Arran Energy (Niugini) Pty Ltd v Kua [2023] PGNC 257; N10441 (21 August 2023)

N10441

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 91 OF 2023 (IECMS – CC1)

BETWEEN:
ARRAN ENERGY (NIUGINI) PTY LTD (ACN 143 361 460)
as Operator and interest holder of PDL10)
Plaintiff

V

HON. KERENGA KUA, OL, MP. Minister for Petroleum
First Defendant

AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

Waigani: Anis J
2023: 18^th & 21^st August

INTERLOCUTORY APPLICATIONS – To refer matter for mediation or whether the matter should be discontinued – considerations – partial agreement on terms of proposed consent order – opposition by plaintiff that the matter should be discontinued without resolution of the first declaratory relief - ruling

Cases Cited:

Nil

Counsel:

E Andersen with Ms. E. Goina, for the Plaintiff
J Holingu, for the First Defendant
Nil appearance by the State

RULING

21^st August 2023

1. ANIS J: This is my short ruling concerning 2 motions that were filed by the plaintiff and the first defendant. The plaintiff has applied to refer the matter for mediation under the Alternative Dispute Resolution Rules (ADR rules). The first defendant, on the other hand, has applied for this Court to vary existing restraining orders that were made earlier in the proceeding, and for the proceeding to be discontinued premised on the terms as set out in his motion.

2. This is my ruling.

BACKGROUND

3. The plaintiff holds 2 licenses under the Oil and Gas Act 1998 (OG Act), the first is a petroleum development license, that is, Petroleum Development License No. 10 (PDL10), and the second is a pipeline license, that is, Pipeline License No. 10 (PL10). The plaintiff’s interest in the oil and gas industry in Papua New Guinea includes this project known as the Stanley Gas Project or Gas Fields which is situated in the Western Province. The 2 licenses were issued to the plaintiff over that area. The plaintiff and the second defendant also have in place a written contract called the Stanley Gas Agreement (SGA/Project) that captures the terms and conditions of the parties’ interests in the Project.

4. The dispute between the parties, which has led to this proceeding, occurred on 28 February 2023. The first defendant, on that day, issued a Notice of Intention to Cancel PDL 10 and PL10 to the plaintiff. The plaintiff in response alleged that due processes under the OG Act and the SGA/Project were breached by the first defendant when he issued the Notice of Intention to Cancel on 28 February 2023.

5. The Originating Summons filed 12 August 2023 stems from that, and the plaintiff seeks the following relief:

1. A declaration that pursuant to section 185 of the Oil & Gas Act 1998, clause 23 of the Stanley Gas Agreement requires the Defendants to exercise any powers given by section 138 of the Oil & Gas Act 1998 in accordance with the process set out in clause 23 of the Stanley Gas Agreement.
2. A declaration that the Notice of Intention to Cancel Petroleum Development License No. 10 and Pipeline License No. 10 dated 28 February 2023, issued by the First Defendant purportedly pursuant to section 138 of the Oil & Gas Act 1998 without complying with clause 23 of the Stanley Gas Agreement, is unlawful and invalid.
3. An order for permanent injunctions restraining the Defendants, and their officers, servants, and agents from relying on and/or taking any action relating to the Notice of Intention to Cancel Petroleum Development License No. 10 and Pipeline License No. 10 dated 28 February 2023.
4. An order that the Defendants pay the Plaintiff’s costs of this proceeding on a solicitor and own client basis.
   

PRESENT APPLICATIONS

6. The plaintiff’s notice of motion filed 20 July 2023 seeks orders to refer the matter for mediation. There was an objection raised concerning jurisdiction of the application. The objection was not contested but countered with applications to amend the motion and dispense with the requirements for service. I had ruled against the plaintiff’s counter applications. Thus, what this means is that I cannot hear the plaintiff’ s motion for ADR in its current form so I refuse it for now. The plaintiff is at liberty to refile a fresh application under the correct source namely Order 2 Rule 3 of the ADR Rules of 2022.

7. In regard to the motion by the first defendant filed 14 August 2023, he seeks the following relief:

1. Pursuant to Order 12 Rule 8 (4), (5) and Order 12 Rule 1 of the National Court Rules, Term 1 of the Orders of the Court ordered on 28 April 2023, and extended by further Orders of this Honorable Court, be varied, and discharged forthwith.
   
2. Pursuant to Section 35 of the Interpretation Act 1975 and or Section 155(4) of the Constitution and Order 12 Rule 1 of the National Court Rules, the First Defendant is granted leave to withdraw the Notice of Intention to Cancel Petroleum Development License No. 10 and Pipeline License No. 10 dated 28 February 2023 respectively, issued under the hand of the First Defendant pursuant to section 138 of the Oil & Gas Act 1998.
   
3. Consequential to the grant of the order sought in term 2 hereof, the Plaintiff shall take steps to discontinue the proceedings forthwith.
   
4. The Defendants shall pay the Plaintiff’s cost of the proceedings on a party-party basis, to be taxed if not agreed.
   
5. Time for entry of these Orders is abridged, which shall take place forthwith.
   

CONTEST

8. The plaintiff only concedes to relief 2 of the notice of motion. It rejects the balance of the relief. It submits, amongst others, that the proposals or counteroffers made by the first defendant do not take into account the first primary relief that it also seeks, which is (I summarise), a declaration that clause 23 of the SGA is compliant or compatible with ss185 and 138 of the OG Act.

9. The first defendant, however, requests that all the relief that are sought in his motion be granted. First, counsel submits that relief 1 is necessary to facilitate relief 2. And secondly, counsel submits that if the Notice of Intention to Cancel is withdrawn, which his client ‘proposes’ or is ‘proposing’ to do, then there no purpose or utility for the proceeding to continue; I note that counsel is implying that the primary dispute that has triggered the proceeding, which was the issuance of the Notice of Intention to Cancel, will have been resolved.

CONSIDERATION

10. I note the submissions of the parties.

11. I have no difficulty in granting relief 2 of the first defendant’s motion. I also take into account the plaintiff’s submission concerning uncertainties that may arise even after the grant of term 2 of the relief. For example, the plaintiff submits that it is possible that another similar notice may be issued soon afterwards, and that the parties may be back in Court to repeat the process, amongst other things. Counsel for the plaintiff also submits that there is also no guarantee that the first defendant would carry out his promise to cancel; that no real undertaking has been given to date.

12. I find the concerns raised by the plaintiff to be genuine. It was clear hearing from counsel for the first defendant that his client has not made any final decision to cancel the Notice of Intention to Cancel. Counsel used terms such as ‘proposes” or “proposing” to cancel.

13. Therefore, and at this stage, I am minded to only grant relief 2 of the first defendant’s notice of motion. The first defendant would still be at liberty to apply to the Court to seek other relief such as requesting for the proceeding to be discontinued which may be considered on its merit, which may also depend on his actions after this moving forward.

SUMMARY

14. From the 2 motions that are before me, I will grant relief 2 of the first defendant’s motion. In summary, the plaintiff’s motion is refused, and the first defendant’s motion is granted in part only.

COST

15. Cost is discretionary. I will order the cost to follow the event in regard to the plaintiff’s motion. As for the first defendant’s motion, I take into account the genuine attempts that had been undertaken by the parties to resolve the matter. As such, I will order each party to bear their own cost.

ORDERS OF THE COURT

16. I make the following orders:

(1) The plaintiff’s notice of motion filed 20 July 2023 is refused.

(2) The first defendant shall have the cost of the motion on a party/party basis to be taxed if not agreed.

(3) The first defendant’s notice of motion filed 14 August 2023 is granted in part only in that the first defendant is granted leave to withdraw the Notice of Intention to Cancel Petroleum Development License No. 10 and Pipeline License No. 10 dated 28 February 2023 respectively, issued under the hand of the First Defendant pursuant to section 138 of the Oil & Gas Act 1998.

(4) Parties shall bear their own cost in relation to the motion.

(5) Time for entry of these orders is abridged to the date and time of settlement by the Registrar of the National Court which shall take place forthwith.

The Court orders accordingly
________________________________________________________________
Dentons PNG: Lawyers for the Plaintiff
Holingu: Lawyers for the First Defendant