Jack Apai v PNG Forestry Authority & Vanimo Forest Products [2018]

Unlawful extension of the Timber Permit for Block 6 of the Vanimo TRP project

Logging companies mentioned in this document:


                                                             N7756
                         PAPUA NEW GUINEA
                [IN THE NATIONAL COURT OF JUSTICE]

                        OS (JR) NO. 275 OF 2018

                              BETWEEN
   JACK APAI for himself and for and on behalf of the 67 customary
 landowners of the Block 6 Area of the Vanimo Timber Rights Purchase
Agreement (TRPA) whose names appear on the Power of Attorney given to
                      him filed in this proceeding
                                  Plaintiff

                        AND
 HON. DOUGLAS TOMURIESA, MP, in his capacity as the Minister for
                       Forests
                               First Defendant

                              AND
                     NATIONAL FOREST BOARD
                              Second Defendant

                            AND
             PAPUA NEW GUINEA FOREST AUTHORITY
                              Third Defendant

                            AND
               VANIMO FOREST PRODUCTS LIMITED
                              Fourth Defendant

                           AND
        THE INDEPENDENT STATE OF PAPUA NEW GUINEA
                               Fifth Defendant


                            Waigani: Makail, J
                          2019: 8th & 12th March

JUDICIAL REVIEW – Extension of Timber Permit – Timber Permit expired -
Decision of Minister for Forests to extend Timber Permit after it expired –

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Effect of expired Timber Permit – Requirement by National Forest Board to
obtain report from Provincial Forest Management Committee prior to
extension of Timber Permit – Mandatory requirement – Breach of – Forestry
Act, 1991 – Sections 78(3) and 137(1B) & (1D)

Cases Cited
Papua New Guinea Cases

Joseph Kelange & Ors v. Kanawi Pouru & Ors (2011) N4662
Kanawi Pouru & Ors v. Peter Apoi: SCA No 87 of 2015 (Unnumbered and
Unreported Judgment of 27th October 2017)
Madang Timbers Limited v. Valentine Kambori (2009) SC1000
Peter Apoi v. Kanawi Pouru (2015) N5983
Sinene on behalf of the Land Owners of the Vanimo TRP Area v. Ikoirere & Ors
(2005) N2903

Overseas Cases

Associated Picture Houses v. Wednesbury Corporation Ltd [1948] I KB 223

Counsel:

Mr. B. S. Lai, for Plaintiffs
Ms. P. Yom, for First and Fifth Defendants
Mr. S. Mitige, for Second and Third Defendants
Mr. W. Mininga, for Fourth Defendant

                                JUDGMENT
12th March, 2019
1.    MAKAIL, J: This is an application for judicial review.
Timber Rights Purchase Agreement

2.    The uncontested facts are that on 8th February 1967 the customary
landowners of the Vanimo Block 6 Area entered into a Timber Rights Purchase
Agreement (TRPA) with the Crown. The term of the TRPA was for a period of
40 years and was to expire on 8th February 2007.
3.     By the TRPA, the customary landowners agreed to alienate their rights in
the timber resources to the Crown to negotiate and secure a developer to harvest
and sell the timber resources in the Vanimo Block 6 area.

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Project Agreement

4.    On 5th October 1990 pursuant to the TRPA, the State (replacing the
Crown) and the Fourth Defendant entered into a Project Agreement whereby the
Fourth Defendant was selected as the developer and to harvest and sell timber
resources of the customary landowners of the Vanimo Block 6 Area. It was also
agreed that the Fourth Defendant will pay monetary benefits to the customary
landowners.
Timber Permit

5.    On 31st October 1991 the Third Defendant granted to the Fourth
Defendant a Timber Permit. It is described as TP 10-8. It conferred on the
Fourth Defendant exclusive rights to harvest timber resources within the
Vanimo Block 6 Area. The term of the Timber Permit was for a period of 20
years and was to expire on 31st October 2011.
Expiration of Timber Rights Purchase Agreement and Timber Permit

6.    On 8th February 2007 the TRPA expired and was not extended. The
Timber Permit expired on 31st October 2011 and was not extended. It is also
conceded by the parties that after the TRPA and Timber Permit expired, there is
no evidence to establish whether logging operations or harvesting of forest
resources continued.
Extension of Timber Permit

7.     It was not until 11th April 2017 that the Timber Permit was extended by
the First Defendant for a further term of 5 years. By the extension, the Timber
Permit was to expire on 11th April 2022. The extension was granted by the
First Defendant pursuant to Section 78 of the Forestry Act 1991.
Breach of Forestry Act, 1991
8.     The first ground of review is based on breach of the Forestry Act 1991, in
particular Sections 78(3) and 137(1B). The Plaintiffs submit that for the
exercise of power by the Minister for Forests to be validly exercised, the
National Forest Board (Forest Board) must receive a report from the Provincial
Forest Management Committee (PFMC) which must support the extension and
thereafter there must be a recommendation by the Forest Board to the Minister
to extend the Timber Permit.
9.    In this case, the decision by the First Defendant to extend the Timber

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Permit was made without a report from the Sandaun PFMC. A letter produced
by the Plaintiffs coming from Mr. Conrad Tilau, the Chairman of the Sandaun
PFMC confirms the lack of the report. This letter is dated 18th June 2018 and
relevantly states that “the decision to grant the extension of the term of permit
for the former Vanimo TRP blocks 3-6 was a Ministerial decision......” and “that
the submission and approval was direct from the National Forest Board, and
not through the Provincial Forest Management Committee level”.
10. The Plaintiffs submit that according to Section 78 and Section 137(ID), it
is mandatory that the Forest Board obtain a report from the Sandaun PFMC
before deciding whether to recommend an extension of the Timber Permit to the
Minister. They further submit that where a statutory provision prescribes a
procedure in mandatory terms, the action taken must be in strict compliance
with the mandatory requirements as Injia DCJ (as he then was) stated in Sinene
on behalf of the Land Owners of the Vanimo TRP Area v. Ikoirere & Ors (2005)
N2903. In this case since the procedure for extension is expressed in mandatory
terms, a failure to obtain a report from the Sandaun PFMC will result in a
breach of this requirement and renders invalid, the decision of the First
Defendant.
11. The Second and Third Defendants concede this point but submit that
there is no evidence from the Plaintiffs to establish that the Sandaun PFMC did
not provide a report to the Second Defendant. This is because the letter from
the Chairman of Sandaun PFMC Mr. Tilau is vague as it does not state that the
PFMC did not provide a report to the Forest Board and is insufficient to support
the ground that there was a report by the Sandaun PFMC upon which the
Second Defendant acted on to recommend to the First Defendant to extend the
Timber Permit of the Fourth Defendant. In the absence of this evidence, it must
be assumed that one was provided to the Second Defendant upon which the
latter recommended to the First Defendant to extend the Timber Permit of the
Fourth Defendant.
12. The First and Fifth Defendants support the submissions of the Second and
Third Defendants while the Fourth Defendant did not take any particular
position on this point.
13. For the First and Fifth Defendants, they submit that by virtue of Section
99(3) of the Constitution in principle, there is a separation of power between the
three arms of Government; the Legislature, Executive and Judiciary. The
decision under consideration is a Ministerial decision and is not open to judicial
review. If the Court were to review it, it would be tantamount to interfering
with the Minister’s exercise of power by the Judiciary and would constitute a
fundamental breach of the doctrine of separation of power enshrined in Section
99 of the Constitution.
14.   The Plaintiffs’ brief response to this submission is that, the First and Fifth

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Defendants’ submission is misconceived. This is because they challenge the
exercise of power by the Minister as conferred on him by Statute, namely the
Forestry Act 1991 to extend a Timber Permit which they contend was exercised
in breach of the said Act, hence falling within the jurisdiction of the Court to
review.
15.   Section 137(1B) states:
      “(1B) Where the term of a timber rights purchase agreement granted
      under the Forestry Act (Chapter 216) (repealed) is longer than the term
      of a timber permit granted in respect of the timber rights purchase
      agreement, the timber permit may be extended or renewed under this
      section subject to—
      (a) the social acceptability of the timber permit in the project area by
      the customary owners in writing; and
      (b) the satisfactory performance of the holder of the timber permit in
      carrying out the operations including compliance with the Act, the terms
      and conditions of the timber permit and the Papua New Guinea Logging
      Code of Practice; and
      (c) the amount of forest resources available in the project area to
      commercially support the operations for not less that two years; and
      (d) the rate of the annual allowable harvest which shall not be
      increased at the time of the application for extension; and
      (e)   the currency of or payment of a performance bond as prescribed;
      and
      (f)    where applicable, amendments to the terms and condition of the
      timber permit to include a time table for the delivery of infrastructure and
      other community based benefits and any forest management and other
      silvicultural treatments specified in the permit.”
16.   Section 137(1D) states:
      “(1D) The Board shall obtain a report from the Provincial Forest
      Management Committee on the requirements in Subsection (1B) and
      where satisfactory, shall recommend to the Minister to extend or renew
      the term of the timber permit and the Minister may grant such extension
      or renewal subject to the term of the timber rights purchase
      agreement.” (Underlining is mine).
17.   Section 78 states:
      “78. Extension or renewal of timber permit.

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      (1) The holder of a timber permit may apply to the Board for extension
      or renewal of the term of the permit.
      (2)   An application under Subsection (1) shall—
            (a)    be in the prescribed form; and
            (b)    be accompanied by the prescribed fee; and
            (c)    be lodged with the Managing Director.
      (3) The Board shall obtain from the Provincial Forest Management
      Committee a report on—
            (a)    the social acceptability of the holder of the timber permit in
                   the project area; and
            (b)    the performance of the holder of the timber permit in
                   carrying out the operations authorized by the timber permit;
                   and
            (c)    the amount of forest resources available in the vicinity of the
                   project area in accordance with sustained yield management
                   practices.
      (4) Where the reports required under Subsection (3) are satisfactory,
      the Board shall recommend to the Minister that an extension or renewal
      of the term be granted to the holder of the timber permit and the Minister
      may grant such extension or renewal.” (Underlining is mine).
18. From parties’ submissions, it is common ground that where a statutory
provision is in mandatory terms, it requires strict compliance. In this case,
under Section 78(3) and Section 137(1D) (supra) in an application for extension
of a Timber Permit by a holder, it is mandatory that the Forest Board obtain a
report from a PFMC, in this case, the Sandaun PFMC. A failure to comply with
this requirement will result in a breach and render invalid, the decision of the
Minister. See Sinene on behalf of the Land Owners of the Vanimo TRP Area v.
Ikoirere (supra); Peter Apoi v. Kanawi Pouru (2015) N5983 and Madang
Timbers Limited v. Valentine Kambori (2009) SC1000. I accept this to be the
correct position in law.

19. The question is, did the Forest Board obtain a report from the Sandaun
PFMC before making a recommendation to the First Defendant to extend the
Timber Permit of the Fourth Defendant? The Plaintiffs did provide evidence
that there was no report by the Sandaun PFMC provided to Forest Board prior
to the Forest Board’s decision to recommend to the First Defendant to extend
the Timber Permit of the Fourth Defendant. This evidence comes from the
principal Plaintiff Mr. Jack Apai and 10 other customary landowners whose

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affidavits were relied upon without any objection. Each of them deposed that
he was not aware of any meeting held by the Sandaun PFMC to recommend to
the Forest Board an extension of the Timber Permit of the Fourth Defendant.
Their evidence is accepted because as customary landowners within the Block 6
area, they are and should have been privy to information before the Sandaun
PFMC regarding extension of the Timber Permit of Block 6 area including
being advised of any application by the Fourth Defendant for extension and the
report by the PFMC prior to the recommendation by the Forest Board to the
Minister to extend the Timber Permit.

20. On the other hand, I consider that the defence is obliged to produce this
report, if it exists and the Second Defendant as the party in receipt of it by virtue
of Section 78(3) and Section 137(1D) (supra) should have it in its possession
and quiet easily produced it at trial. In the absence of this report, Mr. Apai’s
evidence and that of the other 10 witnesses on the lack of this report stands
uncontroverted and is sufficient to prove that no report from the Sandaun PFMC
was obtained by the Second Defendant prior to its decision to recommend to the
First Defendant to extend the Timber Permit of the Fourth Defendant.
21.    In addition, the Chairman of the Sandaun PFMC Mr. Tilau confirms the
lack of report in the letter dated 18th June 2018. It relevantly states that “the
decision to grant the extension of the term of permit for the former Vanimo TRP
blocks 3-6 was a Ministerial decision......” and “that the submission and
approval was direct from the National Forest Board, and not through the
Provincial Forest Management Committee level”. Contrary to the Second and
Third Defendants’ submissions that this letter is vague, I am satisfied that it
sufficiently explains the position of the Sandaun PFMC, in that, it can be
inferred that it was not consulted by the Forest Board in terms of providing its
report prior to the decision to recommend to the First Defendant to grant an
extension of the Timber Permit to the Fourth Defendant.

22. As to the First and Fifth Defendants’ submission that it is not open for the
Plaintiffs to seek judicial review of the exercise of power by the First
Defendant, I accept the submission of the Plaintiffs for the reasons given at [13]
(supra) and I find the First and Fifth Defendants’ submission misconceived and
reject it.

23. In the end result, I find, as a matter of fact, the Sandaun PFMC did not
provide to and the Forest Board (Second Defendant) did not obtain a report
from the Sandaun PFMC as required by Section 78(3) and Section 137(ID)
(supra) prior to recommending to the First Defendant to extend the Timber
Permit of the Fourth Defendant.     As a matter of law, I find that the First,
Second and Third Defendants breached Section 78(3) and Section 137(1D)
(supra) and the breach renders the decision of the First Defendant to grant an

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extension of the Timber Permit of the Fourth Defendant invalid, null and void.
24.   This ground of review is upheld.
Unreasonableness of the decision
25. The second ground is based on the Wednesbury principle of
unreasonableness founded in the case of Associated Picture Houses v.
Wednesbury Corporation Ltd [1948] I KB 223. The Plaintiffs submit that a
Timber Permit is granted subject to a current TRPA. For a Timber Permit to be
valid, the TRPA must be extended prior to its expiry. In this case, as the TRPA
had expired on 8th February 2007, there is no current and valid TRPA upon
which the First Defendant may grant an extension of the Timber Permit for the
Fourth Defendant to continue harvesting forest resources in the Block 6 area.
26.   To make matters worse for the defence, the Timber Permit also expired
on 31st October 2011. For it to be a current and valid Timber Permit, it should
have been extended prior to 31st October 2011. It was not and there is no
current and valid Timber Permit upon which the First Defendant could lawfully
extend. In the circumstances, the decision by the First Defendant to extend the
Timber Permit almost 6 years after the expiry of the Timber Permit is totally
unreasonable and absurd.
27.   Finally, the Project Agreement which is dependent on the Timber Permit
expired when the Timber Permit expired on 21st October 2011. The Second
Defendant sought to overcome the expiration of the said Agreements and
Timber Permit by granting a grace period to the Fourth Defendant pursuant to
Section 137(3) of the Forestry Act 1991 to which the provisions of the said Act
would not apply to them. This is to avoid the expiration of the said Agreements
and Timber Permit and allow them to continue until 11th April 2022. This, the
Plaintiffs submit, is not permitted because Section 137(3) does not apply to this
type of case.
28. The Second and Third Defendants’ second ground in opposition is that,
the application for judicial review is flawed because there is no evidence of a
TRPA for Block 6 area. The one produced and relied upon by the Plaintiffs is
for customary landowners of Blocks 1 to 5. The First and Fifth Defendants
support this submission. The Fourth Defendant refers to the decision of the
Supreme Court in Kanawi Pouru & Ors v. Peter Apoi: SCA No. 87 of 2015
(Unnumbered and Unreported Judgment of 27th October 2017) where it
referred to one Timber Permit (TP 10-8) based on two TRPA and submits that it
may be inferred from that case that there is a TRPA for Blocks 1 to 5 area and
another for Block 6 area and the Timber Permit sufficiently covers all of these

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Blocks of land area.
29. In response to this ground in opposition, the Plaintiffs also take the same
position as the Fourth Defendant and adds that the Fourth Defendant’s General
Manager Mr. David Ling acknowledges that there is a TRPA for Block 6 area
which is consistent with the observation by the Supreme Court in Peter Apoi’s
case. It is, therefore, sufficient to infer that there is in existence a separate
TRPA for Block 6 area and this ground by the Second and Third Defendants
should be dismissed.
30. As to the Second and Third Defendants’ submission that there is no
evidence of a TRPA for customary landowners of Block 6 area to support the
Plaintiffs’ claim for relief, this is a question of standing of the Plaintiffs to seek
judicial review which should have been decided at the leave stage. In my view,
if leave was granted, it must be accepted that the Plaintiffs have been granted
standing to seek judicial review of the extension of the Timber Permit which
covers Block 6 area.
31. Alternatively, I accept the Plaintiffs’ submission which is consistent with
the submission of the Fourth Defendant that while there is no evidence of a
separate TRPA for Block 6 area, it can sufficiently be inferred from the Timber
Permit and the Supreme Court decision in Peter Apoi’s case (supra) including
the evidence of Mr. Ling that there are two separate TRPAs, one for Blocks 1 to
5 and the other for Block 6 with one Timber Permit (TP10-8) covering all of
these Blocks. For these reasons, I find the submission of the Second and Third
Defendants misconceived and reject it.
32. As to the question of reasonableness of the decision, the Second and
Third Defendants concede that where a TRPA has expired, it cannot be extended
under Section 137 (supra). Further, a Timber Permit cannot be extended if a
TRPA has expired. Given this concession, I am satisfied that the TRPA expired
on 8th February 2007. I am further satisfied that the TRPA was not extended
prior to its expiration and that the Timber Permit also expired on 31st October
2011 and was not extended prior to its expiration. The effect of this is as
explained by Manuhu J in Joseph Kelange & Ors v. Kanawi Pouru & Ors
(2011) N4662 at [9]: “...........termination or expiration of a timber rights
purchase agreement also renders impractical and useless a timber permit that is
issued against that timber rights purchase agreement.” (Underlining is mine).
33. This being the effect, I am further satisfied that the TRPA for Block 6
area and Timber Permit for Block 6 area are not current, and useless and cannot
be relied upon by the Fourth Defendant to conduct logging operations or harvest
forest resources in Block 6 area.
34. Finally, I accept the Plaintiffs’ submission that it is unreasonable and
absurd that the Project Agreement which is dependent on the Timber Permit has

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also expired when the Timber Permit expired on 31st October 2011 and yet the
Second Defendant granted a grace period to the Fourth Defendant pursuant to
Section 137(3) of the Forestry Act 1991. This provision is a saving clause or
provision intended to save permits, agreements, licences, etc.., granted under the
former Act and to carry them over to the current Forestry Act after the former
was repealed.     In other words, Section 137(3) is inapplicable and it is
unreasonable and absurd for the Second Defendant to use this provision in an
attempt to avoid the expiration of the said Agreements and Timber Permit and
allow them to continue until 11th April 2022.
35.      For these reasons, this ground is upheld.
Error of Law
36. The Plaintiffs repeat the submissions made in ground one, that is, breach
of law. The Defendants makes the same sorts of submissions in ground one.
For the same reasons given in ground one, this ground is also upheld.
Relief
37. In the event that the application for judicial review is upheld, the
Plaintiffs seek orders in the nature of declaration, certiorari and injunction.
These orders are intended to firstly affirm their claim that the extension of the
Timber Permit is illegal, null and void, secondly, quash the decision of the First
Defendant to extend the Timber Permit and finally, put in place an order by way
of an injunction to stop any further extensions and/or grant of the TRPA and
Timber Permit until they are consulted and have given their consent or
authorisation for logging operations or activities on the land.
38. I am satisfied that the lack of report by the Sandaun PFMC is a serious
breach in the process for consideration of extension of a Timber Permit and
must be rectified before any decision to extend and/or grant the Timber Permit
of the Fourth Defendant can be made. Such a decision cannot be made at this
time when the TRPA and the Timber Permit have also expired and the provision
of Section 137(3) (supra) is inapplicable. This means that any grant of a new
TRPA and Timber Permit must be done in consultation with the customary
landowners of Block 6 and after obtaining their consent or authorisation for
logging operations on their land. The Court will grant the orders sought by the
Plaintiffs, except for the order for entitlement to damages. This is because
parties concede that there is no evidence to establish logging operations or
harvesting of timber after the expiration of the TRPA and Timber Permit and
further, at this stage there is no evidence of any loss suffered.

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Order
39.   The orders are:
      1.     The application for judicial review is upheld
      2.     A declaration that the decision of the First Defendant to extend the
             Timber Permit (TP10-8) of the Fourth Defendant dated 11th April
             2017 is unlawful, illegal, null and void.
      3.     A declaration that the decision of the Second Defendant to
             recommend to the First Defendant to grant an extension and a
             grace period of 5 years to the Fourth Defendant to be exempted
             from the provisions of the Forestry Act 1991 and to continue
             logging activities within the Block 6 area is unreasonable,
             unlawful, illegal, null and void.
      4.     An order in the nature of certiorari be issued to bring up and into
             this Court the decisions of the First Defendant and Second
             Defendant dated 11th April 2017 and to quash the said decisions.
      5.     An order in the nature of a permanent injunction restraining the
             Defendants forthwith from entering into any further agreements or
             making further extensions and/or grant of a Timber Rights
             Purchase Agreement and Timber Permit over the Block 6 area
             unless in consultation with and consent or authority of the
             customary landowners of the area.
      6.     The Defendants shall pay the costs of the proceedings, to be taxed,
             if not agreed.

B. S. Lai Lawyers         :      Lawyers for the Plaintiffs
Acting Solicitor-General:        Lawyers for the First and Fifth Defendants
In House Counsel          :      Lawyers for the Second and Third Defendants
Bradshaw Lawyers          :      Lawyers for the Fourth Defendant

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