damage will occur if the injunction is not granted. Finally, interest of justice is also a ground that can be relied on if it can be shown that the granting of the interim order is fair and just to the parties until a final determination is made. Anyone of these grounds on its own is sufficient for the court to grant or refuse the injunction.

29. The relevant applicable principles relating to extension of interim orders and making them permanent is found in the cases of Tarsie v Ramu Nico Management (MCC) Ltd [2010] PGNC 75; N3960 and Medaing v Ramu Nico Management (MCC) Ltd [2010] PGNC 149; N4127 (per Cannings J). It gives the court the discretion to extend the interim orders and grant permanent injunctions where appropriate on application.

30. The case laws alluded to above succinctly sets out the relevant applicable principles for application relating to the continuation and/or extension of the interim orders and making them permanent. It is incumbent upon the party seeking the interim orders to show that:

(a) it should only be granted where a strong case that a serious damage will occur to the applicant is made out;

(b) there is a serious question to be tried and that an arguable case exists;

(c) an undertaking as to damages has been given;

(d) damages would not be an adequate remedy if the interim order is not granted;

(e) the balance of convenience favour the granting of the interim order; and

(f) the interests of justice require that the interim order be granted.

31. The Supreme Court in Ramu Nico Management (MCC) Ltd v Tarsie [2010] PGSC 22; SC1075 affirmed the decision of his Honour Cannings J on the applicable principles in the application for extension of interim orders.

32. The principles were later adopted and applied in many later cases such as: Yama Group of Companies v PNG Power Ltd N2831; Hon. Havila Kavo MP v Hon Mark Maipaka MP (2010) N4094; Lamiller Pawut v Gregory Tamberang & Ors [2016] N6394 and Pastor Kitubung Mon & Ors v Assoc. of Local Churches of PNG & Ors (2019) N7992.

33. In the present case, the plaintiff relied on the following grounds to seek further extension of the interim order and make it permanent:

(i) There is a serious question to be tried and an arguable case exists;

34. This principle requires that the court must be convinced that there is a serious question to be tried. The onus is on the plaintiff to convince the court that there is a prima fascie case pointing to an arguable case.

35. In the present case, the plaintiff submitted that, they are entitled to the timber royalties’ payable under the Supplementary Forest Management Agreement which they signed with the logging operator and contractor, Cakara Alam (PNG) Ltd, for the trees logged out from the Gaho Malasa FMA project area especially from their plots, coupe 4 and coupe 5. They have been receiving payments on timber royalties until the land dispute arose between the second plaintiffs and the first defendants. As a result, the fourth defendant unilaterally decided not to release any payments on timber royalties to the plaintiffs until the dispute is resolved. This has severely affected their income on logs harvested from their plots. The first defendants however, continues to receive their royalty payments which according to the plaintiff is unfair and unjust and it was on that basis that the plaintiff obtained the interim order to stop payments to all parties including the first defendants until the matter returns for substantive determination. This, in my view, is fair and reasonable. No reason or explanation was given as to why the fourth defendant continued to pay the first defendants its share of the timber royalties and not the plaintiffs.

36. Based on these facts, I am satisfied that there is a serious question to be tried hence, an arguable case exists with respect to the plaintiff’s rights and obligations as a beneficiary under the Agreement with the logging operator. It revealed two things; firstly, a breach of contract (Agreement) and secondly, the plaintiff’s pecuniary interests has been affected by the actions of the first and fourth defendants from which he may be entitled to some relief.
I find therefore, there is a serious question to be tried and an arguable case exists in favour of extending the interim order.

(ii) Balance of convenience

37. The next consideration is whether the balance of convenience favours the granting the interlocutory injunction. The question of balance of convenience arises if there is any doubt as to the adequacy of the respective remedies in damages available to either party or to both. It is the balance of the relief given to the plaintiff against the injury that will be done to the defendant. If the plaintiff was to succeed at the trial establishing his right to a permanent injunction, he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendant’s continuing to do what was sought to be enjoined between the time of the application and the time of the trial. (Wakefield v Duke of Buccleugh (1865) 12 LT 628 at 629). My preliminary assessment of the evidence therefore, is that, if the evidence that is now before me is presented at the full hearing of the matter, it is mostly likely that the plaintiff will be entitled to relief. (See: Beecham Group Ltd n Bristol Laboratories Pty Ltd (1969) 118 CLR at 622).

38. It is obvious that the plaintiff’s ultimate intention is to restrain the fourth defendant (PNG Forest Authority) from paying any timber royalties to the first defendants from the sale of logs harvested from Gaho Malasa FMA logging project and seeks to preserve the status quo until the matter returns for substantive determination. One of the grounds for granting an interlocutory injunction is to preserve the status quo so as to avoid any irreparable and irrevocable damages from occurring if the injunction is not granted. Like the first defendants, the plaintiffs are also beneficiaries of the logging project and have the same rights under the Agreement. There is justification for the fourth defendant to withhold their payments whilst continuing to pay the first defendant its share of the royalty payments. The plaintiffs are equally entitled to the royalty payments as the first defendant. That said, the actions taken by the fourth defendant to withhold the royalty payments due and payable to the plaintiffs is, on all counts, unfair and unreasonable. In the circumstances, the interest of justice requires that the interim order be granted.

39. Having said that, I find that the balance of the relief given to the plaintiff would be no greater than the injury that will be done to the defendant if the royalty payment is withheld as after all, both the plaintiffs and the first defendants are equal beneficiaries under the Agreement. Hence, the loss suffered by the first defendant would be no greater than that suffered by the plaintiffs. In any event, I am satisfied that the undertaking as to damages filed by the plaintiff is sufficient to defray any costs that may be incurred by the defendant in defending this action if it is found to be frivolous and vexatious. I have no doubt in my mind that the adequacy of the respective remedies in damages available to both parties would be proportionate and equitable. In the circumstances, I cannot see how the defendant would suffer more in losses than the plaintiff if relief is awarded to the plaintiff.

40. I am therefore, satisfied that if the plaintiff is to succeed at the trial establishing his right to a permanent injunction, he would be adequately compensated for the loss he has suffered as a result of the first and fourth defendant’s actions. In this regard, the balance of convenience lies in favour of granting of the interlocutory injunction.

41. I conclude that the plaintiff/applicant has made out a prima fascie case pointing to an arguable case and therefore, balance of convenience and interest of justice favours the granting of the permanent restraining orders until the matter returns for substantive determination.

F. RULING

42. Application is granted for the extension of the interim restraining order of the 16^th April 2021 until the substantive determination of the matter.

Costs be in the cause.

Orders accordingly.
________________________________________________________________

Waviha Lawyers: Lawyer for the First Plaintiffs

Nelson Lawyers: Lawyer for the First Defendants