Asuale Business Group Inc v Asuale Development Corporation [2018] N8291

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    Dispute between the parties over who was the rightful recipient of a payment of damages by the PNG Forest Authority that exposes the payments were unlawfully made.

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  • N8291
    PAPUA NEW GUINEA
    [IN THE NATIONAL COURT OF JUSTICE]

    OS NO. 19 OF 2018

    BETWEEN
    PETER WALIET as Chairman of Asuale Business Group Inc.
    First Plaintiff

    AND
    ASUALE BUSINESS GROUP INC.
    Second Plaintiff

    AND
    MR STEVEN MAISAM, Chairman of Asuale Development Corporation Ltd
    First Defendant

    AND
    ASUALE DEVELOPMENT CORPORATION LTD
    Second Defendant

    AND
    MR TUNOU SABIN as Managing Director of PNG Forest Authority
    Third Defendant

    AND
    DR. KEN NGANGAN as Secretary, Department of Finance
    Fourth Defendant

    AND
    Ms HAKAUA HARRY as Secretary,
    Department of National Planning& Monitoring
    Fifth Defendant

    Waigani: Thompson J
    2020: 18th March, 30th April

    Claim against State entities for damages – declaratory relief– S11(2) of Public
    Money Management Regularization Act 2017 – Claims By and Against the State
    Act – claim against funds in State trust account – S121A of Forestry (2007
    Budget Amendment) Act 2006 – meaning of interest arising out of customary
    land – financial benefit arising from use of customary land – Land Disputes
    Settlement Act – courts have no jurisdiction to determine disputes over interests

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  • in customary land – funds no longer existing – futility of declaratory relief.

    Counsel:

    Mr T. Yai, for the First & Second Plaintiff
    Mr P. Kewa, for First & Second Defendant
    Mr T. Dalid, for the Third Defendants
    Mr M. Wangatau, for Fourth – Fifth & the State Defendants

    30th April, 2020
    1. THOMPSON J: FACTS: In 2001, an overseas project developer shut
    down its operations in the Apalik Agricultural Reserve land area, and left PNG,
    after unlawfully having its performance bond of about K196,000.00 returned to it
    by the Papua New Guinea Forest Authority (“the PNGFA”). Various landowner
    groups then claimed compensation from the State, presumably based on the State’s
    failure to enforce compliance with the project performance obligations.
    2. In 2005 the second Defendant issued proceedings against the PNGFA
    claiming for the loss of the performance bond of about K197,000.00. Those
    proceedings were dismissed in September 2006 for failing to disclose a cause of
    action. In 2007 the second Defendant issued fresh proceedings for the same claim,
    and in 2009 those proceedings were also dismissed.
    3. In 2007, a log export development levy was introduced on the export of
    logs, and the levy payments were paid into a trust account operated by a committee
    of the third, fourth and fifth Defendants as trustees (“the LEDL trust account”).
    Under S 121A of the Forestry (2007 Budget Amendment) Act 2006, payments out
    of the LEDL trust account can only be made ‘…in accordance with plans for
    agriculture or infrastructure development projects in logging areas submitted by
    the relevant Local Level Government or Provincial Government.”
    4. In May 2011, the Plaintiffs made a claim against the third Defendant for
    K10,602,464.00 in damages arising out of the stoppage of the Apalik project. In
    November 2011 the PNGFA was said to have prepared an Assessment Report
    which valued the loss and damage caused by the stoppage of the project, at
    K10.2million. It appears that the third Defendant accepted this Report as showing
    liability, and not just the value of the damage, and notwithstanding that any claim
    for damages arising out of the conduct of the project in 2001, would have been
    long since time-barred.
    5. On this basis, in November 2011 the PNGFA asked the State to pay
    K10.6m to the second Plaintiff.
    6. On an unknown date, the State paid K502,000.00, but apparently to the
    second Defendant, from the LEDL trust account.
    7. In August 2012, the State paid K3m to the second Defendant, and approved
    a further payment of K7.1m to be paid to the second Defendant from the LEDL

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  • trust account.
    8. It appears that the State then became aware of a dispute between the second
    Plaintiff and second Defendant as to who should be paid the monies.
    9. In 2016 the State Solicitor was said to have advised the State and the
    PNGFA that the two payments had been unlawfully made from the LEDL trust
    account, because the 2001 project had ceased to exist long before the LEDL export
    levy commenced in 2007. It must also be observed that LEDL payments can only
    be made for proposed future development projects submitted by the relevant LLG
    or Provincial Govt. A payment to a landowner group for damages for past loss,is
    clearly outside the authorized scope of payments. Any agreement by the trustees to
    make such a payment, would be in breach of the Act, and would not be valid.
    10. It appears that the State Solicitor’s advice was that if the State was liable to
    pay damages to the claimant, payment could not come from the LEDL but could
    only come from the State.
    11. Notwithstanding this, in September 2017 the third Defendant signed a
    cheque for K7.1m from the LEDL trust account, payable to the second Defendant.
    Current proceedings

    12. In January 2018, the Plaintiffs issued these proceedings, amended in March
    2018, by way of an Originating Summons seeking Declarations that they are the
    lawful recipients of the sum of K10.6m for the damages claim for the Apalik
    Agricultural Reserve land area, and that K3.5m has been wrongly paid to the
    second Defendant, Orders that the first and second Defendants account for those
    monies, and mandatory orders for the cheque for K7.1m to be cancelled by the
    third, fourth and fifth Defendants, and issued to the second Plaintiff.
    13. In February 2018, the Public Money Management Regularization Act 2017
    (“the PMMR Act”) had the effect of compelling the transfer of all public monies in
    trust accounts to Consolidated Revenue. In April 2018, monies held in the trust
    accounts of the PNGFA including the LEDL trust account, were transferred to
    Consolidated Revenue.
    14. Under S 11 (2) of the PMMR Act, ”A claim for payment, compensation,
    restitution,damages or any other form of relief including injunctive or declaratory
    relief against the State or a statutory body based on the undertaking or promise of
    any person … shall not be enforceable through the Courts or otherwise unless the
    person making the claim produces a properly authorized ILPOC or an Authority to
    Pre-Commit Expenditure relating to the undertaking or promise … to the full
    amount of the claim.”
    15. In June 2018, the Plaintiffs and second Defendant agreed to a Consent Order
    for the third Defendant to issue cheques to the second Plaintiff and second
    Defendant for K3.5m each. That Consent Order was stayed in September 2018.
    16. In August 2018 the third, fourth and fifth Defendants filed two Motions

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  • seeking to set aside the Consent Order, and to summarily dismiss the proceedings.
    17. In March 2019 the Plaintiffs filed a Motion to set aside the Consent Order.
    18. In July 2019 the first and second Defendants filed a Motion seeking the
    payment of K7.1m by the Defendants into the National Court Trust Account.
    19. In September 2019 the Plaintiffs filed a further Motion seeking to set aside
    the Consent Order, and to also have summary judgment entered for the Plaintiffs.
    20. All the Motions were heard on 18 March 2020.
    21. On that date, it was first agreed by all parties that the Consent Order would
    be set aside.
    Summary Judgment
    22. Next, I refer to the Plaintiffs’ application for summary judgment pursuant to
    O12 R 38.
    23. The law on such applications is well settled – the Plaintiffs must show that
    on the facts and on the law, the Defendants have no defence, that it is a clear case
    having no triable issue, and the Plaintiffs must depose that in their belief, the
    Defendants have no defence. (NCDC v Peter Yama (2003) SC 707, and
    Hornibrook Constructions v Kawas Express Corp (1986) PNGLR 301).
    24. The Plaintiffs had issued these proceedings by way of an Originating
    Summons. Order 4 Rule 3 makes it clear that an OS should only be used where the
    principal question is construction of an Act or a document, and where there is
    unlikely to be any real dispute of fact.
    25. Here, the principal issue is not the construction of an Act or a document. It is
    whether or not the Plaintiffs have a lawful entitlement to be paid monies, and
    whether or not there is any legal obligation on the Defendants to make such
    payment. The Plaintiffs’ entitlement is not clearly shown in the material. There are
    numerous disputes on the facts, as well as on the law, and the proceedings were
    seriously contested by the Defendants.
    26. The proper procedure would therefore have been for an order under O4 R35
    that the matter should proceed by way of pleadings, so that the Plaintiffs could set
    out their cause of action in a statement of claim, and the Defendants could file a
    defence. However, this was not done.
    27. These matters are relevant to the application for summary judgment. The
    affidavit material shows a serious conflict on questions of fact and law, and there is
    a clear triable issue on the primary question of the Plaintiffs’ entitlement to be paid
    the monies, as well as the Defendant’s liability to make such a payment. This is not
    a clear case where the Court should deprive the Defendants of their right to defend
    the Plaintiffs’claim, without a trial.
    28. It follows that the Plaintiffs’application for summary judgment must be
    refused.

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  • Summary Determination

    29. Next, I refer to the Defendants’applications to dismiss the proceedings.
    There were several grounds for the applications.
    30. The main ground arises out of the fact that, pursuant to the Land Disputes
    Settlement Act (“the LDS Act”), this Court lacks jurisdiction to determine issues
    relating to disputes over interests in or ownership of customary land. The LDS Act
    gives exclusive jurisdiction to the Local and Provincial Land Courts to determine
    disputes over interests in customary land.
    31. The Plaintiffs plead that they are entitled to receive payment for damages for
    loss sustained arising out of the Apalik land, but the legal right or cause of action
    from which the entitlement is said to have arisen, is not readily identifiable. The
    affidavits indicate that the primary facts are those concerning the consequences of
    the stoppage of the Apalik Project which had been carried out on customary land.
    32. The Plaintiffs say that they are and represent the customary landowners, and
    that in March 2009 the second Plaintiff was determined by the Kandrian District
    Land Mediation Committee to be the business group which validly represented the
    ten customary landowner groups of the Apalik customary land. This determination
    was said to have been made pursuant to the provisions of the LDS Act.
    33. The first and second Defendants assert that they are the company which
    properly represents the Apalik Land Group Inc. There are also other ILGs and
    companies which at various times have made claims to be or represent the true
    customary landowners of the Apalik Project area.
    34. The principal issue in the proceedings is whether or not the Plaintiffs are
    entitled to be paid any monies which may be payable by way of damages arising
    out of the stoppage of the Apalik Project. It is not clear from the OS or the
    affidavits if this entitlement is based on the Plaintiffs being/representing the
    customary landowners making the original claim for damages arising out of the
    2001 stoppage, or if it is based on breach of an agreement to pay damages, which
    was entered into between the Plaintiffs and the third, fourth and fifth Defendants in
    2012. For the reasons given earlier, the actual cause of action relied on by the
    Plaintiffs to make their claim, should have been particularized in a statement of
    claim, but was not.
    35. On the present material, if the claimed entitlement is based on customary
    ownership of the Apalik land, then it cannot succeed in this Court. The National
    Court has no jurisdiction to determine interests arising out of customary land. In
    Louis Lucian Siu v Wasime Land GroupInc (2011) PGSC 4, the Supreme Court
    held that interests in customary land, as used in the LDS Act, means “…interests
    over the use of the…land and includes financial benefits and any other benefits
    derived from the use of such land. It also means any monetary or financial benefits
    arising from…the use of…such customary land, and includes financial payments

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  • and benefits paid to landowners.”
    36. The relief sought in Siu’s case included “A Declaration that the Plaintiff and
    its members are the lawful recipients of royalties from the National Forest
    Service…from logging operations conducted…”on the customary land. In the
    present case, the relief sought similarly includes “An order declaring that the 2nd
    Plaintiffs are the rightful recipient of the compensation monies…being for the
    damages claim over Apalik Agriculture Reserve Land area…”
    37. A claim for damages arising out of the use of the customary land in the
    Apalik Land Project area, is plainly a claim for financial benefit and payments
    derived from the use of the customary land. It is therefore an interest in customary
    land within the meaning of the LDS Act.
    38. It follows that this Court has no jurisdiction to deal with or determine any
    issues relating to disputes over interests, including financial interests, in the
    customary land of the Apalik Project area.
    39. If the Plaintiffs’claim is not based on its customary ownership of land, but is
    based on an agreement for payment reached with the third, fourth or fifth
    Defendants, then other considerations arise.
    40. Pursuant to the Claims By and Against the State Act (“the CBAATS
    Act”), claims against the State may only be enforced by suit, if notice of intention
    to make a claim is given within 6 months of the date on which the cause of action
    arose, or such time as may be extended. The third, fourth and fifth Defendants, and
    the PNGFA, are agents of the State for the purposes of the Act (see, for example,
    Uriap v Tokivung (2008) PGNC 119). There was no evidence that such notice was
    given either within 6 months of the tortious action for damages arising in 2001, or
    of the contractual action for breach of agreement arising in 2012, or in any
    extended time.
    41. Further, the Plaintiffs’ claim is for payment, compensation and/or damages,
    and forms of relief including declaratory relief, against the third, fourth and fifth
    Defendants in their capacity as trustees of the LEDL monies held by the PNGFA, a
    statutory body. If this claim is based on an agreement by the third or other
    Defendant/s to accept and pay the claim, then it is subject to S 11(2) of the PMMR
    Act.
    42. The Plaintiffs have not produced a properly authorized ILPOC or Authority
    to Pre-Commit Expenditure, either for the full amount of the claim or at all.

    43. It follows that the Plaintiffs’claim, if based on an agreement by the 3rd
    Defendant to pay, is not enforceable either ‘’through the courts, or otherwise.’’
    44. It should be stated here that, for the same reasons as set out in each of the
    preceding paragraphs, the first and second Defendants would equally have no legal
    basis for enforcing any similar claim by proceedings in the Courts.

    45. Finally, even if the Plaintiffs were able to establish in this Court that they

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  • were the rightful recipients of any monies payable by way of damages for the
    stoppage of the Apalik Project, the issue remains as to whether or not the third,
    fourth and fifth Defendants have a liability, and the capacity, to make such
    payment.
    46. It is plain from the wording of the Forestry (2007 Budget Amendment) Act
    2006 that payments from the trust account can only be made for a prescribed
    purpose. The Plaintiffs’claim is not a prescribed purpose (and nor would be any
    similar claim by the first and Second Defendants). The third Defendant has very
    properly and admirably conceded this point. The earlier payments were unlawfully
    made, and no further payments could lawfully be made to either the Plaintiffs or
    the first and second Defendants.
    47. Further, it was not disputed that there were no longer any monies in
    the LEDL trust account. The third, fourth and fifth Defendants therefore cannot be
    ordered to make any payments. All the monies have been transferred to
    Consolidated Revenue, and the trust account has been closed. It would be futile to
    make an order for the drawing of cheques on that LEDL account.
    48. There is therefore no utility in the declaratory and other orders sought by the
    Plaintiffs.
    49. As the Plaintiffs have no enforceable cause of action in this Court for their
    claimed entitlement to be paid damages by the third, fourth and fifth Defendants, it
    follows that they can have no entitlement to an accounting or other relief against
    the first and second Defendants.

    Conclusion
    50. The Court therefore orders:

    (1) The Consent Orders made on 14 June 2018, are set aside.
    (2) The Plaintiffs’ application for summary judgment is refused.
    (3) The proceedings herein are dismissed.
    (4) Each party is to pay its own costs.
    _______________________________________________________________
    Bristle Lawyers: Lawyers for the First & Second Plaintiff
    Seria Legal Services: Lawyers for the First & Second Defendant
    Legal Division of PNGFA: Lawyers for the Third Defendants
    Office of the Solicitor-General: Lawyers for the Fourth, Fifth & the State
    Defendants