State v Petroleum Resources Gobe Ltd [2022] PGSC 97; SC2278 (24 August 2022)

SC2278

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SC REV NO. 83 OF 2018

BETWEEN:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Applicant (Respondent to Objection)

AND:
PETROLEUM RESOURCES GOBE LIMITED
First Respondent (First Objector)

AND:
MINERAL RESOURCES DEVELOPMENT COMPANY LIMITED
Second Respondent (Second Objector)

Waigani: Salika CJ, Makail and Logan, JJ
2022: 24^th August (Heard on the papers)

PRACTICE AND PROCEDURE – Application for review – Constitution, s 155(2)(b) – Objection to competency of review application – alleged late service , contrary to Order 7, rule 6 of the Supreme Court Rules – alleged non-compliance of grounds of review with ss 4, 6 and 14 of the Supreme Court Act – alleged inclusion of ground of review beyond terms of grant of leave to review – inapplicability of Order 7, rule 6, as opposed to Order 5, rule 5 in relation to service – distinct procedural character of a review application from an appeal to the Supreme Court – consequential inapplicability of ss 4, 6 and 14 of the Supreme Court Act – additional ground of review expressly carried into effect terms of reasons for judgement granting leave to review – Objection to competency dismissed

The applicant was granted leave to review under s 155(2)(b) of the Constitution a judgment entered summarily in the National Court for a very large sum in respect of allegedly outstanding royalties in respect of the Gobe Petroleum Project. In his judgment granting leave, a judge of the Supreme Court stated that s 12(3) of the Claims by and Against the State Act warranted consideration.

The grounds pleaded in the subsequently filed application for review did not only reproduce the proposed grounds of review set out in the application for leave to review but also included a ground raising an issue under s 12(3) of the Claims by and Against the State Act. The application for review was served more than 21 days after the grant of leave.

The respondents objected to the competency of the application for review on the basis of alleged late service, non-compliance with ss 4, 6 and 14 of the Supreme Court Act and because it included a ground not set out in the application for leave to review.

HELD, dismissing the objection –

1. As to service, Order 5, Rule 5, not Order 7, Rule 6 of the Supreme Court Rules was applicable to an application for review. There was therefore no 21- day service requirement.
   
2. An application for review under s 155(2)(b) of the Constitution is procedurally distinct from an appeal to the Supreme Court. Thus, ss 4, 6 and 14 of the Supreme Court Act were inapplicable. Moi Avei and Electoral Commission v Charles Maino [2000] PNGLR 157 and Viviso Seravo & Electoral Commission v John Giheno (1998) SC539 applied.
   
3. The additional ground of review did more than carry into effect the terms upon which leave to review had been granted, as was apparent from the reasons for judgment of the Court when granting leave.
   

Cases Cited:

Independent State of Papua New Guinea v Petroleum Resources Gobe Limited and anor, SC 83 of 2018, 19 December 2019 (Hartshorn J).
Mai Avei and Electoral Commission v Charles Maino [2000] PNGLR 157.
Viviso Seravo & Electoral Commission v John Giheno (1998) SC539.
Lovika v Malpo [2019] PGSC 114; SC1895.

Counsel:

M. Watgatau, for the Applicant (Respondent to the Objection to Competency)
A. Mana, for Respondent Objectors

24^th August, 2022

1. THE COURT: By an order made on 18 May 2018 in proceeding WS 1488 of 2018 (CC2) in the National Court, in proceedings in respect of the Gobe Petroleum Project between Petroleum Resources Gobe Limited as first plaintiff and Mineral Resources Limited as second plaintiff and the State and various officials of the State and Oil Search Limited as defendants, it was ordered, materially:
   
   • (a) Pursuant to Order 10, Rule 9A-Listings Rules, 15(2)(b) and (c) of the National Court Rules, judgment is entered for the Plaintiffs in the sum of K90,523,363.90 against the First to the Third Defendants for unpaid royalties for the periods of 1999 to 2015.
     
   • (b) A further K40,730,523.00 is ordered in favour of the Plaintiffs in loss profits or business for the periods of 1999 to 2004 and K49,000.000.00 for the periods 2006 to 2015 bringing the total to K89,730,523.00.
     
   • (c) The funds referred to in term 1 of these orders have been paid over to the Department of Petroleum and Energy the Fourth Defendant and they should readily be located and paid over to the Plaintiffs forthwith, failing which, an appropriate investigation shall be carried out either by the police or any other law enforcement agency to establish what has become of the Plaintiffs' funds and hold to account or take appropriate actions against persons who might have misused or misappropriated those funds.
     
   • (d) For clarity, the last preceding order shall not operate as a bar or excuse for the State's obligation to have the total judgment sum paid over with liberty left in the State to recover these funds from person who might have been responsible for any misappropriation or as the case may be of these funds.
     
   • (e) Costs of the proceeding are ordered against the First to the Third Defendants in favor of the Plaintiffs and the Fourth Defendant to be taxed if not agreed.
     
   • (f) The time for the entry of these Orders is abridged to take place forthwith upon the Court signing the Orders.
     

[sic]

2. These orders were made on an application for summary judgment.
   
3. By an application filed on 12 October 2018, the State applied to this Court, pursuant to s 155(2)(b) of the Constitution, for leave to review these orders.
   
4. On 3 April 2018, the State was granted leave by the Court to add Petroleum Resources Gobe Limited and Mineral Resources Development Company Limited as respondents to the application for leave to review. An amended application for leave to review, naming these respondent parties, was subsequently filed on 16 April 2019. The proposed grounds of review remained as stated in the application as originally filed.
   
5. The response of Petroleum Resources Gobe Limited and Mineral Resources Development Company Limited (hereafter, “the objectors”) was to object to the competency of the application for leave to review, as amended. That objection was dismissed on 28 October 2019 on the basis that it was itself incompetent.
   
6. The application for leave to review came on for hearing before a single judge of the Court on 20 November 2019. On 19 December 2019, the learned judge granted the State leave to review: Independent State of Papua New Guinea v Petroleum Resources Gobe Limited and anor, SC 83 of 2018, 19 December 2019 (Hartshorn J).
   
7. The State subsequently filed an application for review. The grounds of review pleaded in that application are as follows:
   

5. GROUNDS:

5.1 The learned trail judge erred in mixed law and fact when His Honour failed to consider relevant considerations which, if considered, the summary judgment should not have been granted and these relevant considerations are:-

(i) The learned trail judge erred in law and fact when His Honour failed to consider that between 1999 and 2002, the Second Plaintiff was not legally mandated to receive Royalties on behalf of the First Plaintiff until 2003 when Section 76 of the Oil & Gas Act was amended to rovide the legal basis for the Second Plaintiff to receive royalties under the Act. Royalties for the periods of 1999 to 2002 were paid directly to Landowners per the Oil & Gas Act.

(ii) The learned trial judge erred in law and fact when he failed to consider the 5% Royalty Withholding Tax component pursuant to Section 159 of the Oil & Gas Act which if considered, would have reduced the amount claimed at paragraph 18 of the Plaintiffs' Amended Writ of Summons and Statement of Claim consequently by 5% of the Plaintiff's outstanding Royalties claim of K150,083,848.30.

(iii) The learned trial judge erred in fact to consider that the table of unpaid royalties contained at paragraph 18 of the Plaintiffs' Amended Writ of Summons failed to correctly plead that the Fourth Defendant paid Royalties for the year 2015 and was erroneously pleaded by the Plaintiffs as payments outstanding. If properly considered would have reduced the judgment debt ordered in the learned trial judge's order now the subject of this review.

(iv) The learned trial judge erred in fact to consider that the table of unpaid royalties contained at paragraph 18 of the Plaintiffs' Amended Writ of Summons failed to correctly plead that the First, Second and the Fourth Defendants paid Royalties for the subsequent years, 2011, 2013 and 2015 and was erroneously pleaded by the Plaintiffs as payments outstanding .If properly considered would have significantly reduced the judgment debt ordered in the learned trial judge's order now the subject of this review.

(v) The learned trail judge erred in law and fact when he failed to consider that some Royalty monies from the periods 2003 to 2005 were paid directly to the respective project area landowners through their respective Incorporated Land Groups (ILGs) in accordance with the purpose of the Trust Deed and in accordance with Section 176(3)(a) of the Oil & Gas Act, 1998.

(vi) The learned trial judge in his decision in entering judgment pursuant to the Orders of 18ᵗʰ May, 2018 failed to consider the Defendants' Defence filed 11^th December, 2016 which raises meritorious defence based on both law and fact.

(vii) The learned trial judge in his decision in entering judgment pursuant to the Orders of 18ᵗʰ May, 2018 failed to consider that pursuant to section 12(3) Claims by and Against the State Act, 1996, where in a claim against the State, the State is in default within the meaning of National Court Rules, judgment of liquidated claim shall not be entered against the State for the sum claimed unless the claim relates to a debt only, and in all other cases judgment shall be entered for damages to be assessed and, where appropriate, for costs.

8. The objectors subsequently filed an objection to the competency of the application for review. The grounds of that objection are as follows:
   
   1. The Application for Review filed by the State on 21 January 2020 fails to comply with Order 7 Rule 6 of the Supreme Court Rules and is incompetent in that the Application was filed outside of the 21 days prescribed by the Supreme Court Rules, after leave was granted to the State on 19 December 2019.
      

The State did not file or serve any application pursuant to Order 7 Rule 6 of the Supreme Court Rules within the 21 days seeking an extension of time to file the Application outside of the 21-day period.

2. Grounds 5.1 (iii) and (iv) of the Application for Review fail to comply with Section 4(2)(c) and Section 14 (I)(c) of the Supreme Court Act where they raise questions of fact for which prior leave has not been sought and granted.

3. Ground 5.1 (vii) in the Application for Review is incompetent and should be struck out as it is a new ground of review that was not included in the Application for Leave to Review and the State has not sought or been granted leave to include it in its Application for Review.

4. Alternatively. Grounds 5.1 (i). (ii). (iii). (iv). (v). (vi) and (vii) in the Application for Review fail to comply with Section 6 (1) of the Supreme Court Act and are incompetent where:

1. The judgement sought to be reviewed is a discretionary judgement of the National Court which did not involve any of the findings of fact or law pleaded in the Grounds.
   

11. The Grounds do not clearly state or establish how the primary judge erred in exercising his discretion in summarily disposing of the matter.

111. The Grounds raise questions of law and fact and raises issues/arguments that were never raised before the National Court and for which no leave has been sought or granted in the Supreme Court.

9. Some of these grounds of objection may be disposed of shortly.
   
10. Ground 1 raises, at most, a procedural issue, not a jurisdictional issue. The jurisdiction of the Supreme Court to hear and determine an application for the review of a subordinate judicial order is derived from and entrenched in s 155(2)(b) of the Constitution. That jurisdiction cannot be ousted by a procedural irregularity as to time of service. It is within the remit of the Court to waive or rectify any such irregularity. Further and in any event, there is no irregularity. The relevant obligation as to service after the grant of leave is as specified in Order 5, Rule 5 of the Supreme Court Rules, "The review shall be served as soon as possible on all parties to the National Court proceedings from which the judicial act to be reviewed arises". The 21 day service requirement in Order 7, Rule 6 of the Supreme Court Rules is applicable only to appeals.
    
11. In its reference to and reliance upon s 4(2)(c) and s 14(1)(c) of the Supreme Court Act, ground 2 is misconceived. These two sections are concerned with appeals to the Supreme Court from the National Court, not with a review under s 155(2)(b) of the Constitution. The present proceeding is not an appeal but rather such an application for review. These are distinct processes: Mai Avei and Electoral Commission v Charles Maino [2000] PNGLR 157; Viviso Seravo & Electoral Commission v John Giheno (1998) SC539.
    
12. Ground 4 is similarly misconceived. As with s 4 and s 14 of the Supreme Court Act, s 6 is directed to an appeal proceeding in the Supreme Court. The present proceeding is not an appeal.
    
13. The determination of ground 3 first requires that we set out the proposed grounds of review, as pleaded in the amended application for leave to review, filed on 16 April 2019, which became the subject of the grant of leave to review. Those grounds were:
    

3. GROUNDS

3.1 The learned trial judge erred in mixed law and fact when His Honour failed to consider relevant considerations which, if considered, the summary judgment should not have been granted and these relevant considerations are:-

(i) The learned trial judge erred in law and fact when His Honour failed to consider that between 1999 and 2002, the Second Plaintiff was not legally mandated to receive Royalties on behalf of the First Plaintiff until 2003 when Section 76 of the Oil & Gas Act was amended to provide the legal basis for the Second Plaintiff to receive royalties under the Act. Royalties for the periods of 1999 to 2002 were paid directly to Landowners per the Oil & Gas Act.

(ii) The learned trial judge erred in law and fact when he failed to consider the 5% Royalty withholding tax component pursuant to Section 159 of the Oil & Gas Act which if considered would have reduce the amount claimed at paragraph 18 of the Plaintiffs' Amended Writ of Summons and Statement of Claim consequentially by 5% of the Plaintiffs outstanding Royalties claim of K150,082,848.30.

(iii) The learned trial judge erred in fact to consider that the table of unpaid royalties contained at paragraph 18 of the Plaintiffs' Amended Writ of Summons failed to correctly plead that the Fourth Defendant paid Royalties for the year 2015 and was erroneously pleaded by the Plaintiffs as payments outstanding. If properly considered would have reduced the judgment debt ordered in the learned trial judge's order now the subject of this review.

(iv) The learned trial judge erred in fact to consider that the table of unpaid royalties contained at paragraph 18 of the Plaintiffs' Amended Writ of Summons failed to correctly plead that the First, Second and the Fourth Defendants paid Royalties for the subsequent years, 2011, 2013 and 2015 and was erroneously pleaded by the Plaintiffs as payments outstanding. If properly considered would have significantly reduced the judgment debt ordered in the learned trial judge’s order now the subject of this review.

(v) The learned trial judge erred in law and fact when he failed to consider that some Royalty monies from the periods 2003 to 2005 were paid directly to the respective project area landowners through their respective Incorporated Land Groups (ILGs) in accordance with the purpose of the Trust Deed created and in accordance with Section 176(3)(a) of the Oil & Gas Act, 1998.

(vi) The learned trial judge in his decision in entering judgment pursuant to the Orders of 18^th May, 2018 failed to consider the Defendants' Defence filed 12ᵗʰ December, 2016 which raises meritorious defence based on both law and fact.

14. A comparison between the pleaded grounds of review and the proposed grounds of review, as set out in the successful amended application for leave to review, discloses that, in respect of the grounds of review pleaded in paragraph 5.1 –
    
    • (a) sub-paragraphs 5.1 (i) to (vi) are in identical terms to all sub-paragraphs of paragraph 3.1 of the amended application for leave to review;
      
    • (b) sub-paragraph 5.1 (vii) does not appear as a proposed ground of review in the amended application for leave to review.
      
15. It is also a feature of the ground pleaded in sub-paragraph 5.1(vii) that the issue which it seeks to raise is not one which was pleaded in the defence filed in the National Court. However, in granting leave to review, Hartshorn J stated, at [22]:
    

22. In considering the exercise of discretion to grant leave, I am satisfied that there are exceptional circumstances existing as mentioned. Further, the State has raised various matters, albeit belatedly, concerning liability and quantum. I also mention as an aside, that s. 12(3) Claims By and Against the State Act warrants consideration.

[Emphasis added]

16. It was therefore the clear intention of the Court when granting leave to review that the grant of leave extend beyond the proposed grounds of review as pleaded in the amended application for leave to review to a ground based on s 12(3) of the Claims By and Against the State Act. Thus, the ground of review pleaded in sub-paragraph 5.1 (vii) does no more than carry into effect the Court’s intention when granting leave.
    
17. It follows that the objection to the competency of the application for review should be dismissed, with costs.
    
18. Given the bases upon which the objection to competency has been dismissed, it has been unnecessary to consider a further submission of the respondent objectors, which was that a deficiency in one of the grounds of review would render the entire application for review incompetent, even though each of the other grounds in the application accorded with the terms of the grant of leave to review. That proposition is counter-intuitive but there is some support for such a view (qv Lovika v Malpo [2019] PGSC 114; SC1895). The present case is not a suitable vehicle for consideration of whether that view is correct.
    

Orders:

1. The objection to the competency of the application for review be dismissed.
   
2. The respondent objectors pay the costs of the respondent to the objection (applicant for review) of and incidental to the objection, to be taxed if not agreed.

___________________________________________________________
ACE Lawyers: Lawyers for the Applicant (Respondent to the Objection)
Corrs Chambers Westgarth: Lawyers for the Respondent Objectors