Fulleborne Extension Business Group v PNG Forest Authority [2022]
Dispute over pre-Independence timber rights
Concessions mentioned in this document:
SC2554
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]
SCA NO. 105 OF 2022
SCA NO. 110 OF 2022
BETWEEN
FULLEBORNE EXTENSION BUSINESS GROUP (INC)
First Appellant
AND
EXTENDED MENGEN BUSINESS GROUP (INC)
Second Appellant
AND
ANIA SAWMILL BUSINESS GROUP (INC)
Third Appellant
AND
PAPUA NEW GUINEA FOREST AUTHORITY
First Respondent
AND
DAIRI VELE as the SECRETARY FOR DEPARTMENT OF TREASURY
Second Respondent
AND
Dr. KEN MENGEN as the SECRETARY FOR THE DEPARTMENT FOR
FINANCE
Third Respondent
AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Respondent
Waigani: Mogish J, Logan J and Wood J
2024: 27th February
2024: 17th April
FORESTRY – Meaning and effect of pre-Independence timber rights sale
agreement made by Administrator on behalf of Commonwealth of Australia
as purchaser with customary land owners as vendors under the Forestry
Ordinance 1936-1951 for the right to harvest timber on customary land – whether any trust thereby created between purchaser and vendor – effect of Independence HELD: Neither Forestry Ordinance nor agreement created any trust, only a contract for the sale of timber rights for a purchase price consisting of two components, in one part cash, in the other part an entitlement to a “Treasury Investment” as defined with the State succeeding on Independence to the rights interests and obligations of the Commonwealth of Australia under that contract. PRACTICE AND PROCEDURE – Limitation of Actions – Frauds and Limitations Act 1988, s 16(1)(a) – action for breach of contract for breach of contract instituted more than six years after the date on which any possible breach might have occurred – expiry of limitation period pleaded – whether National Court correct in concluding action statute barred and dismissing proceeding - HELD: Action statute barred. PRACTICE AND PROCEDURE – Appeals – Admission of fresh evidence – Supreme Court Act 1975, s 6(1)(a) – evidence in existence at the time of hearing in National Court and available to a party exercising reasonable diligence - HELD: application to adduce further evidence on hearing of appeal dismissed. PRACTICE AND PROCEDURE – Obligation of National Court to observe principles of natural justice – whether granting of summary judgment of dismissal and related refusal of application by plaintiffs for an adjournment amounted in the circumstances to a denial of natural justice HELD: No denial of natural justice and, even if there were, opportunity to make submissions on appeal as to issue of law concerning alleged expiry of limitation period critical to the dismissal of the actions wholly remedied any such denial. The three appellants were incorporated under the Business Groups Incorporation Act 1974. In 2020, they respectively commenced proceedings in the National Court seeking damages against the respondents for a failure to pay amounts said to be due under timber rights agreements dating from the 1960s. These agreements were made between the customary landowners (through particular representatives as agents on behalf of smaller groups within the customary landowner group) and the then Territory Administrator, pursuant to the Forestry Ordinance 1936-1962 of the then Territory of New Guinea. The agreements provided the sale of timber rights for a period of 40 years from the customary landowners and the payment of a purchase price consisting of an initial cash lump sum and an interest in a “Treasury Investment” being paid by the Administrator. The “Treasury Investment” was to pay the customary landowners interest payments twice per year, with the principal amount being paid after not earlier than 10 and not later than 15 years. The respondents
applied for the summary dismissal of the proceedings on three grounds: (i) the
causes of action were time barred; (ii) the appellants did not have standing to
bring the claims; and (iii) the National Court did not have jurisdiction because
the claims involved questions of customary land ownership. The National Court
upheld each of these grounds and dismissed each proceeding accordingly.
Held:
1. The proceedings were time barred, with the latest cause of action likely
accruing in 1984 (or, potentially, in 2009), outside the 6-year limitation
for contractual claims.
2. The appellants did not have standing to commence the proceedings, as
there was no evidence of any assignment of or succession by the
incorporated business groups to the rights under the agreements from the
customary land owners.
3. There may or may not have been a customary ownership issue that would
have prevented the National Court from exercising its jurisdiction, but
this was unnecessary to decide and did not prevent that court from
dismissing the proceedings on the other grounds.
Cases Cited:
Papua New Guinea Cases
Charlie v Paki [2021] PGSC 60; SC2134
Christian Life Centre v Associated Mission Churches of Papua New
Guinea [2002] PGNC 83; N2261
Hiwi v Rimua [2015] PGSC 60; SC 1460
Kunai v Papua New Guinea Forest Authority [2018] PGNC 439; N7570
Kuri v The State (No 2) [1991] PGSC 3; SC414
Oil Search Ltd v Mineral Resources Development Corporation Ltd
[2010] PGSC 12; SC1022
Peng v The State [1982] PGSC 15; [1982] PNGLR 331
RD Fishing (PNG) Ltd v Masai [2021] PGSC 65; SC2143
Talibe Hegele v Tony Kila (2012) SC1180
Overseas Cases
Dunlop Pneumatic Tyre Company Limited v Selfridge and Company
Limited [1915] AC 847.
Legislation Cited: Papua New Guinea Legislation Business Groups Incorporation Act 1974. Constitution, s59, s 248. Frauds and Limitations Act 1988 s 16. Investment Promotion Act 1992. Supreme Court Act 1975, s 6. Other Legislation Forestry Ordinance 1936-1962 of the Territory of New Guinea. Papua and New Guinea Act 1949 (Cth). Papua New Guinea Act 1971 (Cth). Counsel: Mr. Abone, for the Appellants Mr. Samiat, for the First Respondent Mr. Tombiam, for the Third Respondent Decision delivered on 17 April 2024 1. BY THE COURT: On 14 June 2022, the National Court at Waigani dismissed, with costs, three actions instituted by respectively, the First Appellant, Fulleborne Extension Business Group (Inc), the Second Appellant, Extended Mengen Extension Business Group (Inc), and the Third Appellant, Ania Sawmill Business Group (Inc) against the Papua New Guinea Forest Authority, the State and certain officials of the State. In the National Court, those actions were, respectively, WS 20 of 2020, instituted by Fulleborne instituted on 8 May 2020, WS 14 of 2020, instituted by Mengen on 26 May 2020 and WS 4 of 2020, instituted by Ania on 31 May 2020. 2. The actions had a similar foundation both as to underlying facts and the claims made against the respondents. It was alleged that monies were owed by
the respondents to Fulleborne, Mengen and Ania, pursuant to timber rights
agreements in relation to certain land held in customary ownership in West New
Britain. The agreements were respectively entered into in the 1960’s with the
Administrator of the then Territory of New Guinea, pursuant to the Forestry
Ordinance 1936-1962 of that then Territory, made pursuant to the Papua and
New Guinea Act 1949 (Cth) (later renamed the Papua New Guinea Act 1949
(Cth)). The amounts allegedly owed are substantial - in excess of K32 million in
WS 20 of 2021, in excess of K23 million in WS 14 of 2020 and in excess of
K21 million in WS 4 of 2020.
3. Unremarkably, given the similarity of facts and claims, the actions were
being case managed together in the National Court, to the end of being heard
together, if not earlier resolved by agreement. As it happened, there was no trial
on the merits, because the learned primary judge upheld an application by the
Authority, in which the other respondents joined, for summary dismissal.
4. The learned primary judge relied on three bases for the dismissal of the
actions:
(a) expiry of the limitation period prescribed by s 16(1)(a) of the
Frauds and Limitations Act 1988;
(b) absence of standing by Fulleborne, Mengen and Ania, because they
were not respectively parties to the agreements allegedly breached and
not shown to be successors in law to those parties; and
(c) absence of jurisdiction, because in each instance an issue as to
ownership of customary land and rights related thereto was raised.
5. The appellants have appealed as of right against the order of dismissal on
issues of law or of mixed law and fact as pleaded in their notice of appeal. That
appeal is SCA 105 of 2022. They have also applied for leave to raise on appeal
questions of fact and to adduce on the hearing of an appeal on that question
what is said to be fresh evidence. That application is SCA 110 of 2022. That
application was argued on the basis that, if leave were granted, the Court would
hear the appeal on the question of fact grounds as well as those issues of law or
mixed law and fact already raised by the notice of appeal.
6. For all their prolixity, and, with respect, perhaps oddly, the grounds of
appeal both as pleaded in the notice of appeal and as proposed to be added by
the application for leave do not seek to engage directly with any of the bases
upon which the actions were dismissed. Instead, in one way or another, the
various grounds allege that the dismissal of the actions was attended with a
denial of natural justice to the appellants.
7. It is given that an exercise of judicial power in respect of controversial issues is attended with an obligation to afford natural justice to the parties to that controversy. Section 59 of the Constitution is declaratory of the position at common law in relation to such exercises of judicial power. Materially, the natural justice right allegedly denied was a failure by the learned primary judge to afford the appellants a reasonable opportunity to be heard prior to determining the dismissal application. 8. However, even if there were such a denial, there would be no point in allowing the appeal if, as a matter of law and on incontrovertible facts, the actions were, as a matter of law, doomed to fail. In those circumstances, whatever denial of an opportunity to be heard that may have occurred in the National Court, that absence of opportunity would be completely remedied by the opportunity offered by the hearing of the appeal and related application to make submissions about the bases upon which the actions had been dismissed. If the appellants could not, by their submissions on the appeal, demonstrate that each of the grounds upon which the primary judge acted to dismiss the proceedings was wrong in law, the appeal would fail. 9. The position would be different if each of those grounds could be shown to have been dependent upon particular findings of fact that required a trial, and that the appellants had been denied the opportunity to controvert those facts by evidence at trial. 10. For these reasons, we offered counsel for each of the parties at the hearing an opportunity to make submissions as to the soundness or otherwise in law of each of the grounds upon which the primary judge had dismissed the actions. 11. It is convenient first to deal with the merits or otherwise of these grounds. Limitation Issue 12. The respondents alleged that s 16(1)(a) of the Frauds and Limitations Act was engaged, because each action was founded on a contract and, as at the time of the issuing of the writ by which each action was commenced, more than six years had elapsed from any conceivable breach of contract. It is trite that a cause of action for damages for breach of contract accrues at the time when the contract is breached: see, for example, Hiwi v Rimua [2015] PGSC 60; SC1460, at [18]. The commission of any breach is denied by the respondents. 13. Assuming though that there was a breach of contract, each contract conferred rights of timber extraction for a period of forty years from the date of
the agreement. The dates of the respective agreements, and of the appellant
party asserting a right to sue thereunder, are as follows:
(a) 22 March 1967 – Fulleborne;
(b) 20 November 1968 – Mengen; and
(c) 24 March 1969 – Ania.
14. Although it was not highlighted in submissions, or for that matter in any
statement of claim, it appears that there may have been, in 1974, a variation of
the various timber rights agreements, so as additionally to confer upon the
customary owners a right to receive 25% of the royalties otherwise payable to
the Administrator (and by succession, for reasons given below, the State) by
those were permitted to exploit the timber rights vested in the government under
the agreements. The same document which records that apparent variation also
records the receipt, as at that stage, of particular payments by the government to
the customary owners by their agents.
15. The timber rights granted under even the latest of the agreements expired
in 2009.
16. From this it was said by the respondents to follow that on no view could
writs issued in 2020 be within a six-year limitation period in respect of a breach
of contract.
17. The appellants’ position was that the agreements did not create a
contractual relationship, at least insofar as there was an obligation to pay
interest created. Instead, it was submitted that a type of trust was created. From
this it was said to follow that the limitation period for which s 16(1)(a) of the
Frauds and Limitations Act was inapplicable.
18. As the learned primary judge correctly recognised, whether a limitation
defence is made out requires identification of the cause of action concerned and,
in turn, identification of the date upon which that cause of action accrued: Oil
Search Ltd v Mineral Resources Development Corporation Ltd [2010] PGSC
12; SC1022.
19. A helpful staring point is to consider the relevant terms of the Ordinance
pursuant to which the respective agreements were entered into. By clause 9 of
the Ordinance, it was provided:
9.-(1.) If the native owners are willing to dispose of the timber
growing on any land, the Administrator may acquire the right of
felling, cutting, removing, and disposing of the timber upon such
terms as may be agreed upon between him and the native owners;
and thereupon no person, by purchase or other dealing with the
native owners of the land, shall, except as in this Ordinance
provided, acquire any interest in the timber, either while it is
standing or after it has been felled, but the exclusive right of
felling, cutting, removing, and disposing of the timber shall vest in
the Administrator and those claiming under him, who, for the
purpose of felling, cutting, removing, and disposing of the
timber, shall, subject to this Ordinance, have the right of entering
upon the land and of erecting such buildings, sawmills, and
machinery as may be
necessary.
(2.) The Administrator may, by notice in the New Guinea Gazette,
declare any land as to which timber rights have been acquired
under the last preceding sub-section to be Administration land for
the purposes of this Ordinance.
20. Clause 9 of the Ordinance is facultative; that is, it authorises the making
of agreements of the kind it describes by the Administrator of the then Territory
of New Guinea with particular customary owners of land. Necessarily, in
entering into any such agreement, the then Administrator would not be acting
personally but rather on behalf of the body politic then administering the then
United Nations Trust Territory of New Guinea, the Commonwealth of
Australia.
21. Clause 9 of the Ordinance contemplates that the Administrator will, in
acquiring timber rights as described in that clause from customary owners, enter
into a contractual relationship for that acquisition. That does not mean that the
parties to any such agreement might not provide for a particular sum to be held
on trust by one party for another or others. What it does mean is that clause 9 of
the Ordinance does not by statute create any form of beneficial relationship by
which particular property came to be held on trust by the Administrator for
customary owners with respect to the acquisition of timber rights.
22. It is now necessary to consider the agreements made under clause 9 of the
Ordinance. The agreements are in a standard form.
23. Understanding the terms of each agreement is not assisted by the absence
in evidence before the primary judge of a complete copy of each agreement or
by the extremely poor quality of the reproduction in the appeal book of those
parts of the agreements which were placed in evidence. Fortunately, sufficient
parts of the agreements were in evidence to give a tolerably clear picture of the
legal rights and obligations they created.
24. On their face, the terms of the agreements offer no comfort for the
appellants in relation to their asserted existence of some form of trust, even
assuming that the State succeeded on Independence to any such obligation
hitherto the responsibility, via its agent, the Administrator, of Australia.
25. The relationship created by the several agreements is wholly contractual
in character. There is no support whatsoever in any of the agreements for the
creation of any relationship of trustee and beneficiary as between, at the time of
their making, Australia and any one or more customary owners. Rather, by each
agreement, a form of property, namely timber rights in respect of designated
land for a 40-year period, is sold to Australia (via its representative, the
Administrator) by customary owners in return for a purchase price consisting of
two components. The two components are a lump sum of cash and what is
described as a “Treasury Investment”.
26. The position is nuanced in relation to the components of the purchase
price. In part, this is because the various customary owners, as co-owners,
appointed, pursuant to an agency agreement related to the timber rights
agreement, nominated individuals to act as their agents to enter into the
agreement and to receive monies payable thereunder. It is also because both as
to the cash component of the purchase price and the “Treasury Investment”
component, each is divided in an agreed proportion between individual
customary owners. Nothing is paid to any collective representative to be held on
trust for the customary owners in some collective way. The agreements record
the receipt by the customary owners, via their appointed agents, of the agreed
proportions of the components of the purchase price.
27. The term “Treasury Investment” is defined. Each agreement provides:
It is hereby agreed that the term “Treasury Investment” where used
in this agreement means that part of the price of the Timber Rights,
which with the consent and by the direction of the Vendors, has
been invested (in the names of and in the proportions due to each
agent for his group) in the Territory of Papua New Guinea Loan
for a period of 15 years computed from [a specified date in the
year in which each particular agreement was entered into] to bear
interest at the rate of five dollars eighty-seven and 1⁄2 cents
($5.87.5) per centum per annum. The owners have the right to
negotiate full payment of the principle after 10 years. Each agent
has received an acknowledgement of his investment from the
Treasurer of the said Territory and interest will be due to each
Agent on the First day of the months of January and July in each
and every year during the said period of 15 years.
[Reproduced without editorial correction]
28. Clearly enough, there is a misspelling in the definition of “Treasury
Investment” such that “principle” should be “principal”.
29. As to succession, s 248 of the Constitution provides:
248. VESTING OF RIGHTS AND LIABILITIES OF
FORMER GOVERNMENT.
All property that was, immediately before Independence Day,
vested in the body corporate at that time known as "The
Government of Papua New Guinea" is, on that day, vested in
Papua New Guinea, and all rights and liabilities (actual or
contingent) of that body immediately before that day are, on that
day, rights and liabilities of Papua New Guinea.
30. Although the Constitution does not define “The Government of Papua
New Guinea”, it is a matter of law that, immediately prior to Independence and
pursuant to an amendments made by the Papua New Guinea Act 1971 (Cth) to
the Papua New Guinea Act 1949 (Cth) (as that Act was renamed), the Territory
of Papua and the Territory of New Guinea were being governed together by
Australia via an administrative union called “Papua New Guinea”. The legal
entity which undertook that government was the body politic, Australia. This
was, in terms of s 248 of the Constitution, “The Government of Papua New
Guinea” immediately prior to Independence.
31. What follows from this is that, on Independence and pursuant to s 248 of
the Constitution, the State succeeded to the timber rights hitherto vested in
Australia under each agreement. In like fashion, the State also succeeded to
what had hitherto been Australia’s liabilities under each agreement. Materially,
those liabilities included the liability to pay interest under the “Territory of
Papua New Guinea Loan” on that part of the purchase price invested in that loan
and to be paid the principal sum so invested on the maturity of that loan.
32. In turn what follows from this is that, after Independence, any failure to
pay interest on the “Treasury Investment” as and when due under each
agreement would constitute a breach of that agreement by the State. Likewise,
any failure to pay the principal upon the maturity of the “Treasury Investment”,
as defined, would constitute a breach of the agreement concerned.
33. Unless, by further agreement, the loan concerned was rolled over for a further period, and this is not pleaded, the principal of each loan was, under each agreement, due for payment in full on maturity of the loan. A failure by the State to repay the principal then would constitute a breach of the agreement. Each loan was for a period of 15 years (although there was, after 10 years, a right to negotiate an earlier maturity date conferred). At the latest therefore, the last of the loans referred to in the agreements matured in 1984, the earliest in 1982. 34. The relevant causes of action are thus each causes of action in contract. With respect to the government’s obligations under the original terms of the timber rights agreements, the last of these causes of action accrued in 1984, upon any failure then to pay the principal under the last of the loans concerned. The earlier dated agreements provided for correspondingly earlier requirements to repay the loan concerned. Any failure to repay the principal on the expiry of the loan would constitute a breach of contract. Likewise, any failure to pay an instalment of interest on the loan would constitute a breach of contract at the time when the agreement required that instalment to be paid. 35. Assuming that the agreements were varied in 1974, so as additionally to provide for an entitlement to a royalty stream, any failure to pay the agreed 25% of royalties as and when the whole of those royalties were received from time to time by the State would constitute a breach at that time of this new term. However, that royalty stream could never rise higher than its timber rights source. That source expired on the expiry of the 40-year timber rights period granted to Australia and, after Independence, enjoyed by the State. Even on this view, and in respect of any breach sounding in a failure to pay royalties, the necessary consequence of this is that at the latest a limitation period commenced to run in 2009. Such a period also had long expired by the time proceedings were instituted in 2020. 36. The learned primary judge computed the date of accrual of the pleaded causes of action as running from the date of the expiry of the respective agreements. This, with respect, was not correct in relation to any failure to pay loan interest or principal, as a cause of action for breach of contract accrues on the date of breach. Even so, her Honour’s conclusion that, as each writ had been issued in 2020, the limitation period had expired at the time of the institution of proceedings should be upheld. That is because, correctly analysed, even the most recent of the pleaded causes of action expired in 1990, six years after the principal amount of the last of the loans fell due for payment. Further, even if there were an amendment so as to confer a royalty steam entitlement, any cause of action for a failure to pay this expired, at the latest, in 2015, six years after the underlying timber rights expired. 37. Thus, even if any of the pleaded causes of action had any foundation in
fact, the proceedings were instituted up to 30 years and upwards too late. 38. In specifying limitation periods for particular causes of action, parliament strikes a balance between the ability of a person in whom that cause of action is vested to seek a remedy via an exercise of judicial power and the ability of an person who may be amenable to such a remedy to order his or her affairs, personal and financial, on the basis that, after the expiry of the limitation period concerned and subject to raising that in bar, they are no longer in jeopardy of being subject to that remedy even if the cause of action could be proved. The bar effected by the limitation period relieves the person of any need to contest whether the asserted cause of action can be proved. 39. Strictly, the conclusion reached concerning the expiry of limitation period issue renders it unnecessary either to consider whether there was any merit in the other grounds upon which the learned primary judge dismissed each proceeding or the appellants’ natural justice issue. However, as each of these issues was the subject of submissions it is desirable to make some observations concerning them. Standing 40. At the time when the respective agreements were entered into in the 1960’s, neither Fulleborne, Mengen nor Ania existed. Each of these corporations was brought into existence pursuant to a statute, the Business Groups Incorporation Act 1974. Thus, neither Fulleborne, Mengen nor Ania was a party to any of the timber rights agreements. 41. The Business Groups Incorporation Act did not effect any acquisition of the rights of the customary owners under the respective timber rights agreements in question or a succession by Fulleborne, Mengen or Ania to such rights thereunder as had hitherto been vested in those customary owners. That Act was therefore not a source of any succession by the appellants to rights under these agreements. 42. Even more elusive was how another statute cited in the statement of claim and in oral submissions by the appellants’ counsel, the Investment Promotion Act 1992, might be a source of any succession to any such rights. 43. Thus, Fulleborne, Mengen and Ania were neither parties to the timber rights agreements nor shown to be successors in law to the customary land owners who were parties to those agreements. Indeed, Fulleborne, Mengen and Ania did not even exist in law at the times when the respective timber rights agreements were made.
44. The learned primary judge correctly identified that only a person who is a
party to a contract may sue on it: Dunlop Pneumatic Tyre Company Limited v
Selfridge and Company Limited [1915] AC 847. Her Honour aptly cited
Christian Life Centre v Associated Mission Churches of Papua New Guinea
[2002] PGNC 83; N2261 as a local example of the recognition in this
jurisdiction of what is a fundamental principle of the common law.
45. It follows that the learned primary judge was also correct to dismiss the
proceeding because of an absence of standing.
Absence of jurisdiction – customary land ownership
46. The inability of Fulleborne, Mengen and Ania to demonstrate that they
had succeeded in law to the rights of the customary owners under the timber
rights agreements left those customary owners, or their lawful successors, as the
only persons who might sue for a breach of those agreements.
47. In relation to whether the National Court lacks jurisdiction because a
proceeding entails a dispute as to customary land ownership, the Supreme Court
held in Talibe Hegele v. Tony Kila (2012) SC1180, that the test to apply is:
If in proceedings in the National Court a question arises whether
the Court has jurisdiction due to the subject matter of the
proceedings relating to ownership of customary land, the
question of jurisdiction is to be determined by characterisation
of the cause of action. If the cause of action requires the Court to
determine ownership of customary land, the Court will lack
jurisdiction. If some other cause of action is being prosecuted,
the proceedings will fall within the jurisdiction of the Court.
48. More recently, in Charlie v Paki [2021] PGSC 60; SC2134, at [6], the
Supreme Court accepted the correctness of this observation, offering this
explanation for that acceptance:
We accept the above statement of principle because customary
landownership disputes fall exclusively within Section 3 of the
Land Disputes Settlement Act, 1975 (“Act”) as “disputes as to
interests in customary land, or as to the position of boundaries of
any customary land”. A consideration of the dispute as to
“interest” according to Section 2 of the Act “includes any interest
in land of whatsoever nature that is recognized by the custom of the
people of the area in which the land is located” and the term
“land” is defined as “customary land ...........”.See also Louis
Lucian Siu v. Wasime Land Group Incorporated (2011) SC1107,
Tender Wak v. John Wia (2008) N3356, Victor Golpak v. Patrick
Alongerea and Ors [1993] PNGLR 491 and Ronny Wabia v. BP
Exploration Operating Co. Ltd [1998] PNGLR 8.
49. The respondents did not, either before the primary judge or on the appeal,
deny that the customary owners who made those agreements with the
Administrator were in law and in fact the owners of the land respectively
described in those agreements. However, even at the time when the primary
judge heard the dismissal application in 2022, ordinary experience of human life
expectancy would suggest that, as these agreements were each made well over
fifty years beforehand, many of the customary landowners who made the
respective agreements may no longer have been alive. So, even had the
proceedings been instituted as a representative proceeding, which may have
been apt, a question of customary land ownership may have arisen as to how
particular persons named in and purporting to authorise the institution of those
proceedings by a representative, in accordance with the practice and procedure
notably described in RD Fishing (PNG) Ltd v Masai [2021] PGSC 65; SC2143,
succeeded to the customary land ownership rights vested in a person or persons
named in one or the other of the timber rights agreements. So it is possible to
see how, even in the absence of controversy as to the customary ownership of
land as at the time when the agreements were respectively made, a customary
land ownership succession issue may have arisen. If so, it would not have been
within the jurisdictional remit of the National Court to determine that issue.
50. As it is, the way in which, under the agreements, the purchase price was
proportionately distributed to agents, apparently for groups of customary
owners, might be thought to suggest that the particular form of customary
ownership which was then apprehended to exist in respect of the land concerned
may have been family or perhaps sub-clan based, perhaps in respect of
particular parcels of land, rather than the whole of the land being held in
customary ownership by the one clan.
51. It was not necessary that the precise form of customary ownership
applicable to the land covered by the timber rights agreements be resolved to
determine that the proceedings should be dismissed on limitation period expiry
or absence of standing grounds. That fell for resolution just on the face of the
agreements and having regard to the time which had passed.
52. For the reasons just given, issues as to the customary ownership and
succession of customary ownership of the subject land may have arisen, had
more attention been given to who had standing to commence a proceeding. The learned primary judge was right to apprehend that there may have been customary land ownership issues, and what would be the jurisdictional consequence if there were, but it was truly unnecessary in the circumstances mentioned to reach a concluded view that there were such issues in order to dismiss the proceedings. It is likewise unnecessary to reach such a conclusion in order to dismiss the appeal. Denial of Natural Justice? 53. On 1 June 2022, the Authority’s application for the summary dismissal of the proceedings was set down for hearing on 10 June 2022. 54. On that day, the appellants by their counsel sought an adjournment of the hearing of the Authority’s application. 55. One basis put forward for the adjournment sought was that it was necessary to take instructions from the management of the client incorporated business groups which were the plaintiffs and are now the appellants. These persons were said to be in Kimbe, remote from the Port Moresby office of the appellants’ lawyers. 56. It was also put forward that the proceedings were otherwise due to be returned in July for further case management before another judge and that the Authority’s application should be adjourned until then. 57. The Authority’s application was of a kind which required that notice thereof be given to the other parties: Order 4, rule 38, National Court Rules (NCR). The required period of notice was not less than three days before the hearing date: Order 4, rule 42, NCR. Although the appellants had been given at least that period of notice of the hearing, the specification in Order 4, rule 38, NCR of “not less than” indicates that, subject to any abridgement of time for cause, the notice period prescribed is a minimum, not a fixed time, with it always open to the Court to conclude that the circumstances of a given case require a greater period of notice. That is in conformity with the requirement, flowing from an obligation in relation to a controversial issue in a case to afford parties natural justice to allow a reasonable opportunity for parties to be heard. What is or is not a reasonable time is inherently fact specific and one for the evaluation of the judge constituting the court for the hearing of a given application. There is considerable scope for reasonable minds reasonably to differ in relation to such an evaluation as to what is reasonable in the circumstances.
58. Notably, it was not put on behalf of the appellants in relation to an adjournment that the timber rights agreements materially excerpted in evidence and which formed a factual foundation for the Authority’s application were not those upon which the appellants sued. 59. The grounds upon which the Authority’s application was put forward were points of law which flowed from the way in which the appellants had pleaded their statements of claim and what was apparent on the face of each of these agreements as to who were the parties to them and from the terms of those agreements, particularly having regard to the definition of “Treasury Investment”. 60. The asserted bases for dismissal raised issues to which any responsible practitioner ought to have given attention prior to the institution of any of the proceedings. Ordinary care upon a lawyer’s encounter with any of these timber rights agreements, given their age and the nominated maturity dates of the “Treasury Investment” component, should have raised a question, prior to their institution, of whether a limitation period had expired. It should also have raised a question as to how, given that they were not parties to the agreements, the appellants had any standing. The appellants and the lawyers acting for them did not just have between 1 June 2022 and 10 June 2022 to turn their minds to such issues. Self-evidently from the reference in the respective statements of claim to the respective agreements, the appellants and their lawyers had the copies of the agreements in their possession in 2020 when the proceedings were instituted. Viewed in this light, there was nothing unreasonable about a conclusion that the appellants had had sufficient time prior to the hearing on 10 June 2022 to consider the issues raised by the Authority’s dismissal application. 61. Contrary to the submission made by the appellants, the application was interlocutory in character. That was so even though the application sought the dismissal of the proceedings on each of the bases upon which, as it transpired, they were dismissed. Order 4, rule 37, NCR permitted the Authority, subject to the giving of notice, to move for the dismissal of the proceedings. 62. On the hearing of the Authority’s application, and as they were entitled to do, the other respondents, by their lawyers, embraced the grounds specified Authority’s application as to why the proceedings should be dismissed not just as against the Authority but generally. 63. It follows that there is no substance in the appellants’ asserted denial of natural justice. Leave to raise matters of fact and admission of fresh evidence
64. The various questions of fact sought to be raised by leave on the hearing of the appeal amounted to nothing more than an endeavour to re-agitate on appeal the merits of a discretionary value judgement by the primary judge to refuse the appellants’ application for an adjournment and instead to proceed with the hearing of the dismissal application. Moreover, the appellants sought to do this via the admission of what was said to be fresh evidence. 65. The admission of further evidence on the hearing of an appeal is governed by s 6(1)(a) of the Supreme Court Act 1975. That requires not just that the evidence be “fresh” but also that the Court is satisfied that the justice of the case warrants it. In Kuri v The State (No 2) [1991] PGSC 3; SC414, a specially constituted bench of five judges endorsed views earlier expressed in Peng v The State [1982] PGSC 15; [1982] PNGLR 331 to the effect that “fresh evidence” in terms of s 6(1)(a) of the Supreme Court Act was new evidence that is relevant, credible, admissible according to the rules of evidence and of such a character that, combined with the evidence already given at the trial, the result in the minds of reasonable men ought to be affected. Evidence that was in existence at the time of a hearing in the National Court and reasonably available to the party seeking to tender it on appeal will not be fresh. 66. What is put forward in the application book as “fresh evidence” is no such thing. Instead it comprises an uncritically assembled amalgam of parts of timber rights agreements already in evidence or which were long in existence at the time when the dismissal application was heard, copies of long ago published gazette notices concerning the making of such agreements and documents on the National Court file or correspondence between lawyers which predated the hearing of that application. 67. Insofar as this material comprises extracts of agreements or gazette notices, this was material which, as we have already mentioned, one might have expected would have been gathered and considered by any competent lawyer prior to the institution of proceedings in the National Court. There is nothing to suggest that this material was not reasonably available. 68. There is nothing in the court documents and correspondence in the application book which either was not already before the primary judge or could not, with due diligence, have been placed before her Honour. 69. Insofar as the application book contains a transcript of the hearing before the learned primary judge on 10 June 2022, this transcript is already in the appeal books and has been considered by us. 70. We are not, for these reasons, persuaded that there is anything in the
application book which meets the requirements specified in s 6(1)(a) of the Supreme Court Act for the admission of evidence on the hearing of an appeal. The appeal should be decided on the evidence before the primary judge. 71. Moreover, leave to raise issues of fact should be refused. 72. In the ordinary course of events, issues of fact are for determination in the National Court. The transcript of the hearings both on 1 June 2022 and 10 June 2022 disclose that the primary judge understood there had been a history of case management of the proceedings by another judge, that related interlocutory directions had been made from time to time by that judge and that there was a forthcoming case management hearing on 1 July 2022. The Authority’s dismissal application had been filed after the time of this forthcoming case management hearing had been fixed. That application raised discrete issues going to whether there was any point in conducting that hearing. 73. All that the learned primary judge did was to make an interlocutory value judgement on a matter of practice and procedure. For reasons already given, that value judgement did not entail any denial of natural justice to the appellants. Further, it was a value judgement reasonably open to her Honour. Moreover and fundamentally, on the issues of both the expiry of a limitation period, which the respondents were disposed to raise and had raised, and standing, these proceedings were fraught with the prospect of summary dismissal. The issues having been raised, there was just no point in putting off the day when the merits of that prospect and its logical and lawful sequel, dismissal, were heard and determined. Closing Observations 74. Based on our perusal of the material in the appeal books, which includes the writs as issued and amended, as well as the relevant parts of the various timber rights agreements, we consider it in the interests of justice to make the following concluding observations. 75. The appellants made reference in their submissions to Kunai v Papua New Guinea Forest Authority [2018] PGNC 439; N7570, which was said to have “settled the issue on redemption of investments”, as well as “the issue on the method of calculation of Timber Rights Purchaser Agreement Investment”. As is disclosed in a finding in Kumai, at [3], there was a finding in that case that the “Treasury Investment” component of the purchase price had been rolled over upon its nominal maturity. That finding is not evidence in the present proceedings. Moreover, the appellants did not plead any such rollover. At most, they pleaded alleged implied terms which were completely at odds with the express terms of the timber rights agreements.
76. Kunai is authority for the issues decided as between the parties to that case and on the evidence led in that case. It is neither necessary nor desirable that we express any view as to the correctness of any of the conclusions reached in that case. 77. However, that Kunai was decided prior to the institution of the present proceedings means that there was a case which, if followed on like facts, offered guidance as to how asserted entitlements of customary owners under long ago made timber rights agreements might yet be actionable. Whether or not Kunai offered such precedential value required a careful investigation, prior to the institution of proceedings, of whether there were any comparable facts in relation to the history of events following the making of the present timber rights agreements and related, careful pleading of how, after so many years, a cause of action known to law and not subject to a limitation period was maintainable by the persons who sought to assert that cause of action. Necessarily, part of that investigation ought to have been whether, and if so how and when, any rollover of a nominal maturity date for a loan occurred. 78. It is not apparent to us that any such careful investigation was undertaken. 79. Papua New Guinea has, from the very first moment of Independence, sought to govern itself according to the rule of law. In any country which seeks to govern itself according to the rule of law, but even more so in developing countries where many do not have the benefit of higher education, lawyers play an essential role in advising those without the benefit of legal education or knowledge of practice and procedure as to whether they have a cause of action known to law and what remedies are open, including whether they are barred by a limitation statute, and in which court. Great benefits to individuals and to general peace and order can be conferred by the provision of accurate legal advice on these subjects. Conversely, there is at least potential for great harm to be done to individuals and to general peace and order by the raising of false expectations as to entitlements based on flawed legal advice on these subjects. 80. Ordinary care ought always, prior to the institution of the present proceedings, have raised an interrogative note as to how incorporated bodies which were not even in existence at the time when any of the present timber rights agreements were made could in law have any right to sue upon an alleged breach of these agreements. 81. Ordinary care, particularly if informed by Kunai, ought also always to have raised an interrogative note, prior to the institution of proceedings, about how there might be any non-statute-barred cause of action in relation to a “Treasury Investment” component of a purchase price, the contractually
specified maturity date for which had long ago expired.
82. Yet another interrogative note which ordinary care ought to have raised is
whether, just perhaps, a failure by groups of customary owners to receive their
proportion of either interest payments or, on maturity, the principal sum was
referable to some failure by their appointed agent, not the State, to pass on such
amounts to them.
83. There was before the primary judge affidavit evidence from a responsible
official about various kinds of post-Independence government securities and
post-Independence transitional relations and recording keeping responsibilities
as between the Reserve Bank of Australia and Papua New Guinea’s Central
Bank. Consideration of this material was not necessary in order for the primary
judge to determine the issues raised by the dismissal application. Nor has it been
necessary for us to detail that evidence to determine the issues raised by the
appeal. We do however note that, if accepted, that evidence would suggest that
the principal of the “Treasury Investment” was paid out prior to the institution
of the present proceedings. It is not necessary in order to determine the appeal
whether or not that is correct.
84. Finally, the dismissal of the proceedings and the upholding of that
dismissal on this appeal brings to finality the proceeding instituted by the
appellants. That outcome has nothing to say about, for example, a representative
proceeding on behalf of those who are the successors to the customary owners
who entered into the present timber rights agreements in respect of an alleged
breach of those agreements in respect of a cause of action for which a limitation
period has not expired.
85. For these reasons, the appeal must be dismissed and the application to
raise on appeal issues of fact and lead further evidence refused. Costs must
follow the event.
Orders:
1. The appellants’ application, being SCA 110 of 2022, for leave to raise on
appeal issues of fact and to lead further evidence be refused.
2. The appeal, being SCA 105 of 2022, be dismissed.
3. The appellants pay the respondents’ costs of and incidental to the appeal
and to that application, to be taxed if not agreed.
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Parkil Lawyers: Lawyers for the Appellants Holingu Lawyers: Lawyers for the First Respondent Ace Lawyers: Lawyers for the Third Respondent Solicitor General’s Office: Lawyers for the Second and Fourth Respondents
