Madang Timbers Ltd v Kambori [2009] PGSC 22; SC1000 (27 November 2009)

SC1000

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA 16 of 2008

MADANG TIMBERS LIMITED
Appellant

V

VALENTINE KAMBORI, WARI IAMO, BONNIE NINAI, AQUILA TUBAL,
PHILIP UPEGUTO, KANAWI POURU, ANDA KIVI & ANTHONY HONEY,
MEMBERS OF THE NATIONAL FOREST BOARD
First Respondent

BELDEN NAMAH, MINISTER FOR FOREST
Second Respondent

PAPUA NEW GUINEA FOREST AUTHORITY
Third Respondent

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Respondent

TIMBERS (PNG) LIMITED
Fifth Respondent

PATRICK PRUAITCH, MINISTER FOR FINANCE
Sixth Respondent

Waigani: Cannings J, Kariko J and Ellis J
2009: 30 October, 27 November

JUDGMENT

Whether the National Forest Board has the power to enter into a project agreement that has not been submitted by a Provincial Forest Management Committee under section 71(b) of the Forestry Act 1991

Whether National Forest Board can validly consider more than one project agreement

Forestry Act 1991, sections 46, 61, 70, 71, 72

Held:

(1) That the use of the word "shall" in sections 71 and 72 of the Forestry Act is mandatory and not directory.

(2) The question of whether the word "shall" is mandatory or directory involves trying to ascertain the real intention of the statute by looking at the subject matter, considering the importance of what has been disregarded and the general object of the Act by reference not only to the words of the statute but also the legislative history.

(3) Whether it was the intention of the statute that an act done in breach of the provision should be invalid requires a consideration of not merely the language of the relevant provision but the scope and object of the whole statute.

(4) The provisions of the Forestry Act should be strictly construed as it involves permitting forestry activities which significantly impact on the rights of people in relation to their land

(5) Words in a statute in the singular will include the plural unless a contrary intention appears. Whether a contrary intention appears should not be confined to any one particular section of an Act: it is necessary to consider the section in its setting in the legislation and to consider the substance and tenor of the legislation as a whole.

Cases cited:

Papua New Guinea Cases

Safe Lavao v The State [1978] PNGLR 15

Overseas Cases

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
Blue Metal Industries Limited v Dilley [1969] UKPCHCA 2; (1969) 117 CLR 651

Counsel:

Mr R Webb SC and Mr R Bradshaw, for the Appellant
Mr I Shepherd, for the 1st, 2nd and 3rd Respondents.
Mr I Molloy and Mr J Shepherd, for the 5th Respondent.

1. BY THE COURT: After the Madang Provincial Forest Management Committee (the Committee) selected the Appellant as the preferred applicant and submitted a final draft of the project agreement to the National Forest Board (the Board), the Board considered three project agreements and resolved to recommend that a timber permit be granted to the Fifth Respondent.

2. That raises two questions for determination in this appeal:

(1) Does the Board have the power to enter into an agreement that has not been submitted by a Committee under section 71(b) of the Forestry Act 1991?

(2) Can the Board validly consider more than one project agreement?

3. During the course of oral argument, it was noticed that the Board had been incorrectly named in these proceedings. For that reason an application to amend the name of the First Respondent by replacing the words "Papua New Guinea Forest Board" with the words "National Forest Board" was made, not opposed and granted.

Factual Background

4. The early part of the process leading to the Committee’s recommendation of the Appellant may be summarised as follows:

(1) A Development Options Study (DOS) was carried out in October 2004.

(2) After circulation of a draft DOS, the final DOS was presented to the Committee on 15 March 2005.

(3) Project Guidelines were prepared and the issued by the Board on 16 July 2005.

(4) By 29 September 2005, following an eight week tender period for the lodgment of expressions of interest, proposals were received from 16 proponents.

(5) With assistance from the National Forest Service (the Service) those proposals were evaluated by the Committee.

(6) Having short-listed four proponents, the Committee held meetings with each of those proponents in July 2006 and then evaluated their proposals.

(7) Following a meeting of the Committee held on 26 September 2006, on 17 October 2006 the Committee submitted its Final Report to the Board, listing those proponents in order of priority as:

Madang Timbers Limited (the Appellant)

Deegold (PNG) Limited

Timbers (PNG) Limited (the Fifth Respondent)

Stettin Bay Lumber Co Limited

(8) After the Stettin Bay Lumber Co Limited was eliminated, on 8 May 2007 the Board resolved to direct the Committee to conduct negotiations with each of the remaining three proponents and that was done.

(9) On 9 July 2007 the Committee delegated the task of negotiating a project agreement to the Service. That process resulted in a draft project agreement with each of the three remaining proponents. The form which the Committee issued when delegating that function to the Service was specific in that it referred to section 71(a) of the Act which provides for the negotiation of a project agreement.

5. On 3 August 2007 the Committee, also referred to as the PFMC, resolved:

"Basing on the analysis collected from the State Negotiation Team and PFMC’s own, and pursuant to section 71(b) of the Forestry Act 1991 (as amended), the Madang PFMC now recommends MADANG TIMBERS LIMITED as the most preferred developer to develop Middle Ramu Block One FMA Project." (emphasis original)

6. In relation to that resolution, it is important to note that the understanding of the Chairman of the Committee, Mr Joseph Dorpar, as expressed in paragraph 50 of his affidavit sworn 29 May 2008, was that section 71(b) of the Forestry Act required the Committee to submit one draft project agreement to the Board. Paragraph 57 of that affidavit is worth quoting in full:

"Timbers (PNG) Limited and Deegold (PNG) Limited were eventually eliminated by the State Negotiating Team and were not included in the submission of the Form 103 together with the Final Draft Project Agreement."

7. On 8 August 2007 the Committee completed the Form 103 document referred to by Mr Dorpar, the Chairman of that Committee. That Form 103 read:

"SUBMISSION OF FINAL DRAFT PROJECT AGREEMENT BY PROVINCIAL FOREST MANAGEMENT COMMITTEE TO THE BOARD

To the Board

The Madang Provincial Forest Management Committee under section 71 of the Forestry Act 1991 submits herewith the final draft of the Project Agreement.

(Attached final draft of Project Agreement for Madang Timbers Limited)" (emphasis original)

8. It is convenient to note here that Mr Kanawi Pouru, the Managing Director of the Papua New Guinea Forest Authority (the Authority) swore an affidavit in reply to that affidavit of Mr Dorpar. Mr Pouru responded to the paragraph quoted above by taking issue with whether the State Negotiating Team eliminated proponents and went on to say "three project agreements were submitted to the Board" but did not suggest that more than one Form 103 was submitted by the Committee to the Board. Mr Dorpar does not appear to have been cross-examined on paragraph 57 of his affidavit.

9. Accordingly, the evidence establishes that, while only one Form 103 was submitted by the Committee to the Board, there were three project agreements before the Board. To the extent that counsel for the Respondents sought to suggest that there may have been more than one Form 103 such submissions must be rejected. That there were three project agreements before the Board is evident from the minutes, considered below. It is clear that the Service went beyond what it was requested to do, namely negotiate a project agreement under section 71(a) of the Act. By submitting three draft final project agreements to the Board the Service went beyond what the Committee had requested it to do and did something which, under section 71(b), is for the Committee to do.

10. The minutes of the 23 August 2007 meeting of the Board relevantly record:

"That the Board having considered the three (3) draft final Project Agreements and based on a comparative analysis of all aspects of the proposal resolves:

(i) To eliminate Dee Gold (PNG) Limited from further consideration base on the outcome of the evaluation report which indicated lack of good track record, no audited financial statements, lowest landowner benefits etc; and

(ii) That Timbers (PNG) Limited is selected as the preferred developer for the Middle Ramu Block one (1) FMA Project in the Madang Province; and

(iii) To executed the Project Agreement on behalf of the Forest Authority after obtaining approval of the Minister for Finance pursuant to Section 21(2) of the Public Finance Management Act; and

(iv) Subject to (iii) above, recommended to the Minister for Forests to grant a timber permit to Timbers (PNG) Ltd."

National Court proceedings

11. The Appellant applied for leave to apply for judicial review of that decision of the Board. On 22 October 2007, Injia DCJ (as he then was) adjourned that application so that the process leading to the grant of a timber permit could be completed.

12. Following the grant of a timber permit to the Fifth Respondent on 6 December 2007, pursuant to section 73 of the Act, the Appellant’s proceedings in the National Court were pursued to judgment. On 9 October 2008 Salika J (as he then was) refused to grant the orders sought and awarded costs to the Defendants. These proceedings are an appeal from that decision.

Statutory Background

13. It is necessary to outline some of the provisions of the Forestry Act 1991 and the Forestry Regulation 1998 in order to appreciate the context in which the particular sections relevant to this appeal appear.

14. The Papua New Guinea Forest Authority (the Authority), established by section 5 of the Act, has objectives and functions set out in sections 6 and 7 respectively. The role of the National Forest Board (the Board), established by section 9, is to "carry out the functions and objectives, manage the affairs and exercise the powers of the Authority".

15. Section 21 of the Act establishes a Provincial Forest Management Committee (a Committee) in each province, thereby facilitating participation by local communities in the process whereby forestry activities are conducted. The functions of such Committees, set out in section 30, include making recommendations to the Board on the selection of operators.

16. Importantly, section 46 provides that "The rights of the customary owners of a forest resource shall be fully recognized and respected in all transactions affecting the resource".

17. Sections 47 provides for a National Forest Plan to be prepared by the Authority and section 49 provides for Provincial Forest Plans to be created by Provincial Governments in consultation with the Committee for that Province. Section 54 provides that "Forest resources shall only be developed in accordance with the National Forest Plan".

18. As the provisions which fall within Subdivisions III.5.A and III.5.B of Division III.5 of the Act are relevant to this appeal, it is instructive to summarise sections 61 to 72.

19. Division III.5 of the Act, headed "Resource Allocation", sets out the procedure for forest development projects and commences with section 61 which provides that, subject to section 64(3) and 87(4) which are not relevant in this case, "a forest development project shall be carried out only after advertisement and in accordance with the procedure set out in this Act" (emphasis added).

20. Otherwise, section 61 and sections 62 to 65 provide a mechanism for the preparation and advertisement of a forest development project.

21. Section 66 permits proposals in relation to a forest development project to be submitted to the Authority’s Managing Director and section 67 follows on by requiring that such proposals be referred to the relevant Committee for evaluation. Section 68 enables the Committee to seek further information in order to clarify or elaborate on a proposal.

22. Once the Committee is satisfied with its evaluation of a proposal received pursuant to section 67, and any further evaluation under section 68, section 69 requires the Committee to prepare a detailed report and submit that report to the Board. That section requires that such a report include "a recommendation as to the proponents (if any) with whom further negotiations should proceed". As indicated earlier, such a report was submitted to the Board on 17 October 2006 with a recommendation that there be further negotiations with four proponents who were listed in priority order as Madang Timbers Limited (the Appellant), Deegold (PNG) Limited, Timbers (PNG) Limited (the Fifth Respondent) and Stettin Bay Lumber Co Limited.

23. Section 70, which requires the Board to consider that report, is in the following terms:

"(1) The Board shall-

(a) consider and consult with the Minister on a report and recommendations submitted to it under section 69; and

(b) subject to Subsection (2), direct the Provincial Forest Management Committee with which proponents, if any, it should enter into further negotiations with a view to negotiating a project agreement and advise the Provincial Forest Management Committee of any comments by the Minister; and

(c) in conjunction with the Provincial Forest Management Committee, set the parameters within which such negotiations shall be conducted; and

(d) assist the Provincial Forest Management Committee to set up negotiating committees.

(2) A project agreement referred to in Subsection (1)(b) may be entered into with a person (natural or corporate) other than a proponent with whom further negotiations were entered into under Subsection (1)(b) provided that the proponent is a shareholder of or a contractor in the project to that person." (emphasis added)

24. Section 70(1) may be summarised by saying that it provides for the Board to direct the Committee to conduct further negotiations with the object of finalizing a project agreement.

25. While section 70(2) is of no moment in this instance, its wording does provide support for the view that once the process has reached the stage of a project agreement a decision as to the successful proponent has been made since it limits the ability to enter into a project agreement other than with the successful proponent to a person or company associated with that successful proponent.

26. Thus, via sections 67 to 70 the Committee is given the function of negotiating a project agreement with input and assistance from the Board.

27. Section 71 requires a Committee to do two things: to negotiate a project agreement and to submit the final draft of that project agreement to the Board. The wording of section 71 is as follows:

"The Provincial Forest Management Committee shall-

(a) negotiate a project agreement in accordance with Section 70; and

(b) submit the final draft of the project agreement to the Board."

28. Section 72 is in the following terms:

"(1) The Board shall-

(a) consider a draft project agreement submitted to it under Section 71 or Subsection (2); and

(b) where satisfied that the draft project agreement makes adequate provision for all aspects of the project-

(i) execute the project agreement on behalf of the authority; and

(ii) recommend to the Minister to grant a timber permit to the person with whom the project agreement has been entered into; and

(c) where not satisfied that the draft project agreement makes adequate provision for all aspects of the project- return the draft project agreement to the Provincial Forest Management Committee with details of the matters therein requiring further negotiation.

(2) Where a draft project management agreement has been returned to a Provincial Forest Management Committee under Subsection (1)(c), the Provincial Forest Management Committee shall carry out such further negotiations as are necessary and submit a further final draft project management agreement for consideration by the Board in accordance with Subsection (1).

29. Section 72 is obviously linked to section 71(b) in that section 72 requires the Board to consider the draft project management agreement submitted to it by a Committee under section 71(b).

30. Before considering the two questions of statutory interpretation that arise for consideration in this appeal, it is important to note the role played by the Forestry Regulation 1998 which is quite detailed, reflected in that fact that a copy of that Regulation runs to more than 360 pages. Each step covered by the Act has a regulatory provision and each step involves the creation of a document. For example, section 30(2) of the Act, which permits the Committee to delegate matters to the Service, gives rise to regulation 44 which requires that the delegation shall be as set out in Form 42. In like manner, section 62(1) links to regulation 84 which requires a Form 81 document and, relevant to these proceedings, section 71(b) of the Act links to regulation 106 which requires that Form 103 be used.

31. That statutory and regulatory framework is consistent with section 61 which requires that a forest development project be in accordance with the procedure set out in Part III of the Act, headed "Forest Management and Development", which spans sections 46 to 103.

32. By requiring that documents are created at each step of the process (1) it becomes clear what was done, by whom and when; (2) the process resulting in the award of a timber permit becomes more transparent; (3) there is a check on the exercise of the powers conferred by the Act; and (4) judicial review of that process is facilitated.

Interpretation issues

33. The various grounds of appeal set out in paragraphs 3(a) to 3(f) of the Notice of Motion in this court filed on 28 November 2008 were compressed into two issues:

(1) Does the Board have the power to enter into an agreement that has not been submitted by a Committee under section 71(b) of the Forestry Act 1991?

(2) Can the Board validly consider more than one project agreement?

34. The first issue involves the question of whether the word "shall" in section 72(1) should be read to mean "must" or "may" since the agreement with the Fifth Respondent was not submitted to the Board by the Committee pursuant to section 71(b). That issue is commonly phrased as being a question of whether the word "shall" is mandatory or directory.

35. In Safe Lavao v The State [1978] PNGLR 15 at 28 Pritchard J said:

"It is my view, when a law in Papua New Guinea affects traditional or customary rights, especially in relation to land, which historically is of so much more significance to the people of Papua New Guinea than many other countries, that law will be strictly construed where it purports to deprive the people of their right to assert ownership, or interest of any sort, in land."

36. Pritchard J went on to agree with two propositions. The first was that there is no universal rule which governs the question of whether the word "shall" is mandatory or directory since each case involves the court trying to ascertain the real intention of the statute. The second proposition was that in each case it is necessary to look at the subject matter, consider the importance of what has been disregarded and the general object of the Act in order to decide the issue. In concluding that the word "shall" was mandatory in that case, reference was made to not only the words of the statute but also the legislative history.

37. The court was also referred to the decision of the High Court of Australia in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 390-391 where it was suggested that the question to ask was whether it was the intention of the statute that an act done in breach of the provision should be invalid and, in order to discern that intention by considering not merely language of the relevant provision but the scope and object of the whole statute.

38. We consider that the word "shall" in section 72(1) and, for that matter, in section 71(b), is mandatory and not directory. In reaching that view the court has been persuaded by the following considerations:

(1) That permitting the word "shall" to be merely directory would be to read down the clear requirement in section 61 of the Act that forest development projects shall only be carried out in accordance with the procedure set out in Part III of the Act.

(2) The scheme of the legislation, with sections in the Act linking to regulations which prescribe particular forms, reflects a detailed procedure the effect of which would be lost if it was held not to be mandatory.

(3) The legislative scheme introduced by the Act, viewed in the context in which the legislation was enacted in 1991, reflects a desire to redress the practices revealed by the Barnett Commission of Inquiry into the forestry industry.

(4) In conformity with the views expressed by Pritchard J more than 30 years ago, this Act should be strictly construed as it involves permitting forestry activities which significantly impact on the rights of people in relation to their land.

(5) That view is supported by section 46 of the Act which provides that "The rights of customary landowners of a forest resource shall be fully recognised and respected in all transactions affecting the resource."

39. It follows that the Board acted in excess of its powers when it executed the project agreement in favour of the Fifth Respondent on behalf of the Authority, pursuant to section 72 of the Act, since that project agreement had not been submitted to the Board by the Committee as required by section 71(b) of the Act.

40. The second issue is whether the Board can validly consider more than one project agreement. There can be no doubt that there were three project agreements before the Board. Likewise, there can be no doubt that the only project agreement which had been submitted to the Board by the Committee was that of the Appellant. Since the word "shall" in section 71(b) and section 72(1) has been held to be mandatory, it follows that the Board could not validly consider the other two agreements.

41. However, the second issue which has been argued should still be considered since it involves an important question of statutory interpretation, namely whether the words "project agreement" in section 71(b) and section 72 can be read as including the plural form: "project agreements". The question of whether words expressed in singular form include the plural is relevant not only to those provisions in the Forestry Act but also to legislation generally.

42. Counsel directed the court’s attention to the decision of the Privy Council in Blue Metal Industries Limited v Dilley [1969] UKPCHCA 2; (1969) 117 CLR 651. The following passage in the speech delivered by Lord Morris, at p 656, was referred to:

"By s. 21 of the Interpretation Act, 1899 (NSW) it is enacted that in all Acts, unless a contrary intention appears, words in the singular shall include words in the plural and words in the plural shall include words in the singular. Such a provision is of manifest advantage. It assists the legislature to avoid cumbersome and over-elaborate wording. Prima facie it can be assumed that in the processes that lead to an enactment both draughtsman and legislators have such a provision in mind. It follows that the mere fact that the reading of words in a section suggests an emphasis on singularity as opposed to plurality is not enough to exclude plurality. Words in the singular will include the plural unless the contrary intention appears. But in considering whether a contrary intention appears there need to be no confinement of attention to any one particular section of an Act. It must be appropriate to consider the section in its setting in the legislation and furthermore to consider the substance and tenor of the legislation as a whole."

43. However, on p 658, a note of caution was sounded:

"The Interpretation Act is a drafting convenience. It is not to be expected that it would be used so as to change the character of the legislation".

44. Section 6 of Papua New Guinea’s Interpretation Act 1975 (Chapter 2) reads:

"In a statutory provision-

(a) words importing the masculine gender include females; and

(b) words importing the singular include the plural and words in the plural include the singular."

45. However, section 2 of that Act is also relevant:

"(1) Except where in this Act the context indicates otherwise, or some other meaning is clearly intended, this Act applies to every statutory provision (including this Act) whenever made or adopted.

(2) The rules contained in this Act apply in accordance with Subsection (1) unless the context of any particular statutory provision indicates otherwise, or some other meaning is clearly indicated by a particular statutory provision.

(3) This Act binds the State."

46. Hence, the starting point is that the words "project agreement" in sections 71 and 72 are to be read as including "project agreements" unless a contrary intention appears. However, applying what the Privy Council said in Blue Metal Industries Limited v Dilley, it is necessary to consider not only sections 71 and 72 but the remaining provisions in the Act and the setting or context of the Act.

47. The court is satisfied that a contrary intention does appear from the following considerations:

(1) The use of the definite article "the" twice in the words "the final draft of the project agreement" in section 71(b).

(2) The contrasting reference to "a project agreement" in section 71(a) to refer to the negotiation of an agreement, bearing in mind the words of section 70 which refer to negotiations with proponents.

(3) Section 70(1) uses plural words for "proponents" and "negotiations" but a singular word to refer to "a project agreement", thereby denoting negotiations with proponents with a view to negotiating a project agreement with the successful proponent. That suggests the singular form of the words "a project agreement" was deliberate.

(4) The use of the singular form of words in section 72 relates to an agreement to be executed on behalf of the Authority in order to permit forestry activities. Plainly, more than one agreement cannot be executed in relation to any individual project.

(5) The inclusion of the adjectives "final draft" in sections 71 and 72 likewise suggests a single agreement.

(6) The scheme of the Act evinces a clear intention for negotiations with proponents to lead to a single project agreement with the successful proponent.

(7) The link between section 71 and 72 in that the project agreement submitted by the Committee under section 71(b) is obviously the same project agreement which the Board is required to consider by section 72.

(8) The inclusion in the Act of section 61 which requires compliance with the procedure set out in sections 70 to 72.

(9) The regulatory framework comprising the Act, Regulation and Forms in that a detailed procedure is established.

(10) The words of Form 103 suggest that it is to be used to denote a decision of the Committee in favour of the successful proponent and not serve merely as the equivalent of a covering letter.

48. Thus, the Board acted in excess of its powers under section 72 when it considered not one but three project agreements and the Board’s decision in favour of the Fifth Respondent is invalid and cannot be allowed to stand.

Mr Pouru

49. The affidavit of Mr Pouru sworn 6 February 2008 did not go unnoticed. It reads not as evidence but as a written submission in which Mr Pouru puts forward his understanding of the law, an understanding which this appeal has revealed to be incorrect. Both this court and the National Court are entitled to expect that affidavits will contain admissible evidence and it is the obligation of the lawyer(s) preparing an affidavit to confine the contents of any affidavit to what is admissible and not use affidavits as a vehicle to try to place inadmissible material before a court.

50. It would appear that the source of the problem in this instance was the dual role played by Mr Pouru as Chairman of the State Negotiating Team which participated in the negotiations and as a member of the Board by reason of his position as Managing Director of the Service. The third page of the minutes of the 3 August 2007 meeting of the Committee record the intention of Mr Pouru to submit three draft project agreements to the Board although earlier on that page he appears to have recognised that it was for the Committee to "do its own recommendations as required by section 71(b)". The minutes of the 23 August 2007 meeting of the Board reveal that Mr Pouru carried out his intention to place not one but three draft project agreements before the Board.

The Respondents’ submissions

51. It remains to refer to the submissions made on behalf of the Respondents not already considered.

52. A close consideration of the relevant documents reveals that the learned trial judge was in error when he said that the Committee submitted three proposals to the Board: the three agreements were submitted to the Board by Mr Pouru; the Committee only submitted and supported the proposals of the Appellant.

53. This court does not, with respect, agree with the conclusion of the learned trial judge that it makes sense to consider more than one agreement. The clear regime introduced by the Act involves the finalisation of only one document, a draft final project agreement, after a decision has been made as to the successful proponent. Finalisation of the project agreement after the identity of the successful proponent is known, means that only one document has to be considered and the issues are reduced to the single issue of what should be the terms of the project agreement.

54. The court is satisfied that the issues raised in this appeal were issues that were ventilated in the court below and that they involve questions of law for which leave is not required.

55. It is no answer to the presence of three agreements before the Board to say that the Committee delegated its work to the Service because that delegation was clearly confined to section 71(a) of the Act.

56. It is correct to state that the minutes of the 23 August 2007 meeting of the Board do not appear to contain any reference to the Form 103 submitted by the Committee but that reflects against Mr Pouru rather than against the Committee.

57. To the extent that the Respondents’ counsel referred to the public interest, it is clear that the public interest is best served by compliance with the procedures introduced by the Act, as required by section 61 of the Act, which is something the customary owners are entitled to expect by virtue of section 46 of the Act.

58. Mr Molloy took the court to various contractual provisions in the course of submitting that the Fifth Respondent had taken steps as a result of being granted a timber permit on 6 December 2007. The first answer to that is that the Fifth Respondent was on notice that any grant of a timber permit was likely to be challenged since the Appellants sought leave to apply for judicial review prior to that timber permit being granted. Further, the court was not taken to any evidence of either what the Fifth Respondent had done or what amount had been expended and, even if the court had been provided with those details, the interpretation of statutory provisions is not something that can be influenced by part performance.

Relief

59. Counsel for the Appellants wisely did not pursue an order that a timber permit be granted to the Appellant in the event that the timber permit granted to the Fifth Respondent was found to be invalid.

60. The Appellant had reached the stage where its draft final project agreement had been submitted to the Board. It is entitled to be put in the same position. Put another way, the procedure in relation to this forest project has been found to be invalid at the point where the Board was purporting to undertake the tasks required of it by section 72 of the Act. The Board should be required to complete its section 72 obligations.

61. On behalf of the Fifth Respondent it was submitted that the matter should go back to the point where there were three proponents, not one. That submission was doubtless intended to keep the Fifth Respondent "in the race". However, that race had already been won by the Appellant.

62. By way of analogy, if the process leading to the grant of a timber permit may be likened to a ladder then the Appellant is entitled to be put back on the same rung: not a rung higher and not a rung lower.

63. None of the submissions in this matter has suggested that costs should not follow the event. The Appellants sought certification for the cost of two overseas counsel. The focus of these proceedings was two questions of statutory interpretation. More than 30 years after Independence, such questions should not require the assistance of overseas counsel. The court has decided to exercise its discretion in relation to costs by permitting the Appellant to recover the cost of two counsel but on the basis that both counsel are local counsel.

64. Accordingly, the orders of the Court are as follows:

1. The name of the First Respondent is amended by replacing the words "Papua New Guinea Forest Board" with the words "National Forest Board".

2. Appeal allowed.

3. Remove into this court and quash the following resolutions of the 1st Respondent passed at its meeting number 137 held on 23 August 2007:

(i) That Timbers (PNG) Ltd is selected as the preferred developer for the Middle Ramu Block One (1) FMA Project in the Madang Province.

(ii) To execute the Project Agreement on behalf of the Forest Authority after obtaining approval of the Minister for Finance pursuant to Section 21(2) of the Public Finance Management Act.

(iii) Subject to (ii) above, recommends to the Minister of Forests to grant a timber permit to Timbers (PNG) Limited.

4. Remove into this court and quash the approval of the Sixth Respondent pursuant to section 61(2) of the Public Finances Management Act 1996 for the execution of the Project Agreement by the First Respondent in favour of the Fifth Respondent.

5. Remove into this court and quash the decision of the Second Respondent to grant a timber permit to the Fifth Respondent in respect of the area known as Middle Ramu Block 1 Forest Management Area in the Madang Province.

6. Declare that the Project Agreement executed by the First Respondent in favour of the Fifth Respondent is void.

7. Declare that the First Respondent shall consider the final draft project management agreement between The Papua New Guinea Forest Authority and Madang Timbers Limited submitted by the Madang Provincial Forest Management Committee in respect of the Middle Ramu Block 1 Forest Management Area (being the document a copy of which is annexure B to the affidavit of Peter Hii sworn 12 September 2007) in accordance with section 72(1) of the Forestry Act 1991.

8. The 1st, 2nd, 3rd and 5th Respondents are to pay the costs of the Appellant in these proceedings and the proceedings in the court below, being the National Court proceedings with reference OS (JR) No 520 of 2007.

9. The Appellant’s recoverable costs shall include the cost of two counsel but on the basis that both counsel are local counsel.

10. The time for entry of these orders is abridged to the time of settlement by the Registrar which shall take place forthwith.

__________________

Bradshaw Lawyers: Lawyer for the Appellant
Blake Dawson Lawyers: Lawyer for the Respondents