Dengnenge Resources Development Limited v Vanimo Jaya Limited [2017] N7950

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    Customary landowners successfully challenged a logging permit issued by the PNG Forest Authority to Vanimo Jaya Limited allowing logging in the Open Bay Consolidated Timber Rights Purchase area.

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  • N7950
    PAPUA NEW GUINEA
    [IN THE NATIONAL COURT OF JUSTICE]

    OS NO. 997 OF 2017

    BETWEEN
    DENGNENGE RESOURCES DEVELOPMENT LIMITED
    First Plaintiff

    AND:
    DENGNENGE LAND GROUP INCORPORATED
    Second Plaintiff

    AND
    VANIMO JAYA LIMITED
    First Defendant

    AND
    PAPUA NEW GUINEA FOREST AUTHORITY
    Second Defendant

    AND
    LOBOT LOTU, HOSEA KUNAM, JOHN SURUGA, ORIM KOPMAN
    AND THOMAS TURANA, claiming to be customary landowners of the
    Dengnengeand Loi Resource Areas, Open Bay, Lassul-Baining Local Level
    Government, East New Britain Province
    Third Defendant

    Kokopo: Anis J
    2019: 5th, 6th June, 14th August

    LAND – Declaratory relief – interest over land the subject of 2 timber permits
    issued under sections 78 and 137 of the Forestry Act, 1991 – Whether
    provisions of the Act were breached in the granting of the timber permits

    PRACTICE & PROCEDURE – primary right – whether the plaintiffs have
    primary rights which they seek to protect or enforce

  • Page 2 of 18

  • PRACTICE & PROCEDURE – res judicata – whether the issues raised in the
    notice of motion to dismiss have been determined

    PRACTICE & PROCEDURE – Duplicity of proceedings – proceeding filed
    subsequent to this proceeding – this proceeding filed first in time

    PRACTICE & PROCEDURE – mode of proceeding – whether the correct
    mode of proceeding should have been by way of a judicial review

    Facts

    In 1967 and 1968, 7 timber rights purchase agreements had been entered into on
    a land mass or areas in Open Bay in Lassul, Gazelle District of East New
    Britain Province. The terms of the 7 timber rights purchase agreements were
    for periods of 40 years each. Two timber permits had been issued in relation to
    the areas covered by the 7 timber rights purchase agreements. They were
    described as TP 15-50 and TP 15-53. The plaintiffs alleged their interests as
    registered owners over the land which had been the subject of the two timber
    permits. The plaintiffs alleged that after the lapse of the 40 years periods for the
    7 timber rights purchase agreements in 2007 and 2008, the land had revered
    back to the traditional landowners including them, and they alleged that they
    had registered their interests over the land after that. They therefore claimed
    that without any valid extensions to the 7 timber rights purchase agreements, the
    two timber permits which were purportedly extended and granted by the second
    defendant to the first defendant in 2017, were done in breach of sections 78, 137
    and 46 of the Forestry Act 1991 which they claimed had affected their interests
    over their customary or registered land.

    Held

    1. The 7 Timber Rights Purchase Agreements where Timber Permits TP
    15-50 and TP 15-53 covered, survived under the Forestry Act 1991, until they
    expired in 2007 and 2008.

    2. The timber areas covered under the 7 TRP agreements and under TP
    15-50 and TP 15-53, reverted to the landowners including those landowners that
    were represented by the second plaintiff after 2008.

    3. No timber rights purchase agreements based upon which TP 15-50 and
    TP 15-53 had been issued, were ever extended prior to 2007 and 2008, and as
    such, they ceased to exist in 2007 and 2008, and no person including a former
    timber permit holder could have qualified to apply to extend any of the 7 TRP
    agreements or TP 15-50 and TP 15-53 after 2008.

  • Page 3 of 18

  • 4. Timber Permit TP 15-50 and Timber Permit TP 15-53 that were granted
    by the second defendant to the first defendant in 2017, were done so in breach
    of sections 46, 78 and 137(1) & 137(1C) of the Forestry Act 1991.

    5. Timber Permit TP 15-50 and Timber Permit TP 15-53 were declared null
    and void.

    Cases Cited:

    Amos Ere v. National Housing Corporation (2016) N6515
    Simakada Holdings Ltd and 2 Ors v. PNG Forest Authority and 4 ORs (2019)
    N7703
    Rafflin v. Richard Gault Industries Pty Ltd [1998] PNGLR 394
    Samson Mangae v. Jackson Aka (2010) N4107
    Joseph Kelange v. Kanawi Pouru (2011) N4662
    Raibow Holdings Pty Ltd v Central Province Forest Industries Pty Ltd [1983]
    PNGLR 34
    Peter Apoi v. Kanawi Pouru (2015) N5983
    SCA 87 of 2015 – Kanawi Pouru and 2 Ors v. Peter Apoi and 1 Or (2016)

    Counsel:

    Mr T. Tape, for the Plaintiff
    Mr N. Saroa, for the First Defendant
    Mr S. Mitige, for the Second Defendant
    Mr F. Cherake, for the Third Defendant

    JUDGMENT

    14th August, 2019

    1. ANIS J: The first plaintiff is a company incorporated under the
    Companies Act 1997, and the second plaintiff is an incorporated land group.
    They seek various declaratory orders under their Amended Originating
    Summons filed on 12 April 2019 (Amended OS). The main relief they seek
    are, and I quote:

    2A. A declaration that Dengnengi & Simbali Timber Rights
    Purchase (TRP) which is TP No. 15-53, East New Britain
    Province extended on the 29th of August 2017 and Loi Timber
    Rights Purchase (TRP) which is TP No. 15-50, East New Britain

  • Page 4 of 18

  • Province extended on the 29th of August 2017, were extended
    over part of land, which has an existing group, Dengnenge Land
    Group Incorporated, which was registered first in time and
    which has never given its consent over its land for TRP
    extension.

    3. A declaration that the initial TRP Permit Holder was Open
    Bay Timbers Limited under consolidated TP No. 15-53 (which
    includes TP No. 15-50) and thereafter the extension granted to
    the First Defendant is contrary to Section 136 and 137 of the
    Forestry Act 1991 (as amended) which is intended for an
    existing Timber Permit Holder and not a new applicant such as
    the First Defendant.

    4. An order that the extension of consolidated Dengnengi &
    Simbali TRP which is TP No. 15-50 is void and of no effect.

    5. Alternatively, if the Court does not grant the order sought in
    item 4 above, the Second Defendant be ordered to cancel, within
    21 days from the date of this Order, the said extended
    consolidated Dengnengi & Simbali TRP, TP No. 15-53, East
    New Britain Province which includes Loi TRP, TP No. 15-50
    forthwith.

    2. Before the trial, the first defendant informed the Court that it had a
    pending notice of motion. It was filed on 6 May 2019. It was agreed then that
    the motion would be considered as a preliminary matter in the substantive
    proceeding. The trial then proceeded on that understanding by the parties and
    the Court.

    PRELIMINARY ISSUE

    3. The preliminary issue of course is to consider the notice of motion of 6
    May 2019. I will deal with it now. The main relief in the motion is this, and I
    quote, Pursuant to Order 12 Rule 40(1)(a), (b) and (c) of the National Court
    Rules, the proceedings herein be dismissed for disclosing no reasonable cause
    of action and an abuse of the Courts process.

    4. The first defendant submits these. It says the first plaintiff’s primary
    right or interest, namely, Forest Clearing Authority FCA No. 15-10 (FCA) had
    been extinguished by the National Court in proceeding OS (JR) No. 144 of
    2018, Simakada Holdings Ltd and 2 Ors v. PNG Forest Authority and 4 ORs
    (2019) N7703, on 22 February 2019. As such, it submits that the first plaintiff
    does not have a primary right that would require enforcement or protection in

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  • this proceeding. Its second argument is this. It says this proceeding amounts to
    duplicity of proceedings and therefore is an abuse of the court process because
    the legal question raised herein is also being raised in an earlier proceeding
    which is still pending, namely, OS 285 of 2018, East New Britain Provincial
    Government and Wilson Matava v. PNG Forest Authority & 2 Ors. Thirdly, the
    first defendant submits that the plaintiff commenced this proceeding using a
    wrong originating process. It submits that the correct mode should have been to
    seek judicial review and name Open Bay Timbers Pty Ltd as the correct party
    given that the company was the previous owner of the 2 timber permits which
    have been subsequently extended and granted to the first defendant.

    5. The second and third defendants support the first defendant’s motion.

    6. The plaintiffs in response submit these. Firstly, they say that a similar
    motion was filed on 30 January 2018; that it was later heard and a decision
    delivered on 23 February 2018. They submit that the Court it its ruling rejected
    the first defendant’s motion to dismiss the proceeding. They submit that the
    matter is res-judicata and therefore the present motion, which is seeking the
    same relief, is misconceived and must be dismissed. Their second submission is
    this. They say that their claim is not without merit. They concede that relief 1
    & 2 have been defeated by the Court’s decision in the earlier judicial review
    proceeding, that is, OS (JR) No. 144 of 2018 where the Court had ordered
    cancellation of the FCA of the first plaintiff. But they submit that the second
    plaintiff was incorporated after the expiry of the 7 timber rights purchase
    agreements in 2007 and 2008, to represent the interests of landowners who
    come from the Dengnenge and Simbali areas. The two areas used to be covered
    by 2 of the 7 timber right purchase agreements, namely, Dengenge Timber
    Rights Purchase Agreement (DTRPA) and the Simbali Timber Rights purchase
    agreement (STRPA). They argue that since the timber rights purchase
    agreements for these two areas have expired, their land has reverted back to
    them and that there was no legal basis for any timber permits to be extended
    over their land. They argue that by granting extension of the 2 timber permits,
    namely, Timber Permit 15-50 and Timber Permit 15-53 (the 2 timber permits),
    to the first defendant without seeking their consents or without an existing
    timber rights purchase agreement or a forest management agreement, the second
    defendant breached various provisions in the Forestry Act 1991 (the Forestry
    Act), namely, sections 46, 78, 136 and 137 of the Forestry Act by illegally
    extending the 2 timber permits to the first defendant. Therefore, the plaintiffs
    submit that their claim is valid and is not frivolous, vexatious or an abuse of the
    court process.

    Res-judicata

    7. I firstly refer to the res-judicata claim by the plaintiffs to the motion that

  • Page 6 of 18

  • is filed by the first defendant. I have considered the earlier motion filed by the
    first defendant on 30 January 2018 to the present motion filed on 6 May 2019.
    The main relief sought in both motions are identical, that is, pursuant to order
    12 Rule 40 of the National Court Rules, which is to dismiss the proceeding on
    the basis of disclosing no reasonable cause of action, frivolity and abuse of the
    court process. My view is this. I do not find the issues res-judicata. I note that
    the circumstances of the case since the earlier motion had been moved have
    significantly changed. Let me explain. At the hearing of the earlier motion, the
    first plaintiff was the only plaintiff named in this proceeding. Also and at that
    time, the first plaintiff had title to the FCA which was then valid and which had
    been issued over the land where the 2 timber permits now cover. The first
    plaintiff filed this proceeding initially to protect its primary right or its interest
    over the FCA against the 2 timber permits. By the time the latter motion was
    filed, the second plaintiff was joined, the relief in the originating summons had
    been amended to include the interests of the second plaintiff, and the first
    plaintiff had by then lost its interest in its FCA. These changes were significant.
    As such, the first defendant has filed the latter motion asking the same questions
    before the Court based on these change of events and in particular, questioning
    the primary right of the first plaintiff and of what effect it has or may have in
    relation to continuation of the present proceeding. I therefore do not find the
    issues raised in the current motion as res-judicata. I dismiss the said argument
    by the plaintiffs.

    Primary rights

    8. It is common ground that the first plaintiff’s primary right before
    commencing this proceeding was in relation to its interest in the FCA. It had
    wanted to protect its FCA by seeking declaratory orders against the 2 timber
    permits which it said had been issued over land the subject of the FCA. Now
    that the FCA has been cancelled, and in my opinion, the first plaintiff no longer
    has a valid primary right in the proceeding. The first plaintiff also claims to be
    a landowner company. I have considered the evidence. Apart from its company
    extract and testimonies of individuals, I see nothing that may be legally
    interpreted to say or support the proposition that the first plaintiff holds shares
    in trust or on behalf of a particular landowner group or beneficiaries. All there
    is, is evidence of 7 issued shares to 7 individuals.

    9. I find that the first plaintiff has not disclosed a valid primary right in this
    proceeding. I dismiss its claim against the defendants.

    10. I turn to the second plaintiff. I note that its legal status and whom it
    represents are not disputed. The second plaintiff has represented the interests of
    its landowners in mediation and court proceedings concerning the now void
    FCA and the current 2 timber permits. At the presentation of submissions

  • Page 7 of 18

  • hearing, it was confirmed by all counsel that, except for the second defendant,
    parties to the proceeding represent the 2 factions of landowners who all come
    from the Open Bay area of Lassul in East New Britain. Both factions have
    engaged developers of their separate choices, to harvest timber on their
    customary land. The plaintiffs obtained the FCA and the defendants the 2
    timber permits. The FCA has been declared void, and now the plaintiffs or the
    second plaintiff is challenging the legality of the 2 timber permits over the
    interest of its land. Evidence of registration of customary land by its members
    are contained in evidence including those contained in annexures “N”, “O”, “P”
    and “Q” to the affidavit of Lobot Lotu, filed by the third defendant which is
    marked Exhibit F2.

    11. I also note this. There is presently no registered customary land disputes
    over the area where the FCA once occupied which is now occupied by the 2
    timber permits. Both factions of landowners, namely, those represented by the
    second plaintiff and those represented by the third defendants, own or share
    land where the 2 timber permits now cover or where the FCA once occupy.

    12. I find that the second plaintiff has a primary right or interest over its
    registered customary land or the customary land of the people that it represents,
    which it now seeks to protect. Its interest is also registered under the ILG.

    Duplicity of proceedings

    13. I note the parties’ submission on the issue, duplicity of proceedings. I
    note that the plaintiffs did not challenge the first defendant’s submission that the
    legal issues raised in proceeding OS 285 of 2018 were the same as those raised
    in this proceeding, namely, challenging the legality of the 2 timber permits. So
    I will assume that that is the case. But that said, my view is this. The present
    proceeding was filed first in time. As such, it should have been incumbent upon
    the parties in proceeding OS 285 of 2018 to join or consolidate their proceeding
    to this proceeding and not the other way around. My second view or reason is
    this. The first defendant’s submission on point is raised belatedly. This matter
    was set down for hearing and has now been heard. Had the first defendant been
    serious, it should have addressed that earlier, and I note that there was nothing
    stopping it from applying for orders to consolidate the proceedings.

    14. I therefore dismiss this ground.

    Mode of proceeding

    15. Did the second plaintiff file a wrong mode of proceeding? Should the
    correct proceeding have been by way of judicial review? My answer to that is
    this. This proceeding is commenced using the correct mode or originating

  • Page 8 of 18

  • process, that is, an originating summons. The second plaintiff, who represents a
    faction of the landowners of Lassul in the Gazelle District of East New Britain,
    is seeking declaratory relief because it alleges that its interest in the customary
    land of its ILG members, which is registered under it, has been infringed. It
    claims that there had been blatant breaches of law under the Forestry Act. It
    says that if the relevant law has been broken by the first and second defendants
    in granting the 2 timber permits, then the 2 timber permits should be declared
    null and void in order to protect its primary right or interest in the matter. See
    case: Amos Ere v. National Housing Corporation (2016) N6515. The second
    plaintiff, in my view, is not seeking to review the decision of the second
    defendant.

    16. I dismiss this argument.

    MAIN ISSUES

    17. Let me now address the main issues. In my view, the main issues are, (i)
    Where there existing timber rights purchase agreements based upon which the 2
    timber permits were extended by the second defendant, and (ii), regardless of
    the first issue, can the second defendant grant further extensions of the 2 timber
    permits at all to the first defendant under sections 78 or 137 of the Forestry Act?

    WHERE THE TRPAs EVER EXTENDED?

    18. I have considered the evidence of both parties concerning the relevant
    historical background of the 2 timber permits. The said background is not
    disputed by the parties, and in my view, is better summarised in the evidence of
    the second defendant.

    19. The second defendant filed one affidavit which is the affidavit of
    Goodwill Amos. It was filed on 22 May 2019 and it is marked Exhibit E1.
    The undisputed facts are as follows. In 1967 and 1968, 7 forest areas were
    identified in the Open Bay area in Lassul, Gazelle District of East New Britain.
    Following that, 7 Timber Rights Purchase Agreements (7 TRPAs) were
    executed between the then Colonial Administration and the landowning clan
    agents. The 7 areas where the 7 TRPAs were executed over were as follows, (i),
    Makolkol, (ii), Kabolu, (iii), Simbali, (iv), Tamoip, (v), Loi River, (vi),
    Aghaghat and (vii), Dengnenge (the 7 TRP areas).
    20. The 7 TRPAs each had a lifespan of 40 years. Based on Annexure C to
    Mr Amos’s affidavit, they all expired in 2007 and 2008 respectively. Their
    exact expiry dates are not relevant for this purpose so I prefer to only use the
    years when they expired, namely, 2007 and 2008.

    21. The 7 TRPAs were then all consolidated under one project which was

  • Page 9 of 18

  • known as the Open Bay Consolidated TRP Project. And of that, 1 Timber
    Permit described as TP 15-50 had been issued to a company called Open Bay
    Timber Company Pty Limited (Open Bay Timber Company Ltd). Open Bay
    Timber Company Ltd had operated under TP 15-50 over the Open Bay
    Consolidated TRP Project.

    22. TP 15-50 was later changed or renumbered as TP 15-53 but which still
    covered the Open Bay Consolidated TRP Project area. I note that the parties are
    also at common ground with the said fact. What this means is that all the 7 land
    areas described under each of the 7 TRPAs, including the land areas of
    Dengnenge and Simbali, were subject to TP 15-53. And I think the following
    fact is the crucial part which had been deposed to by Mr Amos. At paragraph
    14, he states and I quote, Upon expiry of the TRPAs, all timber rights reverted to
    the land/resource owning clan and the TRPA boundaries have ceased to exist. I
    note that Mr Amos’s deposition was also confirmed by evidence and
    submissions of all the other parties to this proceeding. I therefore find that to be
    the case or as a fact, that is, that the 7 TRPAs expired or ceased to exist in 2007
    and 2008 respectively, and that the land areas that used to be under the 7 TRPAs
    and under TP 15-53 reverted to the landowners of Lassul, in the Gazelle District
    of East New Britain after 2008.

    23. At this juncture, I note that there is no evidence disclosed by the parties to
    show whether the 7 TRPAs have been extended thereafter beyond 2007 and
    2008. The second plaintiff argues that no such extensions had been sought. The
    second defendant also makes similar submissions on point. I find that to be the
    fact or the case, that is, that no extensions had been sought and had on all the 7
    TRPAs before they expired in 2007 and 2008.

    SECTIONS 78 & 137

    24. The parties are also at common ground that the first defendant had
    applied for extension of TP 15-50 and TP 15-53, under section 137 of the
    Forestry Act in 2016 or in 2017, and that based on that, the second defendant
    issued the extension of the 2 timber permits under section 78 of the Forestry
    Act.

    25. Section 78 states and I quote:

    78. Extension or renewal of timber permit.

    (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

  • Page 10 of 18

  • (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.

    26. And section 137 states, and I quote:

    137. Saving of existing permits, etc.

    (1) Subject to Subsection (2), all—

    …..
    (b) permits, timber rights purchase agreements, licences and
    other authorities granted under the Forestry Act (Chapter 216)
    (repealed); and,

    valid and in force immediately before the coming into operation of this Act,
    shall continue, on that coming into operation, to have full force and effect
    for the term for which they were granted or entered into or until they sooner
    expire or are revoked according to law.
    …..
    (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

  • Page 11 of 18

  • 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.

    (1C) The holder of a timber permit under Subsection (1)(b) may apply to
    the Board for an extension or renewal of the term of the timber permit in the
    prescribed form, be accompanied by the prescribed fee, and be lodged with
    the Managing Director.

    (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.

    (1E) A timber permit under Subsection (1A) may be extended or
    renewed under this section by the Minister upon recommendation of the
    Board where the Board considers that the remaining forest resource in the
    project area is not sufficient to meet the requirements of Section 78.

    (1F) All timber permits saved under Subsections (1) and (1A) and
    extended or renewed under Section 78 are deemed to be extended or
    renewed under this Section.
    (2) Where the Board is of the opinion that any term or condition of any

    (a) registration as a forest product operator granted under the
    Forest Industries Council Act (Chapter 215) (Repealed); or

    (b) permit, licence timber rights purchase agreement or other
    authority granted under the Forestry Act (Chapter 216) (repealed); or
    (c) agreement entered into under the Forestry (Private
    Dealings) Act (Chapter 217) (repealed),
    is at variance with the provisions of this Act to an extent which makes
    it unacceptable, it shall by written notice—

    (d) advise the registered forest product operator, holder of the
    permit, licence or other authority or parties to the agreement or

  • Page 12 of 18

  • timber rights purchase agreement, as the case may be, of the term or
    condition that is unacceptable; and
    (e) specify the variation in the term or condition required to
    ensure compliance with this Act; and

    (f) intimate that variation shall apply in respect of the
    registration, permit, licence, other authority or agreement or timber
    rights purchase agreement, as the case may be, with effect from a date
    specified in the notice, unless it receives notification from the
    registered forest product operator, holder of the permit, licence or
    other authority or parties to the agreement or timber rights purchase
    agreement, as the case may be, that such variation is unacceptable, in
    which case the registration, permit, licence, other authority or
    agreement or timber rights purchase agreement, as the case may be,
    shall cease to have effect from the date specified.
    (3) In order to achieve the intention of this Act that registrations,
    permits, licences, agreements, timber purchase agreements and other
    authorities saved by this section are able to be adapted to conform to the
    provisions of this Act, the Board may grant in respect of any registration,
    permit, licence, agreement, timber purchase agreement or other authority a
    grace period during which—
    (a) the provisions of this Act shall not apply; and
    (b) the provisions of the repealed Act under which the
    registration, permit, licence or other authority was granted or the
    agreement or timber purchase agreement was entered into shall
    apply.

    WHETHER SECTIONS 78 AND 137 WERE BREACHED

    27. Let me restate this fact. The 7 TRPAs expired in 2007 and 2008. Under
    the repealed Forestry Act Chapter No 216 (repealed Act), a timber rights
    purchase agreement is similar to a forest management agreement under the
    Forestry Act, where it has to be signed between the landowners and the Forest
    Authority or the State, to pave way for issuance of timber permit(s) by the
    Forest Authority to a developer to enter and harvest logs on customary land.
    And the duration of a timber permit that is issued is limited to the duration of a
    timber rights purchase agreement or a forest management agreement. See
    cases: Rafflin v. Richard Gault Industries Pty Ltd [1998] PNGLR 394; Samson
    Mangae v. Jackson Aka (2010) N4107; Joseph Kelange v. Kanawi Pouru (2011)
    N4662; Raibow Holdings Pty Ltd v Central Province Forest Industries Pty Ltd
    [1983] PNGLR 34; SCA 87 of 2015 – Kanawi Pouru and 2 Ors v. Peter Apoi
    and 1 Or (2016).

    28. Section 137 makes provisions for timber rights purchase agreements and

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  • timber permits that were entered into under the repealed Act, to survive under
    the Forestry Act when the latter came into effect. This is of course to ensure the
    smooth transition and continuity of agreements and permits that had been
    entered into under the repealed Act.

    29. In the present case, the 7 TRPAs had survived the transition period
    because their 40 years terms were set to expire in 2007 and 2008. And as
    revealed, in 2007 and 2008, the 7 TRPAs expired. Therefore and according to
    law, it also meant the end of the 2 timber permits as they could not have
    survived without the 7 TRPAs, or a timber rights purchase agreement (TRPA),
    or a forest management agreement (FMA). This now brings me closer to my
    first query. The 2 timber permits were extended in 2016 or in 2017 by the
    second defendant to the first defendant. So I ask myself this. How was that
    possible? If we were to assume that the 2 timber permits had survived after
    2008, then where is the evidence of the 7 TRPAs or a TRPA or a FMA being
    extended on from 2007 and 2008 that would have kept the 2 timber permits
    valid up until the time of their renewal or extensions on 29 August 2017? And
    after the extensions of the 2 timber permits from 29 August 2017, the next
    question is this, which TRPA(s) or FMA has or have survived or has or have
    been extended where the 2 timber permits, after their extensions, could survive
    under?

    30. The next query I have is this. It is not disputed that the original holder of
    the 2 timber permits was Open Bay Timber Company Ltd. It is also not
    disputed that the first defendant was not the holder of the 2 timber permits
    before they expired together with the 7 TRPAs in 2007 and 2008. But in this
    case, the first defendant was the one that had applied for their extensions. Can a
    person who is not a holder of a timber permit apply for an extension under
    sections 78 and 137 of the Forestry Act?

    31. These are my findings. Firstly, sections 78(1) and 137(1C) are express.
    They say that the holder of a timber permit, whose timber permit has survived
    together with a timber rights purchase agreement under the repealed Act, is the
    person that may apply for an extension of the timber permit. What this means
    in practical term is this. The Forestry Act came into force on 25 June 1992. In
    this case, the expiry dates for the 7 TRPAs were in 2007 and 2008. If Open Bay
    Timber Company Ltd had wanted to extend the 2 timber permits beyond 2007
    and 2008, it would have applied for the extensions of the 7 TRPAs if not all then
    one or more of them, before 2007 and 2008. But I do note that section 137 only
    has provisions for extending a timber permit that survives from the old Act [see
    section 137(1B)]. It does not have express provisions to extend a TRPA that
    had been created under the repealed Act and that has survived under the
    Forestry Act by virtue of section 137(1)(b). These obviously explains why the 7
    TRPAs have had to expire in 2007 and 2008, that is, when they had reached

  • Page 14 of 18

  • their 40 years terms. So I find that it is not possible for the first defendant to
    apply for an extension of the 2 timber permits in 2016 or in 2017 because they
    would have ceased to exist 8 years ago in 2007 and 2008 together with the 7
    TRPAs. The 2 timber permits could not have survived on their own after the
    expiry of the 7 TRPAs. Secondly, the first defendant was not the holder of the 2
    timber permits before they expired together with the 7 TRPAs in 2007 and
    2008. The previous holder of course was Open Bay Timber Company Ltd. So
    the first defendant was also not qualified under sections 78 and 137 to apply for
    extension of the 2 timber permits. But even before that, the 2 timber permits
    had already expired or ceased about 8 years ago, so no one, not even Open Bay
    Timber Company Ltd, could have successfully lodged an application under
    sections 78 and 137 of the Forestry Act for extension of the 2 timber permits. In
    other words, the 2 timber permits had to be current or valid before an
    application for their extensions can be made under sections 78 and 137. In the
    present case, none of these conditions or facts existed at the time when the first
    defendant applied for extensions of the 2 timber permits.

    32. I therefore find that both the first and second defendants breached
    sections 78 and 137 of the Forestry Act in the application and granting of the 2
    timber permits. I therefore find that the second plaintiff has established its
    claim.

    SECTION 137(3)

    33. I think it is worth noting this provision, that is, sub-section 3 of section
    137 of the Forestry Act. The provision had been invoked by the second
    defendant to grant a grace period of 3 years to 3 of the 7 TRPAs, namely,
    Dengnenge & Simbali TRPs with TP 15-50 and Loi TRP with TP 15-53. These
    are contained at annexures A, B and C of Exhibit D3 or the affidavit of Chang
    Pang Heng filed on 26 April 2019.

    34. But I note that for the second defendant or its board to invoke sub-section
    3, the 3 TRPAs and the 2 timber permits had to be saved by section 137. In the
    present case, the 7 TRPAs including the 3 TRP referred to, were saved by
    section 137 in that their terms have extended beyond the repealed Act, to 2007
    and 2008, which was accepted under section 137(1)(b). However, after 2007
    and 2008, the 7 TRPAs including the 3 TRPs referred to, have ceased or have
    expired. Therefore, no timber permits, including the 2 timber permits, that had
    been issued over these 7 TRPAs could have existed independently or survived
    beyond 2007 and 2008. The second defendant’s purported action to grant a
    grace period on the 2 timber permits on 13 and 14 December 2016, occurred
    about 8 years after the 7 TRPAs have expired. In other words, a period of 8
    years had lapsed before the second defendant or its board decided to exercise
    their powers under section 137(3) of the Forestry Act.

  • Page 15 of 18

  • 35. Section 137(3) is not expressly intended to revive an expired timber
    permit(s) or an expired TRPA that had been issued under the repealed Act but
    which have survived under section 137(1)(b) the Forestry Act. It is also not
    expressly intended to, after reviving an expired timber permit or an expired
    TRPA, allow a grace period for an applicant to then apply for an extension of
    either a timber permit or a TRPA. Quite to the contrary, only those interests that
    have survived under section 137(1)(b) and continue to exist may be granted
    grace periods under section 137(3). If they survive, like the 7 TRPAs in this
    case, but have since expired afterwards again like the 7 TRPAs, section 137(3)
    does not cover them or can be used to revive or re-create for example the 7
    TRPAs or the 2 timber permits.

    36. The second defendant refers to the unreported Supreme Court case, that
    is, SCA 87 of 2015 – Kanawi Pouru and 2 Ors v. Peter Apoi and 1 Or (2016).
    Counsel submits that the Supreme Court had overturned the National Court’s
    decision, that is, Peter Apoi v. Kanawi Pouru (2015) N5983. The second
    defendant submits that the decision of the National Court is therefore not
    binding. Counsel for the second defendant Mr Mitige has taken the liberty of
    providing a copy of the Supreme Court’s decision for which I am grateful. I
    note that the Supreme Court found on point as follows. It noted that the timber
    rights purchase agreement which had extended beyond the repealed Act was
    saved under section 137(1) of the Forestry Act. The timber rights purchase
    agreement concerned had a lifespan of 40 years and it was to expire on 21
    March 2008. The timber permit issued for the said timber rights purchase
    agreement was granted for a period of 20 years. It too had survived the repealed
    Act pursuant to section 137(1)(b) of the Forestry Act, but it would expire in 31
    October 2011. So the appellant, knowing of that fact took steps whereby an
    extended agreement to the original timber rights purchase agreement was signed
    on 28 February 2008, which was about a month before the original timber rights
    purchase agreement would expire on 21 March 2008. The extension was signed
    between the parties and the term of the extended timber rights purchase
    agreement was set to coincide or end together with the expiry date of the timber
    permit which was set to end on 31 October 2011. In that case, the parties had
    extended the timber rights purchase agreement before it expired, in order to
    continue to validate their timber permit, till 2011 so that their operations were
    unaffected. Had they not taken the step to extend the timber rights purchase
    agreement, their timber permit could not have continued to survive beyond 2008
    which would have meant the end of the operations by the permit holder. The
    Supreme Court upheld the appeal and found that the extension was consistent
    with section 137 and the intention of the Forestry Act.

    37. The case is distinguishable from the present case. In the present case, the
    7 TRPAs were never extended before they expired in 2007 and 2008. Without

  • Page 16 of 18

  • the said extensions, the 2 timber permits could not have survived after 2007 and
    2008. And the first defendant was not the holder of the 2 timber permits that
    had expired so it could not have qualified to apply for an extension under
    sections 78 or 137. But even if we were to assume that the first defendant did
    qualify or that Open Bay Timber Company Limited had wanted to apply under
    sections 78 and 137, they could not because the 2 timber permits and the 7
    TRPAs had already expired; sections 78 and 137 of the Forestry Act could not
    have been invoked after 2008 by the first defendant, or by the second defendant,
    or by the former permit holder Open Bay Timber Company Limited.

    BURDEN OF PROOF

    38. I find that the second plaintiff has discharged its burden of proof on the
    balance of probabilities. I find that the second plaintiff has established its
    interest over the land where the 2 timber permits cover. I find that it has
    established that the original holder of the 2 timber permits was Open Bay
    Timber Company Limited. I find that it has established that the first defendant
    and not Open Bay Timber Company Limited that had applied for the extension
    of the 2 timber permits. I find that it has established that by the time the first
    defendant was registered as a permit holder, the 7 TRPAs including the 3 TRPs
    had already lapsed by more than 8 years.

    39. In my view the burden shifts and in this case, I find as follows for the
    defendants. The defendants have failed to disclose whether the 7 TRPAs had
    been extended before they expired in 2007 and 2008. The defendants have also
    failed to establish how and when the first defendant had acquired the 2 timber
    permits from the original TP holder Open Bay Timber Company Limited before
    it decided to apply for their extensions. The defendants have also failed to
    adduce evidence to show the timber rights purchase agreement(s) that had
    existed which had kept the 2 timber permits valid before the application and
    extensions of the 2 timber permits were made and granted respectively. These
    queries remain outstanding but only to the detriment of the defendants.

    40. I find that the defendants have failed to disprove the second plaintiff’s
    claim.

    CONSEQUENCIAL BREACH – SECTION 46

    41. The second plaintiff has argued that the consent of the landowners it
    represents were never obtained by the first and second defendants in dealings in
    relation to the granting of the extension of the 2 timber permits.

    42. The argument is founded under section 46 of the Forestry Act. It reads,
    and I quote in part, The rights of the customary owners of a forest resource shall

  • Page 17 of 18

  • be fully recognized and respected in all transactions affecting the resource.
    Given all my findings above in my judgment, I will say this. The second
    defendant’s action to extend the 2 timber permits to the first defendant without
    any existing TRPA or FMA, which would have ensured receipt of consents of
    all the landowners of the land including those represented by the second
    plaintiff, was also in breach of section 46 of the Forestry Act.

    RELIEF

    43. I have considered the relief sought by the second plaintiff. The relief to
    be granted should of course reflect upon the Court’s findings in the matter. The
    second plaintiff cannot automatically be entitled to all its relief. I have assessed
    the relief sought in the Amended OS. In this case, I am not inclined to grant
    relief 2A. But I am inclined to and will grant relief 3. I note that the second
    plaintiff also seeks other consequential orders in its Amended OS. And under
    relief 9, it seeks and I quote, Any other order as this Court deems fit. I will
    grant additional orders as well as consequential orders with variations based on
    the Court’s findings.

    COST

    44. Cost is discretionary. I will order cost to follow the event to be assessed
    on a party/party basis, to be taxed if not agreed.

    ORDERS OF THE COURT

    45. I make the following orders:

    1. The application for extensions of TP 15-50 and TP 15-53 was made by
    the first defendant in breach of sections 78(1), 137(1)(b) & (1C) and
    of the Forestry Act 1991.

    2. The granting of extensions to TP 15-50 and TP 15-53 by the second
    defendant were done in breach of sections 78 and 137 and also section
    46, of the Forestry Act 1991.

    3. TP 15-50 and TP 15-53 are declared null and void.

    4. A declaration that the initial TRP Permit Holder was Open Bay Timbers
    Limited under consolidated TP No. 15-53 (which includes TP No.
    15-50) and thereafter the extension granted to the First Defendant is
    contrary to Section 136 and 137 of the Forestry Act 1991 (as
    amended) which is intended for an existing Timber Permit Holder and

  • Page 18 of 18

  • not a new applicant such as the First Defendant.

    5. The first defendant shall cease immediate operations on sites and on
    timber areas in Lassul, Gazelle District of East New Britain, that are
    covered under TP 15-50 and TP 15-53, and it shall be allowed a
    period of 28 days from the date of this Court Order, to vacate the area
    or areas concerned.

    6. The second defendant, its agents including police may assist to ensure the
    smooth transition within the said 28 days period.

    7. All parties are at liberty to discuss what to do with any logs that have
    been felled, within the said 28 days period.

    8. If discussions fail under order 7, then logs felled shall be left where they
    are.

    9. If the time allowed in this order is insufficient, whether it be in terms of
    any discussions on the logs felled or otherwise or in terms of the time
    to vacate the area or sites, then parties are at liberty to apply for
    extension of time provided that sufficient notice is given to the other
    parties to the proceeding.

    10. The defendants shall pay the second plaintiff’s cost of the
    proceeding on a party/party basis which may be taxed if not agreed.

    11. Time is abridged.

    _______________________________________________________________
    Kandawalyn Lawyers: Lawyer for the Plaintiffs
    Nelson Lawyers: Lawyer for the First Defendant
    PNG Forest Authority In-House Lawyer: Lawyer for the Second Defendant
    Cherake Lawyers: Lawyer for the Third Defendant