Active Forest Limited v Cloudy Bay 2024
Dispute over termination of a logging and marketing agreement
Logging companies mentioned in this document:
Concessions mentioned in this document:
N11065
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
OS NO. 52 OF 2024 (COMM)
BETWEEN:
ACTIVE FOREST LIMITED (1-50747)
Plaintiff
V
ANDREW PINI in his capacity as RECEIVER OF CLOUDY BAY
SUSTAINABLE FORESTRY LIMITED (1-732)
Defendant
Waigani: Anis J
2024: 24th & 30th October
APPLICATION TO SET-ASIDE ORDER – ex parte order restraining the
defendant and order for cost – application to set aside the ex parte order and
order for cost – premised on irregular and regular entry of the ex parte order
– consideration of arguments – ruling
Cases Cited:
Makopon v. Billy Parako (2003) N2593
Exxon Mobil (PNG) Limited v. Halimbu Lembo and Ors (2024) N10919
Counsel:
C Joseph, for the Plaintiff
N Kopunye, for the Defendant
DECISION
30th October 2024
1. ANIS J: On 24 October 2024, I heard in part the defendant’s notice of
motion filed 9 October 2024 (NoM) and reserved my decision to a date to be
advised.
2. The relief that was heard and reserved on was relief 2. It reads:
2. Pursuant to Order 12 Rule 8(3)(6)(4)(5) of the National Court Rules and
this Court’s inherent jurisdiction to control proceedings and to dispense
justice fairly in appropriate cases prescribed in section 158(2) and
section 59 of the Constitution, terms (2) and (3) of the Orders of 30
September 2024 be set aside on the following grounds:
a) as to term (2):
(i) as this order was sought as a substantive relief in term 1 of
the Originating Summons filed on 27 September 2024 and as
the Defendant was not served with Court documents prior to
the time of making of this order, the making of this order was
an abuse of process, was harsh and oppressive and in breach
of the Defendant’s right to be heard and to be given an
opportunity to be heard prior provided under ss.59 and 158(2)
of the Constitution and common law as adopted by the
Underlying Law Act 2000 and Order 4 Rule 49 Sub-Rule;
(ii) the Defendant acted within his lawful authority as the duly
appointed receiver to terminate the Logging and Marketing
Agreement dated 28 May 2019 (LMA);
(iii) no relief of specific performance is sought in the Originating
process in relation to any alleged duty owned under the LMA;
(iv) the Plaintiff has come to Court seeking equitable relief with
un-clean hands by refusing to co-operate with the Defendant
as the duly appointed Receiver;
(v) the balance of convenience favours the Defendant in
carrying out his duty as receiver to ensure a judgment debt is
satisfied;
(vi) the remedy (if any) for the Plaintiff lies in damages.
b) as to term (3), the Defendant was not served with Court documents
prior to the time of making of this order which is harsh and
oppressive and in breach of the Defendant’s right to be heard
provided under ss.59 and 158(2) of the Constitution and common
law as adopted by the Underlying Law Act 2000.
......
3. Terms 2 and 3 of the ex parte order of 30 September 2024 (Ex parte
Orders) read:
2. Pursuant to Order 12 Rule 1 of the National Court Rules and the inherent
jurisdiction of the National Court under section 155(4) of the
Constitution, an interim injunction is granted restraining the Defendant
and/or his servants and/or agents from approaching, intimidating,
harassing, threatening and/or assaulting the Plaintiff’s employees,
servants and/or agents and/or from interfering with the Plaintiff’s
operations in the Cloudy Bay FMA Project (TP:03-01) area.
3. The Defendant is to pay the Plaintiff’s costs of this application.
BACKGROUND
4. In brief, the plaintiff is a timber operator/exporter. Its operation, the
subject of this proceeding, relates to its business dealings with Cloudy Bay
Sustainable Forestry Limited (CBL), which is presently under receivership.
CBL and the plaintiff signed a logging and marketing agreement on 28 May
2019 (LMA). The plaintiff was tasked as the Contractor under the LMA, to
harvest and export logs in an area called Cloudy Bay, which is situated in the
Central Province. CBL was the permit holder of a timber permit which was
described as TP 03-01 (TP). The TP was issued over a designated area in
Cloudy Bay within the requirements under the Forestry Act 1991 (as amended).
The TP was initially issued to a company called Northern District Sawmilling
and Company Limited. CBL later acquired the TP to operate in the Cloudy Bay
area.
5. On 27 September 2024, the plaintiff commenced this proceeding to seek
various declaratory orders. The main relief the plaintiff seeks under its
Amended Originating Summons filed 30 September 2024 (AOS) include (my
summary), (i), permanent injunction against the defendant and his agents and
servants from entering the Cloudy Bay Project area where the plaintiff is
presently situated and from intimidating, threatening, assaulting or harassing its
employees, (ii), seeking declaration from the Court to regard a notice of
termination of the LMA that had been issued by the defendant to it on 5 July
2024, as null and void, and (iii), seeking orders for the return of its items and
properties that it alleges were confiscated by the defendant’s agents when they
entered its premises at the site area on 21 and 22 September 2024.
6. On 30 September 2024, the plaintiff sought and obtained the Ex parte
Orders against the defendant, his agents and servants. The Ex parte Orders are
in force.
7. The present status quo of the matter may be summarised as follows. CBL
is now under receivership. The defendant has been appointed by the Court as its
Receiver. Evidence adduced by the parties which is not contested shows that on
5 July 2024, the Receiver had given notice of termination of the LMA to the
plaintiff. The plaintiff, in response, files this proceeding and seeks various
declaratory orders, some of which have been summarised above. The plaintiff
claims, amongst others, that the LMA has not been validly terminated under its
termination clause. It is also adduced in evidence and not disputed, that on 17
October 2024, which was just recently, the Minister for Forest cancelled the TP.
ISSUE
8. Relief 2 of the NoM as quoted above seeks to set aside the Ex parte
Orders. The defendant intends to argue that the Ex parte Orders were
irregularly entered thus and as of right, that the Court should set them aside.
Secondly, if the Court finds the Ex parte Orders to be regular, the defendant also
proposes to argue that they should still be set aside. The defendant gives his
reasonings which are captured under term 2 of the NoM.
TESTS
9. The tests for arguments premised on irregular and regular entered
judgment or order is settled. They are better summarised by Manuhu AJ in
Makopon v. Billy Parako (2003) N2593. In that case, his Honour stated:
In applications like this, the initial inquiry is whether the ex parte order was
made regularly or not. Where an ex parte order has been made irregularly,
the only just remedy is to rectify the irregularity by setting aside the ex parte
order. Non-compliance with an important procedural requirement under the
National Court Rules is usually considered as an irregularity, which
generally results in an ex parte order being set aside. On the other hand,
where an ex parte order has been made regularly or in compliance with
relevant procedural requirements, setting it aside is dependent on what is
just and fair in all the relevant circumstances; and, what is just and fair is
dependent on the reasons for the non-appearance which permitted the
matter to proceed ex parte; the merits of the applicant’s case; and, the
promptness of the application to set aside ex parte order.
WHETHER JUDGMENT WAS IRREGULARLY ENTERED
10. Were the Ex parte Orders irregularly entered?
11 I note the submissions of the parties in addressing this issue.
12. The defendant states its reasons in its NoM. Those that are relevant for
considerations in my view under this sub-heading, are relief 2(a)(i) and 2(b). As
for the first reason [i.e., relief 2(a)(i)], the defendant submits that relief 2 of the
Ex parte Orders is a substantive relief which had been sought by the plaintiff
and granted by the Court on 30 September 2024. Therefore, he submits that this
amounts to fundamental breaches of ss. 59 and 158(2) of the Constitution, the
common law, and Order 4 Rule 49 of the National Court Rules (NCR).
13. I am minded to decline the premise of the defendant’s argument. I do so
for the reason that the said injunction or restraining orders obtained were
interim in nature. They are expressly stated as such under term 2 of the Ex parte
Orders. And they will continue to remain as interim orders until further orders
of the Court. Secondly, it is not uncommon for one to seek permanent
injunction only as a substantive relief. See case: Exxon Mobil (PNG) Limited v. Halimbu Lembo and Ors (2024) N10919. And it is also not a requirement, pursuant to Order 4 Rule 27 of the NCR (see Form 7), for an applicant to expressly plead or assert his or her right(s) in an originating summons. An originating summons must only state the relief. Pleading is not required there. Assertions of rights or interests (which may be sought in the form of declarations) may be included as part of the relief in an originating summons, or they (i.e., assertion of rights or interests) need not be but may be established in the evidence filed in support of an originating summons. See case: Exxon Mobil (PNG) Limited v. Halimbu Lembo and Ors (supra). 14. I now address the second reason contained under relief 2(b) of the NoM, that is, the defendant’s claim that the order for cost, which was granted as term 3 of the Ex parte Orders, was irregularly entered. I am minded to uphold the defendant’s contention in this regard. I find that although the plaintiff had the right to seek dispensation of service of its urgent application, the order for cost that was sought and granted is a permanent order. It is unlike term 2 of the Ex parte Orders which is interim in nature and subject to pending inter parte hearing (i.e., in regard to the plaintiff’s notice of motion filed 27 September 2024). Its permanent nature means that the defendant will not have an opportunity to respond to it. I therefore find the granting of the order to breach the defendant’s rights under s.59 of the Constitution. 15. Consequently, I find the entry of term 3 of the Ex parte Order to be irregular. I will have the said order set aside forthwith. 16. Apart from that, I find no irregularity in regard to term 2 of the Ex parte Orders. I also find the other reasons raised by the defendant under this sub- heading to be without merit and I dismiss them. WHETHER JUDGMENT REGULARLY ENTERED SHOULD BE SET- SIDE 17. I now move to the second leg of the defendant’s submission, that is, whether term 2 of the Ex parte Orders, which was regularly entered, should be set aside. An applicant faced with this type of situation, is required to satisfy the Court, (i), with a reasonable or satisfactory reason(s) explaining why the ex parte order was made in his or her absence, (ii), that he or she has a case or defence on merit , and (iii), that he or she has applied promptly to the Court soon after the orders were made or if not , provide valid reasons for the delay. 18. If the defendant is successful, it means that term 2 of the Ex parte Orders may also be set aside. 19. I note the submissions of the parties in this regard. 20. Does the defendant have a satisfactory reason to allow the matter to proceed ex parte on 27 September 2024? This requirement, however, does not
apply. The Ex parte Orders were granted after the primary Judge had granted
leave to the plaintiff to move its application ex parte. The plaintiff’s notice of
motion filed 27 September 2024 was heard and treated as an urgent matter at
that time.
21. The second requirement is contentious, that is, meritorious case or
defence. I note that the proceeding is commenced under an originating
summons, and also, I note that the defendant has filed a cross-claim in response.
At the hearing, the parties’ main argument revolved around whether the
plaintiff’s case was meritorious; whether there was any utility in the proceeding
given the fact that the defendant had terminated the LMA, and also, given the
fact that the TP was recently cancelled.
22. The defendant submits (my summary) that there is no real interest or right
for the plaintiff to continue to operate in the Cloudy Bay area. He submits that
in addition to the fact that he has terminated the LMA, the TP has also been
cancelled. He also submits that he had given the required 60 days’ notice period
under the LMA for the plaintiff to vacate the area and that the time had lapsed
but that the plaintiff continues to remain at the site.
23. The plaintiff’s main arguments in response are as follows (my summary).
It claims that (i), it is challenging the action of the defendant in purporting to
terminate the LMA, (ii), that regardless of that, that it had been granted
permission or grace period by the Papua New Guinea Forest Authority to
remain and wind up its operations at the site or within the TP area, thus says that
it has sufficient interest or right to continue to remain there, (iii) that it is
seeking permanent restraining orders against the actions of the defendant where
it says it has provided sufficient evidence which have not been opposed to date
by the defendant, of the actions of the defendant, his agents and servants in
harassing, assaulting and intimidating its workers who are on site or within the
TP area; that because it has adduced these evidence, it should be permitted to
continue to be there until such time the Court considers and grants, amongst
others, permanent injunctive orders which are sought in its originating
summons, and (iv), that its action is not limited to disputes concerning the LMA
or the TP, but it also seeks protection of its rights and security, and for the return
of its properties which it claims were taken in a raid that was conducted by the
defendant, his servants and agents at the site on 21 and 22 September 2024.
24. Having considered the submissions and evidence that have been tendered,
I am minded to uphold the submissions of the plaintiff. The main
considerations I take into account are as follows:
• The plaintiff has challenged the action of the defendant to purportedly
terminate the LMA which is now before this Court;
• Regardless of the above, I note that the TP is now terminated;
• The current status of both parties’ interests in the Cloudy Bay area or
their interest in general in regard to their business dealings and
operations, are in serious doubt;
• Both parties appear to no longer hold valid authorizations or permits to
continue to operate at the Cloudy Bay area;
• However, as for the plaintiff, it had been the operator there on site thus it
has interests and properties which may require protection at this stage of
the proceeding;
• Evidence adduced shows that the plaintiff’s employees were harassed on
site and that its properties were destroyed as well as taken away by the
agents and servants of the defendant; I note that these evidence are not
determinative but they remain uncontested at this juncture;
• The primary Judge, having been presented with these evidence, was
satisfied thus granted interim orders to protect the plaintiff and its
employees from further harassments and assaults from policemen
engaged by the defendant;
• I note that the Amended Originating Summons is not confined to
challenges on the LMA, but that it seeks other relief to protect the
plaintiff’s properties and security as well as the wellbeing of its workers
at the site;
• Evidence adduced shows that the Papua New Guinea Forest Authority has
now given permission to the plaintiff, after the termination of the LMA
and the TP, to continue to remain at the site to wind down its operations;
• I also take into consideration that in a case where a logging and
marketing agreement or a timber permit is cancelled, it is the Contractor
on the ground or at site that is given time to pack up and leave;
• In this case, it is the plaintiff who has a lot at stake given the recent
events that have unfolded;
• Therefore, the status quo appears to favour the plaintiff.
25. I find the second requirement in favour of the plaintiff.
26. The third requirement, which is to apply promptly to set aside an ex parte
order, in my view, favours the defendant. The NoM was filed on 9 October
2024 which was about 9 days after the Ex parte Orders were obtained and
served on the defendant.
27. When I weigh all these up, I must say that, except for term 3, I am not
minded to set-aside term 2 the Ex parte Order of 30 September 2024.
SUMMARY
28. In summary, I will partially uphold term 2 of the defendant’s NoM. First,
I find that term 2 of the Ex parte Orders was regularly entered and therefore will
not be set aside but remain. In regard to term 3 of the Ex parte Orders, I find
that it was irregularly entered thus I will have it set-aside. I will also issue a
consequential order for this cost to be reserved to the plaintiff’s notice of motion
filed 27 September 2024.
COST
29. I reserve my order on cost for this hearing as this decision only addresses
term 2 of the NoM. I will make a final ruling on cost after all the relief sought
in the NoM have been determined.
ORDERS OF THE COURT
30. I make the following orders:
1. Term 2 of the defendant’s notice of motion filed 9 October 2024 is
granted in part as follows:
(i) term 3 of the exparte orders made on 30 September 2024 is
irregular and is set aside forthwith;
(ii) the cost incurred in relation to the exparte hearing of 30 September
2024 is reserved to the interparte hearing of the plaintiff’s notice
of motion filed 27 September 2024;
(iii)term 2 of the exparte orders made on 30 September 2024 (interim
injunctions) was regularly entered and shall remain until further
orders of the Court.
2. Costs of this hearing are reserved to the defendant’s notice of motion filed
9 October 2024.
3. Time for entry of these orders is abridged to the date and time of
settlement by the Registrar of the National Court which shall take place
forthwith.
The Court orders accordingly
________________________________________________________________
Ashurst PNG: Lawyers for the Plaintiff
Kopunye Lawyers: Lawyers for the Defendant
