Reference by Mathias Mbari [2011] PGSC 33; SC1129 (26 October 2011)

SC1129

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCR 07 OF 2010

REFERENCE PURSUANT TO CONSTITUTION SECTION 18(1)

In the matter of:
SECTION 6 OF THE OIL AND GAS ACT 1998

AND:
SECTIONS 5, 11, 12, 14, 102 & 132 OF THE LAND ACT 1996

AND:
SECTION 33(2) OF THE LAND REGISTRATION ACT 1981

AND:
SECTION 34N OF THE LAND REGISTRATION (CUSTOMARY LAND) (AMENDMENT) ACT 2009

AND:
LAND GROUPS INCORPORATION (AMENDMENT) ACT 2009

REFERENCE BY:

MATHIAS MBARI and SIMON EKANDA of the Yugu Clan, KUPIAWI ALUIA and PERAU HOMOKO of the Pepe Clan, WALAPE MARA of the Tapu Clan, ARAWI TOMBAIJA and PALIAWE TILA of the Tagopali Clan, HIMUNI HOMOKO and PEPERAIJA KUPALI of the Nguane Clan, MARAKO PATE and AJUWALE LAMBLIKO of the Pate Clan, AKO TAGIRALI and TAGALI PIJAPE of Tagua Clan, TAMBALI PAJAWI and PARANDA AIPE of the Ware Clan, TAPE WARAKO of the Muya Clan, KAMBIAWI PAMI of the Aja Clan, ELIJAH KOJU of the Kuara Clan, HUJALI ANGO of the Alo Clan, LULU ALIAWI and TAGIMA HIRUA of the Himuya Clan, KEN KILI of the Koe Clan, IRUKA TINDINI of the Jakora Clan, TIMON HALUMA of the Mora Clan, ANDIKI PONDO of the Pondo Clan, LUKE MERIA and TARALI ALIWA of the Tagoria Clan, WAIAPE TALU of the Undupi Clan, TUMALI OPE and ALFRED KAIABE of the Weneni Clan, ANGI KULUPI of the Imini Clan, TARALI OLA of the Tamea Clan, and HIMUNI HAGUAPI of the Aipia Clan

Waigani: Davani, J
2011: 28th September
26th October

Facts

The Referrors object to the applications by the Proposed Intervenors to intervene in this reference in which questions are raised as to the constitutionality of statutory vesting to the State of gas and petroleum beneath customary land. There was no evidence of the membership of the Chamber of Mines by way of membership register.

Held

1. The Minister for Petroleum and Energy should not intervene, the proper party to intervene on behalf of the State is the Attorney General, at [12];
   
2. Because it was not established by evidence who were members of the Chamber of Mines the Chamber cannot intervene because it has not shown that its interests will be affected by orders to be made by the Court, at [24];
   
3. The application by the Chamber is ultra vires the powers specified in the Chamber's Rules, at [32].
   

Counsel:

P. Donigi, for Referrors
D. Doiwa, for Proposed Intervenor, William Duma, Minister for Petroleum & Energy
A. Chillion, for Proposed Intervenor, Chamber of Mines and Petroleum

DECISION

26th October, 2011

1. DAVANI .J: This Reference under s.18(1) of the Constitution was filed on 29th November, 2010 by Warner Shand Lawyers for and on behalf of the Referrors.
   

Background

2. The Referrors are members of the Tuguba Tribe which occupies the Hela, Gulf and Western Provinces of Papua New Guinea.
   
3. The Referrors question the legal right of the State to claim or assert property rights in the petroleum and helium under the surface of Tuguba Tribe customary land such as would give it the right to;
   
   • - Grant a Petroleum Development Licence or Petroleum Retention Licences to the Licensees who are listed in the Schedule to the Reference and who are thirteen in number.
     
4. The Referrors assert that;
   
   • (i) Section 34N of the Land Registration (Customary Land) (Amendment) Act 2009;
     
   • (ii) Clause 12 of the pro forma constitution of the Incorporated Land Groups provided for in the Seventh Schedule of the Land Groups Incorporation (Amendment) Act 2009 (Passed by Parliament but yet to be certified by the Speaker),
     

are contrary to s.53 of the Constitution and are therefore void and of no effect.

5. The law or proposed law, the validity of which is the subject of the Reference are;
   
   • (i) S.6 of the Oil and Gas Act 1998;
     
   • (ii) Ss.5, 12, 14 and 132 of the Land Act 1996;
     
   • (iii) S.34N of the Land Registration (Customary Land) (Amendment) Act 2009; and
     
   • (iv) Clause 12 of the pro forma Constitution of Incorporated Land Groups provided for in the Seventh Schedule of the Land Groups Incorporation (Amendment) Act 2009 (Passed by Parliament but yet to be certified by the Speaker),
     

copies of which are before the Court.

6. The questions for referral are;
   
   • (i) Is the vesting of the ownership of property in petroleum and helium at or below Tuguba Tribe customary land in the State by s.6(1) of the Oil and Gas Act 1998;
     
     • (a) Harsh and oppressive and contrary to s.41 of the Constitution?
       
     • (b) A termination of the Referrors' customary rights of inheritance to and property in petroleum and helium under Tuguba Tribe customary land and therefore contrary to s.53(5) (a), (c) and (d) of the Constitution?
       
   • (ii) Does s.6(2) of the Oil and Gas Act 1998 import the pre-independence regime of vesting the property in petroleum and helium in the State and validates that pre-independence regime in a manner that is;
     
     • (a) Contrary to s.53(5)(a), (c) and (d) of the Constitution and therefore void and unconstitutional?
       
     • (b) Contrary to Schedule 2.4.6(2) of the Constitution and therefore void and unconstitutional?
       
   • (iii) If the vesting of petroleum and helium at or under the surface of Tuguba Tribal land under s.6 of the Oil and Gas Act 1998 in the State, is unconstitutional and void, does that make;
     
     • (a) any agreement between the State and any Licensees pursuant to the provisions of the Oil and Gas Act 1998; and
       
     • (b) in particular the PNG LNG Agreement dated 22nd May, 2008,

invalid, void and of no effect?

(iv) Is s.5 of the Land Act 1996 contrary to s.53 of the Constitution and therefore void and of no effect?

(v) Are ss.5 and 132 of the Land Act 1996 laws that comply with s.38 of the Constitution, and if not, are they void and of no effect?

(vi) Is s.12 of the Land Act 1996 limited to interests in land that is the subject of State Leases or does it also apply to customary land? If it applies to customary land, is it then;

• (a) contrary to s.53 of the Constitution; and/or
  
• (b) a law that does not comply with s.38 of the Constitution, and

therefore void and of no effect?

(vii) Is s.14 of the Land Act 1996 limited to interests in land that is the subject of State Leases or does it also apply to customary land? If it applies to customary land, is it then;

• (a) contrary to s.53 of the Constitution, and/or
  
• (b) a law that does not comply with s.38 of the Constitution, and

therefore void and of no effect?

(viii) Is s.132 of the Land Act 1996 contrary to one or all of ss.32, 41 and 53 of the Constitution and therefore void and of no effect?

(ix) Is so far as s.33(2) of the Land Registration Act 1981 have the effect of terminating prior customary rights and interests of the Referrors in Portion 209, is it contrary to s.53 of the Constitution and therefore void and of no effect?

(x) Is s.34N of the Land Registration (Customary Land) (Amendment) Act 2009 in so far as it terminates customary rights to and interests in the subject customary land contrary to ss.38 and 53 of the Constitution and therefore void and of no effect?

(xi) Is clause 12 of the pro forma Constitution of Incorporation Land Groups provided for in the Seventh Schedule to the Land Groups Incorporation (Amendment) Act 2009) Passed by Parliament but yet to be certified by the Speaker) which terminates the application of customary law, contrary to ss.38 and 53 of the Constitution and therefore void and of no effect?

The Schedule to the Reference lists the licensees as;

The Licensees

1. Esso Highlands Limited
2. Oil Search Limited
3. Oil Search (Tumbudu) Limited
4. Santos Hides Limited
5. Lavana Limited
6. Esso PNG Juha Limited
7. Amploex (PNG Petroleum) Limited
8. Merlin Petroleum Company
9. Oil Search (PNG) Limited
10. Ampolex (PNG Petroleum) Inc.
11. Merlin Pacific Oil Company Limited
12. AGL Gas Developments (PNG) Pty Limited
13. Petroleum Resources Kutubu Limited
    

The Application to Intervene

7. The Honourable William Duma, Minister for Petroleum & Energy ('Minister Duma') filed an application through Makap Lawyers on 21st September, 2011, seeking leave of this Court to intervene in this Reference.
   
8. Also before the Court is an Application to Intervene by the Chamber of Mines & Petroleum Inc. (the 'Chamber') filed by Allens Arthur Robinson Lawyers on 14th September, 2011.
   
9. Both applications are made pursuant to O.4 r.19 of the Supreme Court Rules. This rule reads;
   

"19. Before a reference has been set down for hearing, any person who has an interest in the proceedings may make application to the Court or to a Judge for leave to intervene."

(a) Application by Minister Duma

10. The grounds relied upon by Minister Duma as set out in his application before this Court, are as follows;
    

2. Grounds relied upon are:

a. The Applicant has an interest in these proceedings as the State Minister responsible for the Petroleum & Energy sector and accordingly is responsible for overseeing the policy, administration and regulation of the Oil and Gas Act and other legislation insofar as extraction and development of petroleum in Papua New Guinea is concerned.

b. The Applicant has an interest in these proceedings as the State's political head and representative in the Petroleum and Energy sector who is responsible for overseeing and administering State policy in the industry; and

c. The Applicant was identified as a potential intervener by the Court on 14th March, 2011 and the Referrors were directed to serve the originating process on the Applicant.

11. The grounds relied on by the Chamber, are as set out below;
    
    • (a) The Applicant is an interested party to this Reference for the following reasons;
      
      • (i) the issues raised concerns, inter alia, the ownership of the liquefied natural gas, which the State pursuant to Section 6 of the Oil and Gas Act, claimed ownership of and entered into an agreement with Esso Highlands Limited (the Operator of PNG LNG Gas Project) to develop it
        
      • (ii) the Applicant represents relevant interests of its membership, who are participants in the Oil and Gas industries, including the PNG LNG Gas Project;
        
      • (iii) the applicant and/through its membership will obviously be affected by any determination made in this Reference.
        
    • (b) All parties having an interest in this Reference must be heard on the issue raised by the Reference.
      

Objections to the Applications to Intervene

12. The Referrors have filed an Objection to the Applications to Intervene. The Objection is in relation to the both applications by Intervenors, Minister Duma and the Chamber.
    

(i) Intervention by Minister Duma

13. My findings on this are the same as those in SCR 5 of 2010. For the record, I find Minister Duma should not intervene in this Reference but whose submissions or concerns can be brought by the Attorney-General, who is the correct representative of the State.
    

(ii) Intervention by the Chamber

14. The Objections raised by the Referrors in relation to intervention by the Chamber are several. These are;
    

a. There is no evidence before the Court that the Chamber is properly authorised by its members to file an application to intervene on their behalf;

b. The application to intervene is ultra vires the powers specified in the Constitution of the Chamber of Mines and Petroleum;

c. The Chamber of Mines and Petroleum does not have an interest in –

(i) Petroleum Development License No. 1;

(ii) Petroleum Retention Licenses Nos. 2, 11 and 12 and interests in land contained in State Lease described as Portions 159C to 163C (inclusive in the Milinch of Karius, Southern Highlands Province which were granted by the State to Oil Search Limited and Oil Search (Tumbudu) Limited as joint tenants).

d. There are thirteen (13) licensees in Petroleum Development Licence and the Petroleum Retention Licenses and any one of them can file an application to intervene; and

e. The correct and acceptable form for representative proceeding is for one of several of the said thirteen licenses to file an application to intervene for and on behalf of one or all of the thirteen licenses. Failure to any one of them to intervene must send a message to this Honourable Court that they concede to:

(i) the facts as presented in the Reference by the Referrors; and

(ii) the claim by the Referrors that the State does not own the resources under customary land; and

(iii) the application by the Chamber is merely a token defence of the current licensed based system or policy of resource extraction."

15. These grounds of objections can be summarised under the following sub-headings;
    
    • (i) That the Chamber is not properly authorised to file an application to intervene for and on behalf of the thirteen (13) licensees named in the Schedule to the Reference.
      
    • (ii) That the application to intervene is ultra vires the powers specified in the Chamber's Constitution.
      
16. The Chamber's application is supported by the affidavit of Gregory Anderson, sworn and filed on 23rd August, 2011. Gregory Anderson is the Executive Director of the PNG Chamber of Mines & Petroleum. Also in evidence before me, which is not attached to Mr Anderson's affidavit but which was handed up to me on my request, are the Rules of the Chamber of Mines & Petroleum. It is entitled the "Papua New Guinea Chamber of Mines and Petroleum" Rules.
    
17. The reasons why the Chamber seeks to intervene in this Reference are as deposed to in Mr Anderson's affidavit at pars. 14 to 18 and which I set out below. These are;
    

"14 The assertions of the Referrors challenge core components of the statutory framework that regulates mining, oil and gas project developments in PNG.

15. If one or more of the Referrors' assertions were to be upheld by the Supreme Court, the ownership and management of existing and future projects would be altered fundamentally.
    

16 This would have serious and detrimental impacts on the viability of these projects and, as a result, on the rights and interests of the Chamber's members.

17 As the peak representative body for the mining, oil and gas sectors, the Chamber is therefore vitally interested in the conduct and outcome of this Reference.

18 It therefore respectfully requests that it be granted leave to intervene in the proceeding."

(iii) Issues

18. Is the Chamber properly authorised to file an application to intervene for and on behalf of the thirteen licensees named in the Schedule to the Reference?
    

(iv) Analysis of objections and the evidence

19. The Chamber's Rules provide for membership and the eligibility criteria for membership of those persons or entities wishing to become members. This is set out at Rules, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15 of the Chamber's Rules. Membership is in certain classes which are;
    
    • - Full members
    • - Associate members
    • - Service members
    • - Life members
    • - Honorary members
      
20. It is only upon approval by the Council of an application or nomination of a "person" for membership, that the person shall then become a member of the Chamber in the relevant class of memberships (Rule 15). The Council in this case is a body comprising not less than 8 nor more than 11 members, made up of a President, Senior Vice President, Vice President, not less than 3 other councillors nominated by full members and elected by full members and associate members and one or two other councillors nominated by associate members and elected by an associate member (Rule 45). The same criteria applies to "firms, associations or corporations" (Rule 12).
    
21. Mr Anderson has not attached to his affidavit the Register of Members to show the Court who the Chamber's members are (Rule 17). The Register is a document that is maintained by the Chamber's Executive Officer which contains the names, addresses, classes of membership and the dates of commencement of membership of each member (Rule 17).
    
22. This means that Mr Anderson's evidence in his affidavit that the Chamber has a current membership of over 170 companies (par.4) is not supported by evidence.
    
23. As it is, this Court does not know if the thirteen licensees named in the Reference are members of the Chamber.
    
24. It means that the Chamber cannot intervene because it has not shown that its interests will be affected by orders to be made by the Supreme Court in this Reference.
    
25. Additionally, the powers of the Council as provided in Rule 61 of the Rules of the Chambers are that the "management and control of the business and affairs of the Chamber should be vested in the council". The Council may exercise all such powers and do all such things that are within the scope of the rules and need not be done at a general meeting (Rule 61).
    
26. It is the Council who is vested with the management and control of the business affairs of the Chamber (Rule 61). The Council appoints an Executive Officer who attends this meeting including general meetings and who keeps minutes of the proceedings and resolutions of all general meetings and meetings of the Council (Rules 64(b)).
    
27. Mr Anderson has not put before the Court evidence that the Council had met and decided that the Chamber would represent the interests of all its members, which members includes the thirteen licensees named in the Reference. The evidence is more appropriately minutes of the resolutions passed by the Council and which must be attached to the affidavit of the Executive Officer. That is not before me.
    
28. Although, Mr Anderson deposes at par.5 of his affidavit that the Chamber is "a representative voice for the mining and petroleum industries in PNG" and the Chamber's principal role is to promote and support the industry by presenting to Government and other stakeholders the concerns and issues facing the industry along with proposals to address these issues (pars.4 and 5), that these contentions must be supported by evidence that the membership of the Council includes the named licensees. That evidence is not before me. It indeed makes the Court's task very difficult.
    
29. If mining and petroleum companies are affected by this Reference, I do not see why they cannot apply to be included in the Reference as a party or an intervenor to then present their interests, which in my view are unique to each one of them. That is a more proper alternative than by the Chamber applying.
    
30. Does the Chamber have the power to bring these proceedings?
    
31. This is an issue that should be read together with reasons raised above. I say this because Rule 61, the provision on the powers of the Council, states that the management and control of the business and affairs of the Chamber, "are within the scope of these rules and are not hereby expressly directed or required to be exercised or done by the Chamber in a general meeting but subject nevertheless to these Rules and to any directions as to the general policies of the Chamber decided at a General Meeting and to any regulations from time to time made by the Chamber in General Meetings...". This qualification speaks for itself which is that any action by the Chamber must be within the scope of the Chamber's Rules, which is that the Chamber represents its members and its decisions are made by the Council. No such evidence is before me.
    
32. Therefore, I find that the application to intervene is ultra vires the powers specified in the Chamber's Rules. I also find that I need not consider the other objections raised in relation to the inadmissibility of certain paragraphs of Mr Anderson's affidavit and Mr Donigi's contentions and assertions against certain mining companies.
    
33. I will refuse the application by the Chamber and will also order that the Chamber pay the Referrors' costs of this application.
    

Formal Orders

34. These are the formal orders of the Court;
    

(1) The Application to Intervene by the Minister for Petroleum & Energy is refused;
(2) The Application to Intervene by the Chamber of Mines & Petroleum is refused;
(3) The Minister for Petroleum & Energy and the Chamber of Mines & Petroleum shall pay the Referrors' costs of the application, to be taxed if not agreed.

_________________________________________

Warner Shand Lawyers: Lawyers for the Referrors
Makap Lawyers: Lawyers for the Intervenor,William Duma, Minister for
Petroleum & Energy
Allens Arthur Robinson Lawyers: Lawyers for the Intervenor, Chamber of Mines and Petroleum