Mineral Resources Development Company Ltd v Sisimolu [2010] PGSC 50; SC1090 (15 December 2010)

SC1090

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 12 OF 2006

BETWEEN:

MINERAL RESOURCES DEVELOPMENT COMPANY LIMITED
First Appellant

AND:

IMBI J. TAGUNE – THE MANAGER CLIENT SERVICES, MINERAL RESOURCES DEVELOPMENT COMPANY LIMITED
Second Appellant

AND:

MR. FRANCIS KAUPA -
THE MANAGING DIRECTOR, MINERAL RESOURCES DEVELOPMENT COMPANY LIMITED
Third Appellant

AND:

PHILIP KENDE
Fourth Appellant

AND:

MATHEW SISIMOLU - CHAIRMAN; PR SAM YANEKA - DEPUTY CHAIRMAN; KIPSY PIELE - SECRETARY AND UPEKE KAIRI - TREASURER, as the Executive of the WOLUTOU INCORPORATED LAND GROUP NO. 6323 FOR AND ON BEHALF OF THEMSELVES AND MEMBERS OF THE WOLUTOU INCORPORATED LAND GROUP AND WOLUTOU CLAN
Respondents

Waigani: Lenalia, Davani, Kariko .JJ
2009: 26th October
2010: 15th December

STATUTORY AUTHORITY – Mineral Resources Development Company Limited ('MRDC') is a Corporation, a statutory authority and an entity of the State – a claimant must give s.5 Notice under the Claims by and against the State Act 1996 ('CBASA') in a claim against the MRDC – s.5 of the CBASA.

STATE ENTITY – governing legislation – contains provisions demonstrating that the MRDC is accountable to the State – Mineral Resources Development Company Pty Limited (Privatisation) Act 1996, ss.5, 16, 17, 18

INCORPORATED LAND GROUP ('ILG') – Locus standi – ILG's Constitution – provisions on how and when an ILG can sue – Land Groups Incorporation Act – s.13.

Facts:

1. The respondents filed a claim in the National Court claiming that landowner funds held by the MRDC on their behalf, were paid to persons who purportedly represented the Wolutou ILG and that the MRDC should not have done that. The respondents claimed there was fraud involved in that payout.
   
2. The appellants applied to dismiss the proceedings in the National Court claiming that the respondents had not given notice to the MRDC under s.5 of the Claims By and Against the State Act ('CBASA'). They also sought dismissal claiming that the respondents did not have the locus standi or capacity to sue as they did not put before the Court good evidence of minutes of the ILG's meeting and certificate showing named respondents were properly authorized to sue for and on behalf of the ILG, to be done in accordance with s.13 of the Land Groups Incorporation Act.
   
3. The trial Judge found and held that the MRDC was not an entity of the State so s.5 notice need not have issued. However, the trial Judge did not make any findings on the locus standi issue.
   
4. The respondents appealed to the Supreme Court after the grant of leave.
   

Held:

State entity – That the MRDC is an entity of the State because it's enabling legislation provides throughout, the large role the State plays in its every day functions. Effectively, the MRDC, a statutory authority, through its enabling legislation and its Constitution, demonstrates that it is answerable to the State in all its functions. Therefore, because of these characteristics, the CBASA applies to it, hence the requirement to firstly issue s.5 notice by those suing the MRDC.

Locus Standi – An ILG's functions and powers are governed by its Constitution. The powers of the ILG must be exercised in the manner specified by its Constitution. Before it can sue, it must have been properly authorized by the ILG to do so, to be done in accordance with the relevant provisions in its Constitution. If the purported members of the ILG do not have that authority, then they do not have standing to sue for and on behalf of that ILG.

Case Cited:

SCR 4 of 1980; the Petitioner M.T Somare [1981] PNGLR 265;
PNG Air Pilots Association v. Director of Civil Aviation and Air Niugini [1983] PNGLR 1;
Olympic Stationery Ltd v. The Independent State of Papua New Guinea (2001) N2194;
Daniel Hewali v. PNG Police Force and the State (2002) N2233;
Okam Sakarius & Ors v. Chris Tep, Projector Manager & Cocoa Coconut Agency (2003) N2355;
Mathew Totori v. Bob Nenta (2003) N2373;
Dan Salmon Kakaraya vs. The Ombudsman Commission & The State (2003) N2478;
Yawasoro Poultry Farm v. The PNG Defence Force and the State (2004) N2736;
Otto Napi v. National Capital District Commission (2004) N2797;
Dumal Dibiaso Incorporation Land Group No. 1664 & Ors v. Kola Kuma & Ors (2005) SC805;
Naomi Vicky John v. National Housing Corporation (2005) N2770;
Albert Purane v. Ase Tipurupeke Land Group Inc., MRDC & Secretary for Department of Petroleum & Energy (2005) N2806;
Eliakim Laki & Ors v. Guau K Zurenuoc & 2 Others (2005) N2818;
John Napi v. Kundiawa General Hospital Board (2006) N3047;
Bernard Uriap v. Simon Tokivung & Ors (2008) N3444;
National Capital District Commission v. Jim Reima on behalf of himself and 120 Youth Groups of Moresby North East and Balus Sokele and Robame Pesimi (2009) SC993.

Counsel:

J. Kumura, for the first, second and third appellants
D. Bidar, for the fourth appellant
I. Mileng, for the respondents

DECISION

15th December, 2010

1. BY THE COURT: Mineral Resources Development Company Limited ('MRDC'), first appellant, appeals from a ruling in the National Court, handed down on 10th January, 2006 in proceedings WS 1086 of 2005, Mathew K. Sisimolu & Ors v. Mineral Resources Development Company Limited & Ors.
   
2. As this was an appeal from an interlocutory ruling, the appellant applied for leave to appeal which was granted by the late Chief Justice Kapi on 15th June, 2006.
   

Background

3. In summary, the Notice of Appeal filed on 6th July, 2006 pleads the following grounds of appeal;
   
   • (i) That the trial Judge erred when he held that the MRDC was not a governmental body;
     
   • (ii) That therefore, the respondents should have given s.5 Notice under the Claims By and Against the State Act 1996 ('CBASA');
     
   • (iii) That the trial Judge erred when he ruled that the respondents had standing and authority to issue the proceedings in the National Court when it did not have the authority from the Wolutou Incorporated Land Group No. 6323 ('Wolutou ILG') to bring the action in the National Court.
     
4. The respondents oppose the appeal.
   

Issues

5. The issues before the Court are whether;
   
   • (i) The MRDC is a statutory authority/governmental body;
     
   • (ii) If so, whether s.5 Notice should have been given by the respondents prior to filing the Court action;
     
   • (iii) Whether the respondents as plaintiffs, should have filed the Writ of Summons and Statement of Claim in the National Court as individuals without firstly obtaining authority from the incorporated land group, in breach of relevant provisions in its Constitution.
     

Analysis of evidence and the law

6. (i). Parties to appeal; Before discussing the issues, we describe the parties to this appeal.
   
7. The first appellant is an entity created under the Mineral Resources Development Company Limited (Privatization) Act 1996 ('MRDC Act'). The second and third appellants are officers or employees of the first appellant and are joined in that capacity. The fourth appellant is the Chairman of Petroleum Resources Gobe Limited, a landowner company.
   
8. The respondents are the executive of the Wolutou Incorporated Land Group No. 6323 that represents the Wolutou Land Group, a land group within the Gobe Project Area.
   
9. (ii). National Court proceedings; In the National Court proceedings, the respondents sought reimbursement or an order for the return of K94,000.00 from the appellants which they claimed was wrongly paid by the first appellant to the fourth appellant in the belief that K94,000.00 was the respondents' share or entitlement from their equity interest based on their percentage of ownership in the Gobe Project Area.
   
10. Pending trial on the substantive matter, the first appellant filed a Notice of Motion in the National Court seeking to dismiss the entire proceedings pursuant to O.12 r.1 of the National Court Rules ('NCR') and further, for failure to give notice to the State pursuant to s.5 of the CBASA, which application was opposed by the respondents.
    
11. In their submissions to dismiss the substantive proceedings for failing to give notice under s.5 of the CBASA, the appellants argued that the MRDC is a State entity and therefore s.5 Notice was a condition precedent and should have been issued prior to the filing and service of the Writ of Summons and Statement of Claim.
    
12. The appellants also submitted and argued that the respondents, as Executive of the Wolutou ILG and as individuals, were not authorized to issue proceedings in the National Court as the Court action was not approved by all the members of the land group as provided under s.5 of the Wolutou ILG's Constitution. The appellants submitted that the respondents as Executive of the Wolutou ILG had no standing to bring the National Court action and therefore the proceedings are void and should be dismissed.
    
13. The respondents opposed the application. On the s.5 issue, they submitted that the MRDC is incorporated under the Companies Act and therefore is a corporate entity and does not fall within the definition of "State" as defined under s.5 of the CBASA and that therefore, notice under s.5 was not required prior to the filing of Court proceedings.
    
14. In relation to locus standi, the respondents appeared to have considered and accepted the appellants' submissions in relation to non-compliance with s.5 of the respondents' Constitution. They however submitted and argued that the Executives' action to issue the Court proceedings was endorsed by the members of the Wolutou ILG.
    
15. The trial Judge in considering those issues said this in relation to the s.5 Notice;
    

"...

I note that Mineral Resources Development Company is really a vehicle established by the State where the State channels the landowners' monies through the Petroleum and Energy Department. The monies that go to Mineral Resources Development Company are landowners' monies, be it royalty payments or other benefits to the landowners or resource owners. The Mineral Resources Development Company simply manages the monies.

It pays out the royalty payments to the landowners. But then should the State be given notice? The State is not even a party to the proceedings. Mineral Resources Development Company is an incorporated company under the Companies Act established by the State to manage resource owners' monies." (pg.3 of trial Judge's Reasons and pg.80 of Appeal Book)

16. In relation to the locus standi issue, the trial Judge did not address that. He only said in conclusion;
    

"There are real legal issues to be tried and the allegations of possible fraud needs to be investigated properly instead of dismissing the proceedings.

In the circumstances, I refuse to grant the orders sought in the Notice of Motion. The application is dismissed." (pg.3 of trial Judge's Reasons; pg.80 of Appeal Book)

17. However, the trial Judge did make passing reference to affidavits filed by Executive members of the Wolutou ILG. He said this;
    

"The plaintiffs have on the other hand, asserted that they have standing to bring this matter to Court because they are executives of the Wolutou Incorporated Land Group. They also filed affidavits by Mr Koni Pombo and Augustine Mano who both are elders or executives of the Clan. They both say they supported the actions taken by their leader Mr. Sisimolu.

Mr Sisimolu has also filed an affidavit denying he is the author of a letter allegedly written and signed by him authorizing the payment of the K94,000.00 to Mr. Philip Kende." (pgs. 2 & 3 of trial Judge's Reasons; pg.80 of Appeal Book)

First Issue – Is the MRDC an entity of the State?

18. Again, the trial Judge did not take into account the lengthy submissions by all appellants' Counsel to this issue. In relation to the respondents' submissions, the trial Judge was very brief as demonstrated above.
    
19. Firstly, the respondents submit that although the first appellant may be considered an instrument or agent of the State that this does not necessarily mean that the requirements under s.5 of the CBASA can be extended to it. Mr Mileng for the respondent submits this, relying on the fact that the CBASA is silent on whether or not companies wholly or partially owned by the State, are covered by s.5. He submits that s.5 only stipulates that where the State is a party to proceedings or a claim has to be enforced against it, then provisions of s.5 will apply. Mr Mileng for the respondent submits further that as the first appellant is an incorporated company under the Companies Act 1997, ie. a separate legal entity as distinct from its shareholder, which in this case, is the State, that the CBASA does not apply to it. He submits that it therefore continues in existence until it is removed from the Companies' Register in accordance with the Companies Act 1997. Again, he emphasizes that the first appellant has full legal capacity to carry on or undertake any business or activity and to enter into any transactions and has full rights, powers and privileges, subject to the Companies Act.
    
20. The respondents submit further that the first appellant exists as a separate legal entity apart from its shareholders and that the present circumstances does not give rise to a situation or circumstances warranting the lifting of the corporate veil such that the shareholder should be held liable.
    
21. The respondents also submit that as the claim is against the first appellant and not against the State and neither is the State a party to the proceedings, that there is no requirement to comply with s.5 of the CBASA.
    
22. Respondents' counsel referred the Court to Dan Salmon Kakaraya vs. The Ombudsman Commission & The State N2478 where the trial Judge discussed at length the nature of the MRDC and whether the plaintiff in that case, being the Managing Director then of the MRDC, could be referred and is subject to the provisions of the Leadership Code and the Constitution. The Court in that case held that the MRDC was formed to deal with both the State and Papua New Guinea's resource owners' financial interests in the mining, oil and gas extraction industries. That the Government appoints the MRDC Board and its Managing Director and therefore there can be no argument that the MRDC is a public institution dealing with public funds. The Court held that the MRDC is therefore an organization where its employees are subject to the provisions of the Leadership Code and the powers of the Constitution. The trial Judge then concluded that the Ombudsman Commission did have jurisdiction to refer the plaintiff to the Public Prosecutor under the provisions of the Leadership Code and the Constitution.
    
23. The respondent's Counsel then invited the Court to take the approach adopted by the National Court in Naomi Vicky John v. National Housing Corporation N2770 where the trial Judge set out 6 criteria as a guide to determining whether the National Housing Corporation was subject to the s.5 Notice requirements. These criteria were;
    
    • Such bodies are established by the Constitution;
      
    • That they form the three tier system of government enshrined in the Constitution;
      
    • As with the other tiers of government, they are constituted by elected representatives;
      
    • The National Government exercises some form of control over them in political, administrative and financial matters;
      
    • They fall within the definition of "governmental body" as defined in the Constitution;
      
    • Judgment debts are recoverable from monies allocated in their budgetary process.
      
24. The criteria set in the Naomi Vicky case is not criteria that is properly tested as against the characteristics of every statutory authority or entity that called or calls for recognition as a State entity. In our view, the factors to be taken into account when determining whether an entity is a statutory organization or a State entity, is to revert to the governing legislation which would demonstrate the functions of that organization, whether it is accountable to the State and whether it is a public body. This was the attitude taken by several trial Courts (see Dan Salmon Kakaraya v. The Ombudsman Commission (supra); John Napi v. Kundiawa General Hospital Board [2006] N3047; Bernard Uriap v. Simon Tokivung & Ors [2008] N3444; Okam Sakarius & Ors v. Chris Tep, Projector Manager & Cocoa Coconut Agency [2003] N2355; Otto Napi v. National Capital District Commission (2004] N2797; Albert Purame v. Ase Tipurupeke Land Group Inc., MRDC & Secretary for Department of Petroleum & Energy (2005) N2806).
    
25. In the John Napi case above, Davani .J found and held that the Board of a public hospital, although incorporated, is a public body. She found that relying on the evidence that because the Board's finances were controlled and governed by the Public Finances (Management) Act ('PFMA'), that funding to the hospital is coordinated by and from the Department of Finance and Treasury in Waigani. Furthermore, the Court found that on perusal of the Public Hospitals Act, the provisions therein demonstrate and confirm that its functions and very existence is governed by the National Government. Based on that, Her Honour found that Hospital Boards and Public Hospitals are State entities.
    
26. In the case of Albert Purane (supra) which concerns the MRDC, the plaintiff sought to file enforcement proceedings against the MRDC for payment of a judgment debt owing to it by the Land Group defendant. The MRDC was named as first Garnishee. Various legal issues arose in that case, one of which was whether the MRDC was an entity of the State and whether the funds it held could be garnished. It was pointed out to the Court that the MRDC was incorporated under the Companies Act 1977, that its Directors were representatives from the State and that its affairs were managed under the direction and supervision of its Board. However, the Court found on reviewing the evidence that;
    
    • The funds were managed and controlled by the State under a Trust;
      
    • That the MRDC's Board consists of representatives from the State;
      
    • That the majority shareholding is held by the State;
      
    • That the powers of the shareholder may be performed or undertaken by the Minister for Treasury and Finance.
      
27. These peculiarities or characteristics are stated in the MRDC's Constitution which of course provided the basis for the Court's Ruling that there cannot be any execution or enforcement upon the property or revenue of the MRDC because it is an instrumentality or entity of the State.
    
28. MRDC is an entity created by statute. It is a corporate entity under the Companies Act. It is created by statute for a specific purpose. It has been held that MRDC is a governmental body as referred to in s.219(1)(a) of the Constitution and a statutory authority as referred to in s.26(1)(a)(ii) of the Constitution. Pursuant to the MRDC's Constitution which sets out its objects and functions, MRDC is set up for the governmental or official purposes and carries out decisions or directions of the National Executive Council. I elaborate on this further below. Clearly, for all purposes, MRDC comes within the definition of State under s.5 of the CBASA which means that in any action against the MRDC, prior notice of a claim under s.5 of the CBASA is mandatory and must be given.
    
29. All the above cases are National Court cases. The 6 criteria referred to by Lay .J in Naomi Vicky John, were taken from SCR 1 of 1998; Reservation pursuant to 15 of the Supreme Court Act (2001) SC 672 (Amet .CJ, Sheehan, Salika, Sakora .JJ) where the Supreme Court dealt with the issue of whether the Provincial Government is part of the State within s.5 the meaning of the CBASA, in an enforcement of judgment scenario. The tests set in Naomi Vicky John were tests applied in enforcement proceedings against a Provincial Government. Therefore, in our view, those tests do not apply to a situation where the Court is seeking or seeks to determine whether an entity is either a statutory authority or an instrumentality of the State.
    
30. The issue that now confronts this Court, was succinctly addressed in the case National Capital District Commission v. Jim Reima on behalf of himself and 120 Youth Groups of Moresby North East and Balus Sokele and Robame Pesimi SC 993, decision by Davani, Manuhu, David .JJ.
    
31. That case was an appeal from a decision of the National Court of 8th July, 2008 where the trial Judge refused to dismiss the proceedings in a situation where the respondents had not complied with ss.59 and 61 of the Public Finances (Management) Act ('PFMA') and s.5 of the CBASA. In those proceedings, the appellant in the National Court had sought orders that the respondents' Motion for summary judgment be struck out for being defective and incompetent and for further orders that the entire proceedings be dismissed because the appellant had not given notice under s.5 of the CBASA, that there was lack of proper consent/authority by the respondents or alternatively, that the whole proceedings be struck out for non-compliance with ss.59 and 61 of the PFMA.
    
32. The trial Judge refused the appellant's Motion and held that;
    
    • (i) The appellant was not an entity of the State so s.5 Notice under the CBASA need not be given;
      
    • (ii) That the NCDC is a body that can sue and be sued in its own name and style and is a corporation with perpetual succession;
      
    • (iii) That the NCDC is an entity of the State because the NCDC Act does not specifically state that persons wishing to sue the NCDC must first give notice under s.5 of the CBASA;
      
    • (iv) That the requirements of ss.59 and 61 of the PFMA need not be complied with because the Contracts/Agreements entered into between the NCDC and the respondents were not the kind that required tender approval.
      
33. On appeal, the same issues now put before us, were dealt with by that Supreme Court which were;
    
    • Does s.5 of the CBASA apply to the NCDC and should persons intending to sue the NCDC, firstly give notice to the State under s.5 of the CBASA?
      
34. Again, the trial Judge relied on s.4 of the NCDC Act which states that the NCDC is a corporation, it has perpetual succession, it may sue and may be sued in its own corporate name, amongst others. The trial Judge raised these sentiments in his published reasons;
    

"...

Why can't a person sue the NCDC direct because its own law says it can be sued in its own name and style? Why couldn't the NCDC Act be amended to say that any persons wishing to sue NCDC, must firstly give notice under s.5 of the Claims By and Against the State Act." (par. no.11 of trial Judge's published Reasons)

35. The Supreme Court in Jim Reima then considered the whole of the NCDC Act and the peculiarities within the NCDC Act which demonstrated that the NCDC is an executive arm of Government, a statutory authority and an entity of the State. The Supreme Court discussed the peculiarities of a statutory authority and said the following.
    

"The NCDC is, in a sense, the executive arm of government for the National Capital District. According to Douglas and Jone's Administrative Law 5th Edition (2006);

"Traditionally, executive government was composed of the Crown as its head, minister of the Crown, cabinet and its alter ego, the executive council (both of which are constituted by ministers), and government departments with a minister as political head. This picture is now varied by addition of a second strand to the executive, statutory bodies and statutory offices. In brief, these are bodies or offices created by statute which tend to be outside the traditional strand of executive government..." (par. No. 13, pg.2 and par.18 of Jim Reima).

(our emphasis)

The text then discusses or points out what these bodies are, then discusses what a statutory authority is. Douglas & Jones (supra) defines a statutory authority as;

"21. Statutory Authorities

A statutory body is simply a body established by statute. This statute is variously referred to as the body's enabling Act, parent Act or charter... Statutory bodies are what their parent Act or statute makes them, but since there are a number of fairly common features, it is possible to make some general comments about them... Frequently, the enabling Act will give a statutory body corporate personality and authorise it to own property, enter contracts, and to sue and be sued in its corporate name. As well, the statute will establish the governing board or other form of management, endow the body with power and possibly lay down procedures. Not infrequently there is a statement of a body's function and objects. Other not uncommon provisions are for officers and employees, revenue, finance and accounting, criminal offences to protect the body and authorisation for delegated legislations. Sometimes, there is a provision for special review of the body's decisions.... All of these points to one fairly obvious and simple piece of advice. Where a statutory body is involved, it is necessary to go through its enabling Act to ascertain its powers, procedures and the like. In many cases, the enabling Act is the sole source of these, although it is always possible that other Acts also deal with some of these matters." (par.21; pg.4 and par.19 of Jim Reima)

(our emphasis)

36. Douglas and Jones (supra) states further at pg.5;
    

"While statutory corporations are distinct legal entities, the government can still exercise some control over them. One of the most potent forms of control is a provision in the enabling Act giving the Minister a right to give directions to the body or to veto its actions. Sometimes, the government may be able to appoint some or even all of their governing body. If the corporation can make delegated legislation this normally requires the approval of the executive or parliament. Financial control can be exercised by the amount of money which the government allocates to a corporation and by the audit of its books and the accounts. Publicity can be given to the activities of statutory corporations by a requirement that they prepare an annual report which is tabled in Parliament."

(our emphasis)

37. In accordance with the above definition, does the Minister have a right to give directions to the MRDC?; or does it veto its actions?; or does the MRDC's Board prepare an annual report to be tabled in Parliament? etc, etc. On our review of the Mineral Resources Development Company Pty Limited (Privatization) Act 1996 (the 'Act') and the MRDC's Constitution, we note these peculiarities;
    
    • (i) Section 5 of the Act, the provision an "Application" –
      
      • - Provides at s.5(1) that it binds the State;
        
      • - At par.5(2)(a), it states that the Minister determines the Mining and Petroleum projects to be referred to in the Option Agreement.
        
    • (ii) S.8 of the Act, the provision on "implementation of Option Agreement"-
      
      • - That Government Minister's, officers, instrumentalities of the State and all bodies created by or under an Act for a public purpose are authorised, empowered and required to do all things necessary to give effect to the Option Agreement.
        
    • (iii) S.16A of the Act, the provision on "Acquisition of State interests"–
      
      • - At s.16(1)(a), the State, the MRDC and the Company have the right to acquire and transfer a participating interest in a mining project in accordance with the Option Agreement.
        
    • (iv) S.16 of the Act, the provision on "Grant of a Special Mining Lease"–
      
      • - An amendment to s.33 of the Mining Act where it is the Head of State who, acting on advice, shall not grant a special mining lease, unless the Minister first gives written notice to the Company.
        
      • - Sections 17 and 18 of the Act demonstrate the other significant roles by the Minister in relation to the grant of a Mining Lease and proposals for a Mining Lease.
        
    • (v) Schedule Option Agreement Recital B provides;
      

"MRDC is a company wholly owned by the State and has been nominated by the State to hold and manage all of the State's interests in mining and petroleum development projects."

38. The MRDC's Constitution stipulates likewise, provisions demonstrating the involvement of the State's related agencies and departments. We set out a few provisions to demonstrate;
    
    • (i) Clause 4.0 "Transfer of Shares"
      
      • - Clause 4.0, the State shall be the only beneficial owner of shares so all other persons holding shares in the Company will hold the shares in Trust and for the "exclusive benefit of the State."
        
    • (ii) Clause 8.11 "Actions of Body Corporation and the State"
      
      • - The State, who is a shareholder, may appoint a representative to attend a shareholder's meeting and may pass resolutions on its behalf.
        
    • (iii) Clause 11.0 – "Appointment and removal of Directors"
      
      • - Persons on the MRDC's Board are;
        
        • The Secretary of the Department responsible for the administration of the Public Finances (Management) Act 1996;
          
        • Secretary for the Department responsible for Mining matters;
          
        • Secretary of the Department responsible for Petroleum matters;
          
        • A Senior Officer responsible for the investment in mining and petroleum matters in the Department responsible for the administration of the Public Finances (Management) Act 1996, who is nominated by the Secretary for the Department.
          
39. Therefore, the MRDC is very much a State entity as its activities are controlled by the State's agencies and representatives whereas a Company is there for its shareholders who more often are individuals.
    
40. These statutory authorities of which the MRDC is one, by or through their enabling legislation, demonstrates that there is government control over these bodies. Therefore, the MRDC is not separate and distinct because of those characteristics.
    
41. Having found that the MRDC is a public body and an entity of the State, it follows therefore that s.5 Notice under the CBASA should have issued prior to the filing of court proceedings because as was held in Paul Tohian v. Tau Liu SC566;
    

"It is clear to us that the Notice of Intention to make a claim is a condition precedent to issuing a Writ of Summons in all the circumstances". (see Yawasoro Poultry Farm v. The PNG Defence Force and the State (2004) N2736; Daniel Hewali v. PNG Police Force and the State N2233; Eliakim Laki & Ors v. Guau K Zurenuoc & 2 Others (2005) N2818); Olympic Stationery Ltd v. The Independent State of Papua New Guinea (2001) N2194); Mathew Totori v. Bob Nenta (2003) N2373).

Third Issue - Whether the respondents as plaintiffs, should have proceeded to filing the Writ of Summons and Statement of Claim in the National Court as individuals without firstly obtaining authority from the incorporated land group?

42. We will consider this alternative argument raised by the appellants because they raise important issues on how an Incorporated Land Group should proceed when filing a Court action. The appellants submit that the respondents did not rely on clause 5 of the respondent's Constitution. The Constitution is attached to the affidavit of Lucas Nilkare sworn on 20th September, 2005 and filed on 22nd September, 2005 by Posman Kua Aisi Lawyers. The affidavit of Lucas Nilkare is Annexure "E7" to the affidavit of Muriso Pokia sworn on 12th May, 2006 and filed in these proceedings on 17th May, 2006, which affidavit was relied on by the appellant in its application for leave to appeal.
    
43. Clause 5 of the respondent's Constitution reads;
    

"5. MANNER IN WHICH THE GROUP ACTS

(1) The land group acts in the following manner:-

• (a) Before any act of the land group, the Committee or the continuing or surviving members thereto, shall give notice to the members stating:-
  
  • (i) When and where the land group will meet; and
    
  • (ii) The nature if the matter on which the land group proposes to act.
    
• (b) Notice is given under paragraph (a) must be sufficient to allow the members of the land group resident in PAWABI SOPISE AND KAIAM# 2 villages to attend the meeting, and normally should not be less than three (3) days.
  
• (c) The matter on which the land group proposes to act shall be fully discussed at the meeting, and a decision reached on the matter by consensus of the members present.
  
• (d) A decision reached in accordance with paragraphs (a), (b) and (c) shall not be invalidated by reason of the absence from the meeting of any individual member or members of the land group, providing however that not less than one half of all existing clan members are present at the meeting so convened.
  
• (e) When a decision is reached in the above manner, that decision is the decision of the land group, and is sufficient authority for the Committee to act on behalf of the land group so as to carry out the decision.
  

(2) The acts of the land group are evidenced by the members of the Committee completing and signing the Certificate in the Schedule to this Constitution."

44. Therefore, minutes of the land groups meeting should have been put before the National Court prior to the filing of these proceedings, more particularly attached to the affidavit of one of the respondents, preferably the Chairman. But such evidence was not put before the Court.
    
45. In SCR 4 of 1980; the Petitioner M.T Somare [1981] PNGLR 265, the Court said;
    

"An applicant must have sufficient interest in that to which the application relies and that the test of sufficient interest is an objective one based on the facts of each case."

46. In PNG Air Pilots Association v. Director of Civil Aviation and Air Niugini [1983] PNGLR 1, the Court said at pg.3;
    

"The plaintiff will have locus standi where he can show actual or apprehended injury or damage to his property or proprietary rights, to his business or economic interests and, perhaps, to his social or political interests."

47. We agree with the appellant that for the respondent to issue National Court proceedings, they have to show actual or apprehended injury or damage to their property or proprietary rights to their business or economic interests. In this case, the money complained of, the subject of these proceedings, belongs to the Wolutou ILG, not the individuals in the National Court proceedings. Therefore, the named respondents did not have any proprietary rights or business or economic interests that were affected.
    
48. Furthermore, the respondents did not have the authority from the Wolutou ILG to institute the proceedings to be done in accordance with Clause 5 of the respondent's Constitution.
    
49. This is further confirmed by the respondent's lawyer's letter of 8th August, 2005, which is marked as an exhibit to Muriso Pokia's affidavit where he said;
    

"We concede with Clause 5 of the Constitution, but nevertheless maintain that our client, either on his own or together with the ILG and the Executives named, have the authority and mandate to issue these proceedings for and on behalf of their clan members...

We confirm that we have not issued any Section 5 notice to the State."

50. There is also evidence before the National Court, copy of Certificate attached as Annexure "C" of Muriso Pokia's affidavit which are purportedly, resolutions of the Wolutou ILG. That Certificate states;
    

"We certify that the resolutions attached are the true decisions of the land group and are the decisions of the entire land group.

We therefore certify these resolutions or decisions to be adopted and enforced."

51. Also attached to that Certificate is an undated decision which also purportedly, is the executive of the Wolutou ILG. It reads;
    

"To Whom It May Concern:

Subject: Support letter

We undersigned Wolutou ILG Executives do confirm that under no circumstances we never agreed to any funds to be paid to Philip Kende or any other Petroleum Resources Gobe ('PRG') Members.

The K94,000.00 collected by Mr. Philip Kende through whatever means from Wolutou ILG was never authorized by the Chairman Mr. Mathew Kamili Sisimolu or any of the Executive members.

We therefore conclude that Mr. Philip Kende willingly misused the money K94,000.00 belonging to the Wolutou members of Pawabi Village."

52. We note that it was the respondents' Executive, who made the decision, not the ILG in accordance with Clause 5 of its Constitution. The authority for the conduct of the ILG lies with the members, not the executive. Additionally, the authenticity and integrity of the Certificate is questionable because the meeting dates have been crossed over several times and the date "21 June 2005" is written in just above the crossed date. At the bottom where it states that it provided for the date of the certification, the month of the decision has been written over what was initially written. We can infer that a meeting may not have been held on 21st June, 2005 because of the many alterations to the Certificate.
    
53. Additionally, s.13 of the Land Group Incorporation Act, chapter 147 states that the powers of the land group must be exercised in the manner specified by its Constitution. In this case, there is no evidence that Clause 5 of the respondent's Constitution was complied with. This was emphasized in the case Dumal Dibiaso Incorporation Land Group No. 1664 & Ors v. Kola Kuma & Ors (2005) SC805 where Injia .DCJ, Sevua, Kirriwom .JJ said at pg.25;
    

"Unless proper legal authority is issued by an individual Incorporated Land Group, no person or trustee has any right to disburse trust monies. Because the individual Incorporated Land Groups are a creature of statute and are legal entities separate from Chairpersons, proper authority which must be under seal of the Incorporated Land Groups must be provided to the trustees to disburse the funds held in trust. In the absence of such authority under seal, no trustee shall have any authority to pay out monies to anyone from the funds he holds in trust."

54. That case emphasizes the requirement for ILGs to be properly authorized before taking any action, done in accordance with provisions of its Constitution.
    
55. Again, there is no evidence that the respondents have sought proper authority from the Wolutou ILG before acting. The land group is a separate legal entity and its chairperson and Executive, must obtain proper authority from the group before they can act.
    
56. We therefore find that the respondents suing in the manner they were suing in the National Court, did not have the capacity or locus standi, to sue.
    
57. We uphold that ground of appeal.
    

Final orders

58. Having found that the appellants' submissions are correct both in law and on facts on all the grounds, we will uphold the appeal.
    
59. We make the following orders;
    
    • (1) The National Court's Orders of 10th January, 2006 are quashed; and
      
    • (2) The National Court proceedings WS 1086 of 2005 is dismissed;
      
    • (3) The respondents shall each and severally pay the appellants' costs in both the National and Supreme Courts, to be taxed if not agreed.
      

_______________________________
Posman Kua Aisi Lawyers: Lawyer for the First, Second and Third Appellants
Mirupasi Lawyers: Lawyer for the Fourth Appellant
Mileng Lawyers: Lawyer for the Respondents