Independent State of Papua New Guinea v Central Provincial Government [2009] PGSC 2; SC977 (15 June 2009)

SC977

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA 99 &100 OF 2005

BETWEEN:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
First Appellant

AND:

SAM AKOITA, MINISTER FOR MINES
Second Appellant

AND:

TOLUKUMA GOLD MINES LIMITED
Third Appellant

AND:

CENTRAL PROVINCIAL GOVERNMENT
Respondent

Waigani: Sakora, Manuhu & Hartshorn JJ.
2008: 3rd July,
2009: 15th June

APPEAL - Appeal against refusal to dismiss Originating Summons as an abuse of process – whether trial judge erred in his determination of whether correct procedure used in claiming relief sought – application for declaratory orders – factors necessary for relief to be sought – no competing rights or controversy between parties – abuse of process - appeal upheld

Facts:

Tolukuma Gold Mines Ltd operates a mine in the Central Province and was granted an extension of the term of its mining lease. The Central Provincial Government (CPG) sought declaratory relief in the National Court that the extension was unconstitutional, unlawful and null and void. Tolukuma applied unsuccessfully to dismiss the National Court proceeding as being incompetent and an abuse of process. Tolukuma, the State and the Minister for Mines appeal that decision refusing to dismiss.

Held:

1. There is no requirement for the Central Provincial Government to be consulted before the term of a mining lease is extended. There are no competing rights or controversy between the parties and declaratory relief should not have been sought.

2. CPG’s cause of action is incontestably bad and an abuse of process.

3. The trial judge fell into error when he exercised his discretion and refused to dismiss the proceeding as an abuse of process under Order 12 Rule 40(1)(c) National Court Rules.

4. The appeal is upheld and the whole of the interlocutory judgment of the National Court of 3rd August 2005 is set aside.

Cases cited:

Papua New Guinea cases:

Donigi v. The State [1991] PNGLR 376
Curtain Bros (PNG) Ltd v. UPNG (2005) SC788
Ok Tedi Mining Ltd v. Niugini Insurance Corporation & Others (No.2) [1988-89] PNGLR 425

Overseas Cases:

Ainsworth v. Criminal Justice Commission [1992] HCA 10; (1991-1992) 175 CLR 564
Mentha & Ors v. GE Capital Ltd & Anor (1997) 154 ALR 565
Russian Commercial and Industrial Bank v. British Bank for Foreign Trade Ltd [1921] 2 AC 438

Counsel:

Mr. G. Poole, for the Third Appellant
Mr. A. Jerewai and Mr. S. Tolo, for the Respondent

15 June, 2009

1. BY THE COURT: Tolukuma Gold Mines Ltd operates a mine in the Central Province and was granted an extension of the term of its mining lease. The Central Provincial Government (CPG) sought declaratory relief in the National Court that the extension was unconstitutional, unlawful and null and void. Tolukuma applied unsuccessfully to dismiss the National Court proceeding as being incompetent and an abuse of process. Tolukuma, the State and the Minister for Mines appeal that decision refusing to dismiss. Leave to appeal was granted by consent.

2. At the hearing of the appeal there was no appearance on behalf of the State and the Minister for Mines. The appeal proceeded in their absence as we were satisfied that they were sufficiently aware that the appeal was to proceed before us.

3. Tolukuma submitted that the trial judge erred in law and fact in not dismissing the Originating Summons of CPG as amongst others:

a) CPG had not used the correct mode of procedure by claiming the declaratory relief that it has,

b) the Minister for Mines was not required to consult CPG before making his decision to grant an extension of the mining lease,

c) the Minister had taken into account the considerations required of him by the Mining Act 1992 in deciding whether to grant an extension.

4. CPG takes issue with the submissions of Tolukuma and submits that the trial judge did not err in law and fact as:

a) the correct procedure was used as CPG has the right to be consulted on whether an extension of the mining lease should be granted,

b) the issue whether CPG should have been consulted on an extension to the mining lease was substantive and should be considered at trial.

Issues

5. From the above the issues are, did the trial judge fall into error in his determination of whether:

a) CPG has used the correct procedure in claiming the relief that it has,

b) the issue concerning CPG's consultation could only be considered at a substantive hearing.

6. The decision of the trial judge that is the subject of this appeal was an exercise by him of judicial discretion in considering an application under Order 12 Rule 40(1)(c) National Court Rules. This Court’s role in an appeal from such a decision is considered in Curtain Bros (PNG) Ltd v. UPNG (2005) SC788. We agree with and respectfully reproduce the following passage from that decision:

"The appellant Court will not interfere with a discretionary judgment on a procedural matter within its jurisdiction, except where the exercise of that discretion is clearly wrong. A discretionary judgment may be set aside if an identifiable error occurred in the exercise of discretion. Alternatively, it may be set aside where there is no identifiable error, but the resulting judgment or order is "unreasonable or plainly unjust" and such that an error can be inferred. These principles are well established. We adopt a passage from Kitto J in the Australian High Court case of Australia Coal and Shale Employees’ Union v The Commonwealth [1953] HCA 25; (1956) 94 C.L.R. 621 at p.627, which was adopted by Clarkson J. in Breckwoldt & Co. (N.G.) Pty Ltd v. Gnoyke [1974] PNGLR 106 at p.112 – 113:

"The decision by the primary judge to stay the action was made in exercise of a judicial discretion and I accept that in those circumstances the principles on which this Court should act are as described by Kitto J. in Australian Coal and Shale Employees’ Union v The Commonwealth ... the true principle limiting the manner in which appellate jurisdiction is exercised in respect of decisions involving discretionary judgements is that there is a strong presumption in favour of the correctness of the decisions appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong. A degree of satisfaction to overcome the strength of the presumption may exist where there has been an error which consists in acting upon a wrong principle, or giving weight to extraneous or irrelevant matters, or failing to give weight or sufficient weight to relevant considerations, or making a mistake as to the facts. Again, the nature of the error may not be discoverable, but even so it is sufficient that the result is so unreasonable or plainly unjust that the appellate court may infer that there has been a failure properly to exercise the discretion which the law reposes in the court of first instance..."

Whether correct procedure used

7. Counsel for CPG submitted that Tolukuma raised this issue before the trial judge but did not pursue it. It is clear from a perusal of the transcript that the issue was raised by counsel for Tolukuma. There is no indication that the issue was not pursued. We are of the view that nothing turns on this point.

8. CPG commenced the National Court proceeding by Originating Summons seeking a declaration that the decision of the Minister for Mines was amongst others null and void. Other relief sought included orders that Tolukuma cease operating in the mining lease area and that no further extension of the mining lease be granted without CPG being consulted.

9. CPG submits that as it has a right to be consulted under s.115 Organic Law on Provincial and Local Level Governments and s. 255 Constitution, it is able to seek declaratory orders under Order 4 National Court Rules and consequential relief.

10. Reliance is placed upon the National Court decision of Ok Tedi Mining Ltd v. Niugini Insurance Corporation & Others (No.2) [1988-89] PNGLR 425 where Kapi DCJ (as he then was) said:

"I am of the opinion that an objection may now be made to a mere declaratory order on the basis that he does not seek any consequential relief."

CPG submits that as it has a right to be consulted and is seeking declaratory and consequential relief, no objection can be taken to the procedure used.

11. Tolukuma submits that although the granting of declaratory orders is discretionary, the discretion to grant such orders is only to be exercised where there is a clear case of competing rights between the parties. Reliance is also placed upon the Ok Tedi case (supra) in which reference was made to the factors that are required to be established before a declaratory order can be made. These are set out in the celebrated case of Russian Commercial and Industrial Bank v. British Bank for Foreign Trade Ltd [1921] 2 AC 438 at 448. They are:

1) There must exist a controversy between the parties.

2) The proceedings must involve a right.

3) 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.

12. In this regard we also refer to the High Court of Australia decision, Ainsworth v. Criminal Justice Commission [1992] HCA 10; (1991-1992) 175 CLR 564, in which 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.

13. In this jurisdiction in Donigi v. The State [1991] PNGLR 376, Brown J. held amongst others, that the power of the National Court to grant declaratory relief in respect of legislation is dependent on there being a specific problem concerning it which requires the determination of personal or proprietary rights - there is no power to declare hypothetical problems. Then in the Federal Court of Australia, Finklestein J. in Mentha & Ors v. GE Capital Ltd & Anor (1997) 154 ALR 565 said:

What is being sought is no more than the advice of the Court that their view is correct. It is not appropriate for the court to give that advice. The proper function of the court is to determine the rights, duties and liabilities of parties when the occasion for their determination arises. Generally, that occasion will only arise when there is a dispute about those rights, duties and liabilities.

14. To determine whether there is a real controversy between the parties, the particular legislative provisions upon which CPG relies must be considered. They are s. 46 Mining Act 1992, s. 115(1) Organic Law on Provincial Governments and Local Level Governments and s.255 Constitution.

15. Section 46 of the Mining Act 1992 is:

"46. Extension of the term of mining lease.

(1) The Minister may, on the application by the holder of a mining lease and after considering a recommendation from the Council, extend the term of the mining lease for such period or periods each not exceeding 10 years, as the Minister determines.

(2) An application for the extension of the term of a mining lease-

(a) shall be on the prescribed form; and

(b) shall be lodged in triplicate with the prescribed application fee; and

(c) shall be lodged in accordance with the procedure specified in Division VI.1."

The "Council" is the Mining Advisory Council which does not include the CPG.

16. Section 115(1) Organic Law on Provincial Governments and Local Level Governments is:

"115. Control of natural resources.

(1) Where there is a proposal to develop a natural resource in a province or provinces, the appropriate National Minister designated by the National Executive Council shall consult with the Provincial Government in the province or provinces where the natural resource is situated."

17. Section 255 Constitution is:

"255. Consultation

In principle, where a law provides for consultation between persons or bodies, or persons and bodies, the consultation must be meaningful and allow for a genuine interchange and consideration of views."

18. The decision under consideration is a decision to extend a mining lease, a mining lease that had already been granted. It is not a proposal to develop a natural resource.

19. It is apparent from a consideration of the legislative provisions upon which CPG relies to found its substantive application for declaratory relief, that there is not any requirement for the Minister to consult CPG before extending the term of a mining lease.

20. As there is no such requirement, there is no controversy between the parties, CPG does not have a right of consultation and does not have a proper or tangible interest in obtaining the relief sought.

21. Even if it could be said that CPG has used the correct procedure, it is clear that its proceeding is bound to fail for the reasons given.

22. It is our view that it is plain and obvious that CPG’s cause of action is incontestably bad and an abuse of process. In not so deciding, we are of the respectful view that the trial judge fell into error when he exercised his discretion and refused to dismiss the proceeding as an abuse of process under Order 12 Rule 40(1)(c) National Court Rules.

23. In deciding as we have, it is not necessary to consider the other arguments of counsel.

Orders

24. The orders of the Court are:

a) the appeal is upheld and the whole of the interlocutory judgment of the National Court of 3rd August 2005 is set aside.

b) Judgment is entered in lieu of the National Court decision, dismissing proceeding OS 689 of 2004 for being an abuse of process.

c) the respondent shall pay the third respondents costs of the appeal.

__________________________________
O’Briens Lawyers: Lawyers for the Third Appellant
Jerewai Lawyers: Lawyers for the Respondent