Ibi Enei v Rimbunan Hijau [1998] WS1115

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    Rimbunan Hijau was ordered to pay more than K4 million in damages for illegally occupying customary land and using it as a log pond and to export logs for eight years.

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  • N4402

    PAPUA NEW GUINEA
    IN THE NATIONAL COURT OF JUSTICE

    WS No. 1115 OF 1998

    Between:

    IBI ENEI ON HIS BEHALF AND ON BEHALF OF OGA CLAN OF LOUPON
    ISLAND, ABAU
    Plaintiff

    And:

    RIMBUNAN HIJAU LIMITED
    Defendant

    Waigani: Gavara-Nanu J.
    2007: 10 & 11 December
    2008: 24 & 30 October
    2009: 16 April
    2011: 28 September

    DAMAGES – Trespassing – Continuous trespassing – Customary land – Logging
    company occupying customary land illegally for eight years – Land used as a log pond
    and a port to export logs– Access road into the customary land – Use of heavy
    machinery such as trucks and a giant crane – Use of tug boats and pontoons to carry
    logs to load on ships – Types of damages discussed – Damages awarded based on the
    total benefits received by the logging company from the illegal use of the land –
    Logging company acting in breach of the Land Act, 1996.

    DAMAGES – Local Land Court declaring a wrong clan as the owner of the land –
    Logging company paying rental fees for the land to the wrong clan – Memorandum of
    Understanding signed between the logging company and the clan – Logging company
    being fully aware of the dispute over the ownership of the land – Reckless disregard of
    the interests and rights of the true landowner by the defendant- Local Land Court
    decision quashed on appeal – Memorandum of Understanding having no legal effect.

    EVIDENCE – Admissions made by the defendant in the pleadings binding –
    Newspaper cuttings accepted as credible evidence – Damages assessed by
    environmental science groups engaged by the plaintiff – Rate and formula used by the
    environmental science groups to assess damages adopted as fair and reasonable.

    Cases cited:
    Papua New Guinea Cases

    Central Province Forest Industries Pty Limited v. Rainbow Holdings Pty Limited N321
    Commissioner General of Internal Revenue Commission v. Julian Paul Leach (1988)

  • Page 2 of 18

  • Eva Aglum & Ors v. MVIL (1988) N678
    Helen Jack v. The Independent State of Papua New Guinea [1992] PNGLR 391
    Inabari v. Sapat and Independent State of Papua New Guinea [1991] PNGLR 427
    Kolaip Palapi v. Independent State of Papua New Guinea (2001) N2274
    Madaha Resena & Ors v. The Independent State of Papua New Guinea [1990] PNGLR
    22
    Mark Hosea Sinai Custormary Legal Representative of Buekau clan v. Kei Buseu
    Kampani Pty Ltd & Ors – N935
    Mauga Logging Company Pty Ltd v. South Pacific Oil Palm Development Pty Ltd (No.1)
    [1977] PNGLR 80
    Mumukrui Kopil v. John Wakon [1992] N2065
    Pike Dambe v. Augustine Peri & The Independent State of Papua New Guinea [1993]
    PNGLR 4
    Rainbow Holdings Pty Ltd v. Central Province Forest Industries Pty Ltd [1985] PNGLR
    34
    Reference by the Public Prosecutor under s.27(2) of the Organic Law on Duties and
    Responsibilities of Leadership and In the Matter of General Sigulogo [1988-89] PNGLR
    384
    Robert Brown v. MVIL [1980] PNGLR 409
    Roselyn Cecil Kusa v. MVIL (2003) N2328
    Susanna Undapmaina v. Talair Pty Ltd [1981] PNGLR 559
    Toglai Apa & Ors v. The Independent State of Papua New Guinea [1995] PNGLR 43
    Trevor Yaskin v. Wallya Abilio (2006) N3108
    United Timber (PNG) Ltd v. Mussau Timber Development Pty Ltd N645

    Other cases cited

    Storm Bruks Aktie Bolag v. Hutchison [1905] AC 515

    Counsel:

    L. Yandaken, for the plaintiff
    B. Frizzel, for the defendant

    28 September, 2011

    1. GAVARA-NANU J: The plaintiff claims damages against the defendant for trespass,
    continuous trespass and illegal use of his customary land known as Mogubo foreshore,
    including a site known as Magubo log pond (‘the land’), which is situated at Loupom
    Island in the Abau District of the Central Province.

    2. The land is recorded in the Department of Lands and Physical Planning as Portion
    249C in Survey Plans Cat Nos. 53/136 and 53/137.

    3. The plaintiff claims that in or around 1988, the defendant while engaged in logging
    activities, entered and occupied the land without seeking his prior approval or agreement
    and used the land to store logs for loading onto the log ships which were berthed not far
    from the shore for export overseas. The plaintiff says the defendant continuously used
    and occupied the land while carrying out logging operations in the project area until 1996

  • Page 3 of 18

  • when it ceased logging operations.

    4. The plaintiff claims that he repeatedly asked the defendant to pay and compensate him
    for the use of his land or to vacate it, but the defendant refused those requests and
    continued to use and occupy the land illegally to carry out its commercial logging
    activities without paying him any money at all.

    5. The plaintiff says the actions of the defendant in entering the land without his approval,
    consent or agreement amounted to trespass, continuous trespass and illegal use of the
    land which he says was also in breach of the Land Act, 1996.

    6. As a result of such illegal entry, use and occupation of his land by the defendant, the
    plaintiff says he suffered injury as a result of the destruction caused to the land, including
    damage done to the foreshore area, especially the seabed, marine and other aquatic life by
    barges, tug boats and pontoons carrying logs from the log pond to the log ships berthed
    not far from the shore.

    7. The plaintiff claims the defendant exported round logs of hardwood in excess of
    252,000 cubic meters during the period it used and occupied the land. The actual volume
    of logs exported is not pleaded but the ‘Shipments Checks’ which are records of logs
    exported annexed to the plaintiff’s affidavit show that about 297,241.451 volumes of hard
    wood logs were exported in 1991, 1992, 1993 and 1994. There are no records of volumes
    of round logs exported in 1989, 1990, 1995 and 1996.

    8. The plaintiff claims general, exemplary and special damages and claims interest and
    costs.

    9. In its amended Defence filed on 11 May, 2006, in paragraph 4 (b), (c) and (e), the
    defendant admits that it did not seek approval or agreement from the plaintiff before
    entering the land and using it as log pond, it further admits that it has not paid any rental
    fees at all to the plaintiff for the use of the land.

    10. The defendant in paragraph 4 (d) of its amended Defence denies receiving any
    requests from the plaintiff for payment for the use of the land or to vacate it.

    11. In paragraph 1.1 of the Statement of Agreed and Disputed Facts and Legal Issues, the
    parties agreed that the plaintiff is the customary landowner, apart from this concession by
    the defendant and the admissions it made in its amended Defence, other evidence indicate
    clearly that the defendant has conceded that the plaintiff owned the land. For instance, at
    one stage an attempt was made by the defendant to pay the plaintiff K6,000.00 for the use
    of the land which the plaintiff refused, then in the second attempt, the defendant in the
    presence of the member for Abau, Sir Puka Temu, offered to pay K36,000.00 to the
    plaintiff, which the plaintiff again refused as inadequate for the cost of damages done to
    the land. This evidence appears in paragraph 23 of plaintiff’s affidavit. The defendant has
    not denied or disputed this evidence and the Court accepts the evidence.

    12. At the hearing the following documents were tendered:-

    i. Affidavit sworn by Ibi Enei on 28 June, 2006, Exhibit ‘A’;

  • Page 4 of 18

  • ii. Affidavit sworn by Ibi Enei on 26 November, 2007, Exhibit ‘B’;

    iii. Memorandum of Understanding (MOU) dated 24 May, 1994, between
    Warata clan of Laruoro Island, Amazon Bay, Central Province and Magarida
    Timbers Pty Ltd, the holder of Permit – TRP 3 – 28 and Rimbunan Hijau (PNG)
    Pty Ltd, the Contractor to Magarida Timbers Pty Ltd, Exhibit ‘C’;

    iv. Letter to the General Manager of Rimbunan Hijau (PNG) dated 18
    November, 1994, by W.L. Noki, Senior Provincial Magistrate, to which the
    Kwikila Local Land Court Order of 4 November, 1994, was attached, Exhibit ‘D’;

    v. Letter to the General Manager of Rimbunan Hijau (PNG) Pty Ltd dated 9
    November, 1994, by Pepi Kimas, then Regional Manager, Southern Region,
    Department of Lands and Physical Planning, to which Acting Valuer General’s
    report dated 4 November, 1994 was attached, Exhibit ‘E’;

    vi. Letter to Rimbunan Hijau (PNG) Pty Ltd by Blake Dawson Waldron dated
    6 October, 1993, Exhibit ‘F’; and

    vii. A photostat copy of the Infrastructure Account, Exhibit ‘G’.

    13. The issues raised by the parties in the Statement of Agreed and Disputed Facts and
    Legal Issues are:-

    i. Whether the defendant’s actions amounted to trespass and continuous
    trespass;

    ii. Whether the defendant should pay compensation to the plaintiff for the use
    of the land for which the defendant has already made payments to Warata clan
    pursuant to the MOU and the Order made by the Kwikila Local Land Court;

    iii. Whether the defendant should pay damages to the plaintiff and if so, what
    should be the amount payable when the defendant has already paid Warata clan
    for the use of the land;

    iv. Whether the plaintiff has a cause of action against the defendant when the
    defendant has already paid money to Warata clan for the use of the land; and

    v. Whether the plaintiff’s cause of action is in fact against Warata clan.

    14. The defendant argues that the payments it made to Warata clan in rental fees for the
    land were justified because the payments were made pursuant to the MOU which
    provided for Warata clan to be paid K500.00 per month. Furthermore, the Order made by
    the Kwikila Local Court declared that Warata clan was the owner of the land.

    15. The defendant also argues that its occupation and use of the land was lawful and
    justified because Warata clan which was declared by the Kwikila Local Land Court as the
    owner of the land had authorized it to use the land. It therefore argues that it has no

  • Page 5 of 18

  • obligation to pay any compensation in damages to the plaintiff. I will return to this issue
    later.

    16. The plaintiff gave evidence, he told the Court that the defendant occupied the land
    without his permission and he repeatedly asked the defendant to compensate him for its
    use of the land or to vacate the land but the defendant ignored those requests. The
    defendant denies that the plaintiff made such requests.

    17. The defendant called one Pia Dometa an authorized officer of the defendant as a
    witness, he was the only witness for the defence. Mr. Dometa admitted that when the
    defendant made rental payments to Warata clan for the use of the land the defendant was
    aware that the plaintiff was disputing Warata clan’s claim of ownership over the land. He
    also agreed that the defendant continued to pay Warata clan for the use of the land after
    the plaintiff had filed proceedings at the Kwikila Local Land Court to challenge Warata
    clan’s claim of ownership over the land.

    18. There is no dispute that the land was outside the TRP area in which the defendant was
    allowed to harvest timber.

    19. It was submitted by Mr. Yandaken of counsel for the plaintiff that although the
    defendant has told the Court that it made payments to Warata clan for the use of the land,
    there is no evidence before the Court to confirm that those payments were indeed made.
    Mr. Yandaken submitted that the defendant has not verified those payments. It was further
    submitted that even if payments were made to Warata clan, it does not relieve the
    defendant from compensating the plaintiff for trespassing onto his land and illegally
    using and occupying it to do business and causing damage to it.

    20. Mr. Frizzel of counsel for the defendant submitted that if the Court found in favour of
    the plaintiff, any damages ordered for the plaintiff should be based on the value of the
    land which is K4,000.00. This submission is based on the Valuation Report made by the
    Acting Valuer General in which the land was valued at K4,000.00. Otherwise it was
    submitted that the defendant was justified in using and occupying the land under the
    MOU and the Kwikila Local Land Court Order. Mr. Frizzel further submitted that the
    plaintiff also needs to prove that he was in possession of the land when the defendant
    entered and occupied and used the land before he can claim damages against the
    defendant for trespassing. It was submitted that there is no evidence that the plaintiff was
    in possession of the land at the time the defendant entered the land, the defendant
    therefore should not pay damages to the plaintiff.

    21. Mr. Yandaken also submitted that because the defendant was fully aware of the
    dispute regarding the ownership of the land all the rental fees it paid to Warata clan
    should have been paid into a Trust Account until the land-ownership issue was resolved.

    22. Mr. Yandaken also told the Court that the defendant continually insisted that the issue
    of ownership of the land be resolved quickly first, yet it continued to occupy and use the
    land and continued to make payments to Warata clan for the use of the land even when
    Warata clan’s claim of ownership over the land was still in dispute.

    23. There is in my view overwhelming evidence that plaintiff is the owner of the land,

  • Page 6 of 18

  • this view is based on the clear and unequivocal admissions made by the defendant in its
    amended Defence and the steps it took on two occasions when it tried to pay the plaintiff
    for the use of the land. So the only determinative issue left really is whether the use and
    occupation of the land by the defendant amounted to trespass and continuous trespass or
    was the use and occupation of the land by the defendant justified by the MOU and the
    decision of the Kwikila Local Land Court, as claimed by the defendant? In this regard it
    is quite plain that the defendant cannot rely on the Order or the decision made by the
    Kwikila Local Land Court because that decision was subsequently quashed on appeal. It
    is also plain that the defendant cannot rely on the MOU because the MOU is void of any
    legal effect because when Warata clan signed the MOU, it was not the owner of the land
    as such it had no legal capacity and authority to sign the MOU. The defendant’s use and
    occupation of the land was as a result unlawful and it amounted to trespass and
    continuous trespass. This conclusion in my view effectively resolves all the other issues
    before the Court, including the issues raised in the Statement of Agreed and Disputed
    Facts and Legal Issues.

    24. The defendant is in the result liable to the damages claimed by the plaintiff.

    25. As I alluded to earlier, Mr. Frizzel has submitted that in the event that the Court finds
    in favour of the plaintiff, damages awarded to the plaintiff should be based on the value
    of the land, which according to the valuation report made on the land by the Acting
    Valuer General is K4,000.00. I find the contention by Mr. Frizzel untenable for a number
    of reasons. First: the valuation report was made at the behest of the defendant for its own
    benefit. This is clear from the plain reading of the report. The report shows that the land
    was for sale with the purchase price of K1,800.00, this amount and the part occupancy
    fee of K2,200.00, made up the purported value of the land i.e K4,000.00. There is
    evidence that the defendant was the intended purchaser. In a letter to the General
    Manager of the defendant dated 9 November, 1994, the Secretary for the Department of
    Lands and Physical Planning advised that his Office was preparing purchase document
    (sic.). In my view, this confirms that the valuation report was made for the sole benefit of
    the defendant. Second: the report states that the landowners agreed to sell the land
    outright, obviously the plaintiff could not be privy to such an agreement, if there was
    such an agreement, because he was fighting for his land and was asking the defendant
    repeatedly to compensate him for using the land or to vacate it. In this regard I accept on
    the balance of probabilities, the evidence by the plaintiff that he asked the defendant
    many times to compensate him for the use of the land or to vacate it. I also find on the
    balance of probabilities that the defendant refused or simply ignored those requests. I
    accept plaintiff’s evidence because it is consistent with his action in these and other
    related proceedings. This action in fact emanates from those unsuccessful requests by the
    plaintiff to the defendant for compensation. Furthermore, there is no evidence that the
    plaintiff wanted to sell the land. Third: the defendant occupied the land to store and
    export logs from which the defendant derived huge revenue for itself, the plaintiff’s
    damages must therefore be based on the total benefits the defendant derived from the use
    of the land. To use K4,000.00, which is the purported unimproved value of the land as the
    basis for the Court in deciding damages for the plaintiff would be grossly unfair and
    inadequate for the plaintiff. This is the approach adopted in assessing damages arising
    from the tort of trespass committed on another’s land including customary land and where
    the trespasser uses the land to earn income and other benefits: Madaha Resena & Ors v.
    The Independent State of Papua New Guinea [1990] PNGLR 22 at 29. In that case,
    Bredmeyer J, quoted a passage from McGregor on Damages, 15th ed. (1988), Ch. 32,

  • Page 7 of 18

  • paragraph 1417. At paragraph 1421, the learned author stated the principle this way:

    “Nevertheless, on the strength of these decisions as establishing the principle, it
    was held in Whitwham v. Westminster Brymbo Coal Co. [1896] 2 Ch. 538 at 542,
    where the defendant had trespassed on the plaintiff’s land by tipping soil from his
    colliery upon it, that the principle of the wayleave cases applied so that the
    damages were not to be assessed merely by taking the diminution of the value of
    the land but the higher value of the user to which the defendant had put it. Lindley
    L.J. said the law was settled by Jegon v. Vivian, (1871) L.R. 6 Ch. App. 742. He
    put the matter thus: “The plaintiffs have been injured in two respects. First, they
    have had the value of their land diminished; secondly, they have lost the use of
    their land, and the defendants have had it for their own benefit. It is unjust to
    leave out of sight the use which the defendants have made of this land for their
    own purposes, and that lies at the bottom of what are called the wayleave cases”.
    In the result, it was held that as to so much of the plaintiff’s land as was covered
    by the soil tipped thereon by the defendant, the value of the land by using it for
    tipping purposes was the correct measure, this value being much greater than the
    diminution in the land’s value since it was the only land procurable for tipping
    purposes. And in more modern times the courts have applied Whitwham v.
    Westminster Brymbo Coal Co. to reach a similar result. In Penarth Dock
    Engineering Co. v. Pounds [1963] 1 Lloyd’s Rep. 359, the defendant, having
    bought a pontoon or floating dock from the plaintiffs failed to have it removed
    within a reasonable time from the dock premises of which the plaintiffs were
    lessees and which were in the course of being closed down by their lessors. In the
    plaintiffs’ action, which was framed as trespass or breach of contract, Lord
    Denning M. R. assessed the damages at the benefit obtained by the defendant by
    having the use of the dock premises after he should have removed the pontoon,
    although the plaintiffs had lost nothing since the dock premises were of no use to
    them and their lessors had not required them to pay extra rent”. (my underlining).

    26. The passage supports the view I have adopted that damages for the plaintiff should be
    decided on the basis of the total benefits the defendant derived from using the land. As
    illustrated in this passage, the plaintiff in this case has been injured in two respects; first,
    by the damage done to his land resulting in the diminution of the value of the land;
    second, he was deprived from using and benefiting from the land for the period the
    defendant used and occupied the land illegally. Application of the principles enunciated
    in the passage is also fitting to the gravity of the damages or injuries suffered by the
    plaintiff. The plaintiff has adduced evidence showing that defendant stored round logs on
    the land in large volumes. There is also evidence that the land was used by big machinery
    like loaders and a giant crane to move and load logs from the log pond onto pontoons,
    barges and tugboats which were berthed offshore which were then used to carry logs to
    the ships berthed not far from the shore. The plaintiff’s affidavit, which annexed cuttings
    taken from Post-Courier for Tuesday 28 January, 1992, attesting to these facts is not
    challenged or disputed by the defendant.

    27. It is also clear from the evidence that the defendant was exporting logs in large
    volumes from the logs stored at the log pond throughout the period it occupied the land.

    28. The Post-Courier cuttings annexed to the plaintiff’s affidavit, show pictures of large
    volumes of round logs being stored at the log pond and heavy machinery including a

  • Page 8 of 18

  • giant crane, a tug boat and a pontoon waiting to move and tow logs from the log pond to
    sea for loading onto a ship. The Post-Courier reported that the ship pictured was waiting
    to be loaded with logs for shipment to markets in Asia.

    29. There cannot be any doubt that with such large volumes of logs being transported
    from forests where they were harvested by heavy loaders and trucks to the log pond and
    such large volumes of logs being stored at the log pond, then the logs being transferred in
    large volumes from the log pond by heavy machinery including the giant crane
    continuously for eight years, and the continuous use of barges, tug boats and pontoon to
    move and transfer such volumes of logs to the waiting ships for eight years would have
    caused serious and substantial damage to the land and the foreshore areas, including the
    seabed, marine and other aquatic marine life. Clearly, in those circumstances K500.00 per
    month the defendant was to pay or was paying in rental fees for its use of the land under
    the MOU, was as I said earlier absurdly small and inadequate. With such level and
    intensity of activities in such a long period, some, if not, most parts of the land would
    have been seriously damaged and the value of land diminished substantially, if not
    forever. The effects of such damage were most certainly long term.

    30. The plaintiff engaged two environmental science groups to assist him in assessing the
    damages done to the land, namely, Environmental Science and Community Development
    Foundation Inc. and Partners with Melanesians. The latter was engaged to reassess the
    damages, including damages for the log pond area because when Environmental Science
    and Community Development Foundation Inc. did its assessment of damages it only
    assessed damages for the access road, it did not assess damages for the log pond area.

    31. The assessment of damages made by Environmental Science and Community
    Development Foundation Inc. on 27 November, 2002, for the access road is Annexure ‘A’
    to the plaintiff’s affidavit sworn on 26 November, 2007. The amount assessed is
    K5,131,368.00.

    32. The assessment of damages made by Partners with Melanesians on 13 June, 2006 is
    Annexure ‘B’ to the same affidavit. The total amount assessed is K13,073,945.45, which
    is inclusive of K5,131,368.00 assessed by Environmental Science and Community
    Development Foundation Inc. for the access road. It should however be noted that the
    amount of K13,03,945.45 was made up of K5,131,368.00 for access road, K1,960,800.00
    for log pond area and K5,981,777.45 for shipment of logs. The rate used by the two
    environmental science groups to arrive at these amounts is K1.90 per square meter. The
    formula the two groups used for access road and log pond area is Rate x Area x Years. So
    for the access road the formula used is K1.90 x 337,590m2 x 8 years and for log pond,
    the formula used is K1.90 x 129,000m2 x 8 years and for shipment of logs, the formula
    used is Rate x Cubic meters x 8 years, i.e K1.90 x 393,537.99m3 x 8 years. It should be
    noted that 8 years adopted in these formulae is the number of years the two groups said
    the defendant used and occupied the land.

    33. I have decided to reject the amount assessed for shipment of logs, which is
    K5,981,777.45, because there is no explanation given by the two groups on how and why
    393,537.99m3 was adopted to make the assessment. Furthermore, I am of the view that
    damages awarded to the plaintiff should relate to the damages done to the land. Based on
    this same reasoning I have decided that the plaintiff should be compensated for damage

  • Page 9 of 18

  • done to the foreshore area.

    34. The total amount of damages assessed by the two environmental science groups for
    the access road and log pond areas is K7,092,168.00.

    35. The plaintiff also claims:- (i) out of pocket expenses which he says were incurred
    when attending proceedings before the Kwikila Local Land Court and these proceedings.
    These expenses relate to transport from his village which is remotely located in the Abau
    District of the Central Province and back, food and accommodation, (ii) damages on
    behalf of some of his deceased clansmen who he says died while fighting this case with
    him, (iii) damages in berthing charges for ships, tug boats and barges that used to berth
    along and near the shores to tow, carry and ship logs during the period the defendant used
    and occupied the land. The plaintiff adopted the berthing rates used by the PNG Harbours
    Board which he says is K2.50 per hour to arrive at the amount claimed which is
    K2,610,000.00.

    36. It was submitted by Mr. Yandaken that because the defendant has not challenged or
    denied the amounts claimed by the plaintiff in damages, all the amounts claimed should
    be awarded to the plaintiff in full.

    37. Before assessing damages for the plaintiff, it is convenient that the period in which
    the plaintiff used and occupied the land be determined first because the parties do not
    agree on the period. This is important to properly decide the quantum of damages for the
    plaintiff.

    38. In the Statement of Claim, the plaintiff claims that the defendant occupied and used
    the land from 1988 to 1994, which is a period of 7 years, however at the hearing he
    claimed that the period was from 1989 to 1996 which is a period of 8 years. The
    defendant on the other hand has maintained that it occupied and used the land from 1989
    to 1994, which is a period of 6 years. In a number of Post-Courier cuttings, annexed to
    the plaintiff’s affidavit, the Managing Director of the defendant Mr. Francise Tiong was
    quoted as saying compensation demands were a problem since the defendant started
    harvesting timber in the Bonua Magarida Timber Project in 1989. The headline on the
    particular page of the Post-Courier read “Developer committed to project”. It was also
    reported that the Permit to harvest logs was issued on 15 October, 1988.

    39. From the relevant evidence before the Court, I have concluded that the defendant
    occupied and used the land from 1989.

    40. In regard to the year the defendant ceased occupying and using the land, it is noted
    that the defendant in paragraph 6 (a) of its amended Defence says:-

    6. Further and in answer to the allegations made in the statement of claim the
    defendant says:-

    (a) at all material times up until in or around 1996 when the defendant
    ceased its logging operations in the Bonua – Magarida Timber Rights
    Purchase Area pursuant to the Timber Permit No. TP3-28 the defendant
    paid compensation for use of the said land to the Warata clan; (my

  • Page 10 of 18

  • underlining).

    41. The defendant in this paragraph has in my view made a clear admission that it ceased
    its logging operations in the project area in 1996. On this basis it is reasonable to
    conclude that the defendant ceased occupying and using the land to store and export logs
    in 1996, this is the year the plaintiff also says the defendant ceased its logging operations
    in the project area.

    42. Consequently I find that the defendant occupied and used the land for a period of
    eight years from 1989 to 1996. This is the period for which the plaintiff is entitled to
    claim damages.

    43. It is noted that in paragraph 1.3 of the Statement of Agreed and Disputed Facts and
    Legal Issues, the parties agreed that the defendant in or around 1990, while engaged in
    logging activities entered and occupied the land and used it for purposes of storing round
    logs. Ordinarily the parties would be bound by what they have agreed, including 1990 as
    the year the defendant entered and occupied the land, however I have adopted 1989 as the
    year the defendant entered and occupied the land and started using it to store and export
    logs because at the hearing the parties, especially the defendant argued strongly that the
    defendant started using and occupying the land in 1989.

    44. I note that damages for access road has not been specifically pleaded by the plaintiff
    in the Statement of Claim but the defendant has admitted entering and occupying the land
    without the plaintiff’s approval. It would naturally follow from this admission that there
    was an access road constructed through which the defendant gained access to the log
    pond and foreshore areas. I therefore consider that the plaintiff is entitled to claim
    damages for the access road. In any case, I find that the pleadings in the Statement of
    Claim in regard to the description given of the land, i.e Portion 249C in Survey Plans Cat
    Nos. 53/136 and 53/137 in paragraphs 3, 4, 5, 6, 8, 9, 10 and 11 in regard to the defendant
    entering and trespassing onto the land are sufficient to include and cover damages for the
    access road. Furthermore the plaintiff’s claim for damages in relation to the access road
    has been fully litigated by the parties, the Court is therefore entitled to consider the claim
    and have plaintiff’s damages assessed for the access road: Roselyn Cecil Kusa v. MVIT
    (supra).

    45. The plaintiff has only given evidence regarding the sizes of these two areas but it has
    not given any evidence regarding the type of land for which the plaintiff is claiming
    damages, the only evidence is given by the Acting Valuer General in his report dated 4
    November, 1994. In the report the Acting Valuer General described the land as “generally
    flat savannah grassland with clay black loamy soil suitable for agricultural purposes”.

    46. From this description of the land it is reasonable to say that construction of the access
    road and the log pond would have resulted in the destruction of trees, shrubs, vines, grass,
    beaches, general foreshore area and general vegetation. The damages in this regard were
    significant for the plaintiff because he was deprived of making gardens and hunting on
    his land for eight years. He was also deprived of using the seas to fish for that same
    period. In regard to gardening, the land was described as “…black loaming soil suitable
    for agricultural purposes”, the land was therefore good for subsistence farming and
    growing cash crops. The plaintiff was deprived of using and benefiting from such land by

  • Page 11 of 18

  • the defendant for eight years. These are relevant factors for the Court to take into account
    when assessing damages for the plaintiff; which cannot be properly and fairly determined
    by reference to the unimproved value of the land. To do so would be unfair to the plaintiff
    because any amount of damages assessed using such criteria would be grossly inadequate
    when compared to the benefits the defendant derived from using the land to do logging
    business including exporting logs in eight years and the damages done to the land in that
    period.

    47. Under the MOU, the defendant would have paid K500.00 to Warata clan every month
    for eight years it occupied the land. Thus, the defendant would have paid a total of
    K36,000.00 to Warata clan in those eight years. Such an amount as I said is absurdly
    small and inadequate to compensate the landowners when compared to the income and
    other benefits the defendant derived from using the land in those eight years.

    48. Turning now to the MOU, its terms are significant because they indicate a couple of
    things, first; the defendant was aware that ownership of the land was disputed by the
    plaintiff, yet it went ahead and signed the MOU with Warata clan, second; the defendant
    knew that it was renting the log pond area as well as the foreshore area. This is significant
    because it indicates that the defendant appreciated that whoever owned the land also
    owned the foreshore area or had rights over it. The foreshore area for purposes of the
    plaintiff’s claims is the area of the sea and shore between the log pond and where the log
    ships were berthed.

    49. The damages for the foreshore area include damages done to the shore, marine and
    other aquatic life and the seabed. Such damages would have been done by the use of
    barges, tug boats, pontoons, a giant crane and log ships. The defendant has also
    acknowledged the plaintiff’s rights over the foreshore area in the MOU.

    50. The proper thing for the defendant to do in this case was to enter into a lease
    agreement either with the State or the plaintiff to use the land but it did not, it instead
    entered into a MOU with the Warata clan which was not the true landowner. This is fatal
    to the defendant. The timber permit pursuant to which the defendant carried out logging
    operations would have required the defendant to ensure that all landownership issues and
    interests arising either within or outside the TRP which were affected by its logging
    activities were resolved before embarking on logging operations. I have no doubt that this
    is the reason why the defendant entered into the MOU with Warata clan and was insisting
    that all landownership issues be resolved first. The overall scheme of the Forestry Act
    1991 is also aimed at safeguarding such rights and interests of the resource owners. The
    provisions under PARTS III and IV of the Act, in particular provide for proper and good
    Forest Management and stipulate requirements regarding Development and Registration
    of Forest Industry Participants and consultants and their respective duties and
    responsibilities. Section 46 for instance, expressly states that rights of customary owners
    of forest resources are to be fully recognized and respected. Such mandatory statutory
    requirements were breached by the defendant when it occupied and used the land for
    eight years without the permission and authority of the plaintiff. These provisions of the
    Forestry Act, have a general application to damages done to land and other natural
    resources both within and outside the TRP areas by resource developers including
    logging companies.

    51. In Rainbow Holdings Pty Ltd v. Central Province Forest Industries Pty Ltd [1985]

  • Page 12 of 18

  • PNGLR 34 at 38, the Supreme Court stressed the obligation imposed on the logging
    companies by the Forestry Act, to adequately compensate the resource owners for any
    damages caused to their resources by their activities:

    “Now the Forestry Act and Regulations together with Forestry (Private Dealings)
    Act, (Ch. No. 217), are designed to protect not only a valuable natural resource
    but also to provide adequate payment to the traditional or customary owners of
    the resources”.

    52. See also, Reference by the Public Prosecutor under s. 27 (2) of the Organic Law on
    Duties and Responsibilities of Leadership and In the Matter of Gerard Sigulogo
    [1988-89] PNGLR 384. The principles enunciated in these cases apply generally to
    resources both within and outside the TRP areas which may be affected by the activities
    of the resource developers.

    53. When assessing damages in cases of this nature one view is that the plaintiff should
    only be entitled to damages equivalent to the rental fee for the land. Such an argument is
    in my opinion untenable in this case because tort was committed on a customary land.
    The argument would have merit had the tort been committed on a property held under a
    lease.

    54. It is important that value of the subject land is understood and appreciated from the
    perspective of the plaintiff in order to properly determine the damages suffered by the
    plaintiff. This approach is in my view consonant with the scheme of the Forestry Act
    1991. To a customary landowner land is a vital source of life because he uses the land to
    make gardens, hunt, plant and grow fruit trees, cut timber for making houses and canoes,
    creeks and rivers to fish and draw water and seas to fish and so on. Sometimes when land
    and other natural resources are damaged or destroyed, the damage can be permanent and
    irreparable, especially where regeneration of those resources is impossible.

    55. It is also important to remember that land is also a source of wealth and status to its
    owner. These observations also apply to the plaintiff.

    General damages.

    56. It was submitted by Mr. Yandaken that damages claimed by the plaintiff should be
    awarded in full because the defendant has not disputed them. I cannot accept such an
    argument because claims must not only be reasonable and have proper basis but they
    must also be supported by credible evidence, the plaintiff still has the onus to prove his
    claims: Kolaip Palapi v. Independent State of Papua New Guinea (2001) N2274.

    57. I bear in mind that this case is not about unpaid royalties, it is about damages done to
    the customary land by a trespasser. In that regard, it is important to note that even after
    the defendant had left and vacated the land the damages done to the land and the effect of
    such damages would have continued to impact on the land. I have no doubt that the
    plaintiff was not able to use the land anytime soon after the defendant vacated the land
    because of such long term or even permanent damage to the land.

    58. The plaintiff has by his affidavit, adduced records of log exports for the Bonua

  • Page 13 of 18

  • Magarida timber project. Going by the ‘Shipments Checks’ which show the F.O.B prices
    for volumes of logs exported, I estimate that the total value of logs exported by the
    defendant from 1989 to 1996, would have been at least K60,000,000.00 in F.O.B prices.

    59. According to these records which are not disputed, in 1991, 1992, 1993 and 1994,
    K32,216,827.88 worth of logs were exported to Asian markets. For 1996, only one
    shipment of logs was recorded it was for 13 August, 1996, which was worth
    K547,984.45.

    60. There are no records of logs exported in 1989, 1990, 1995 and 1996, except for the
    single shipment recorded for 13 August, 1996. The volumes and prices of logs exported
    in those four years are therefore not known. But going by the volumes of logs exported in
    1991, 1992, 1993 and 1994 as shown above, it would be fair and reasonable to estimate
    that in 1989, 1990, 1995 and 1996, the defendant would have exported an average of
    K7,000,000.00 worth of logs in each of those years, which comes to a total amount of
    K28,000,000.00. Going by this figure, I estimate that in eight years the defendant would
    have exported logs to the total value of at least K60,000,000.00 in F.O.B prices. This is
    one way of estimating how much the defendant would have earned in log exports in the
    eight years it used and occupied the land.

    61. In a further attempt to decide the total earnings or benefits the defendant would have
    derived from exporting logs in the eight years, I find the case of Central Province Forest
    Industries Pty Limited v. Rainbow Holdings Pty Limited N321, as another helpful guide.
    In that case the plaintiff went into liquidation and some of its assets which the Provincial
    Liquidator was to sell were the unsold logs it harvested prior to going into liquidation.
    The logs consisted of 6,000 cubic meters of rosewood and 1,000 cubic meters of taun.
    The logs were harvested in the Magarida area which is the same area in which the
    defendant harvested timber. The defendant company in that case offered to purchase the
    logs for K450,000.00. In the end the logs were sold for the reduced price of K270,000.00
    because of depreciation in their value and quality over time. Clearly, had the logs been
    sold soon after they were harvested, they would have been sold for K450,000.00 because
    the defendant was willing to pay that amount. In other words the defendant would have
    paid K450,000.00 for 7,000 cubic meters of rosewood and taun. I find the case helpful as
    a guide because it illustrates the value of logs, it helps me in deciding defendant’s total
    earnings from exporting hardwood logs during the eight years it used and occupied the
    land. See, also United Timber (PNG) Ltd v. Mussau Timber Development Pty Ltd, N645
    and Mauga Logging Company Pty Ltd v. South Pacific Oil Palm Development Pty Ltd
    (No.1) [1977] PNGLR 80.

    62. In this case, the plaintiff claims the defendant exported over 252,000 cubic meters of
    hardwood. Adopting the value placed for 7,000 cubic meters of rosewood and taun in
    Central Province Forest Industries Pty Limited v. Rainbow Holdings Pty Limited (supra),
    which is K450,000.00 or even at the price the logs were sold which is K270,000.00, I
    estimate that the defendant would have earned well in excess of K60,000,000.00 even if
    the defendant had sold only 252,000 cubic meters of logs. It should also be noted that in
    1993 alone, the total log exports was worth K11,451,090.41 in F.O.B prices. This is one
    reason why I say the defendant could have earned more than K60,000,000.00 in the eight
    years it occupied and used the land. What then is the fair compensation for the plaintiff in
    damages? Using Central Province Forest Industries Pty Limited v. Rainbow Holdings Pty
    Limited (supra) as a guide the estimated total earnings of at least K60,000,000.00 by the

  • Page 14 of 18

  • defendant in eight years is still a moderate figure even if only 252,000 cubic meters of
    hardwood had been sold. For purposes of determining the plaintiff’s damages, I will use
    K60,000,000.00 total income or benefit for the defendant in eight years as the base.

    63. The two environmental science groups assessed the plaintiff’s total damages for the
    access road and log pond areas at K7,092,168.00. It is however noted that the two groups
    have not given any evidence regarding the nature and the extent of the damage caused to
    the two areas. The plaintiff also has not given any evidence regarding the nature of
    damages caused to the land and the foreshore areas. The claims are basically for trespass
    and illegal use of the land by the defendant. In the circumstances, I will only allow half of
    the amount assessed for the two areas. This comes to the amount of K3,546,084.00.

    64. The damage caused to the foreshore area was not assessed by the two groups, thus
    taking into account the matters I raised in regard to the assessments made for the access
    road and log pod, I would assess damage for the foreshore area at K500,000.00.

    65. Thus for access road, log pond and foreshore areas the total amount assessed in
    general damages is K4,046,084.00.

    66. The key factor here is that the defendant illegally used and occupied the land and
    trespassed continuously and caused damage to the land for eight years and continued to
    benefit from its illegal use of the land in those 8 years. The damages caused to the land by
    defendant’s activities continued unabatedly at the same level of intensity from when it
    first entered the land to store and export logs in 1989 to when it ceased its logging
    operations in 1996 and vacated the land.

    67. I keep in mind that the aim of awarding damages to the plaintiff is not to over enrich
    him. The amount of damages awarded must be fair and reasonable and they should as
    much as possible put the plaintiff back in the position he was or would have been before
    the tort was committed or had the tort not been committed.

    68. It should be noted that although the defendant has denied exporting in excess of
    252,000 cubic meters of logs in his amended Defence, the undisputed evidence adduced
    by the plaintiff from the record of exported logs show that total of 297,241.451 volumes
    of logs were exported in 1991, 1992, 1993 and 1994. This confirms the claim by the
    plaintiff that over 252,000 cubic meters of hardwood logs were exported. This figure does
    not include the volumes of logs exported in 1989, 1990, 1995 and 1996, the records of
    logs exported in those years are not before the Court. If log exports for those years are
    added, the defendant’s total earning in eight years would as I alluded to earlier definitely
    go well beyond the estimated K60,000,000.00: Central Forest Industries Pty Limited v.
    Rainbow Holdings Pty Ltd (supra).

    69. The records of the F.O.B prices of exported logs adduced by the plaintiff show that
    the lowest price of a log per cubic meter was K41.90 and the highest price was K254.16.
    The F.O.B prices of logs according to these records were arrived at by multiplying the
    volumes of logs by the prices per cubic meter of logs. This is another reason why
    K60,000,000.00 is a moderate figure or amount to use as a base in determining plaintiff’s
    damages.

  • Page 15 of 18

  • 70. I consider the amount of K4,046,084.00 fair and reasonable in general damages for
    the plaintiff given that the damages done to the land are likely to be long term if not
    permanent. Furthermore, the amount represents less than ten percent of the total
    estimated revenue of K60,000,000.00 the defendant would have earned in eight years it
    used and occupied the land.

    71. I therefore award K4,046,084.00 to the plaintiff in general damages.

    72. The plaintiff also claims damages for the loss of some of his relatives who he says
    died while fighting this case in Court. I consider that the claim should be dismissed, first
    because it has not been pleaded and second, the claim is not for plaintiff’s personal losses.

    73. The plaintiff also claims damages for berthing by ships, tug boats and pontoons. I also
    consider that this claim should be dismissed first, because it has not been pleaded and
    second, the damages awarded for the foreshore area sufficiently cover such claims.

    74. I have rejected other claims by the plaintiff either because they have not been pleaded
    in the Statement of Claim or have not been proven.

    Exemplary damages

    75. Exemplary damages are vindictive and punitive in their nature and are subject to the
    discretion of the Court: Toglai Apa & Ors v. The Independent State of Papua New Guinea
    [1995] PNGLR 43. The award of exemplary damages is aimed at punishing the party
    against whom award is made for the wrong done by the party. The damages awarded
    should have the element of deterrence to deter the party from repeating the wrong, it
    should also deter others from committing the same wrong: Pike Dambe v. Augustine Peri
    & The Independent State of Papua New Guinea [1993] PNGLR 4; Helen Jack v. The
    Independent State of Papua New Guinea [1992] PNGLR 391 and Mumukrui Kopil v.
    John Wakon [1992] N2065. These were criminal cases in which victims were shot and
    killed by police. In Pike Dambe and Helen Jack, the Court awarded K30,000.00 in each
    case and in Mumukrui Kopil, the Court awarded K60,000.00, in that case the victim was
    shot dead by police after he had surrendered. In all these cases deterrence was an element
    in the damages awarded.

    76. In Trevor Yaskin v. Wallya Abilio (2006) N3108, K20,000.00 was awarded against the
    defendant for the conduct of his agents who deliberately breached the Customs Act,
    Chapter No. 101, when they unlawfully detained a vessel belonging to the plaintiffs from
    sailing.

    77. In Commissioner General of Internal Revenue Commission v. Julian Paul Leach
    (1988), the defendant’s cross-claim against the plaintiff succeeded. The Court found that
    the plaintiff had acted unreasonably resulting in the defendant suffering losses over a
    number of years. The Court awarded K10,000.00 for mental distress and K110,000.00 in
    general and exemplary damages.

    78. In this case, there is undisputed evidence that when the defendant executed the MOU,
    it was fully aware that the plaintiff was disputing Warata clan’s claim of ownership over
    the land.

  • Page 16 of 18

  • 79. The defendant had deliberately breached Clause 4 of the MOU when it continued to
    pay the monthly rental fees for the land to Warata clan when the issue of ownership of the
    land was not yet resolved.

    80. Clause 4 of the MOU expressly stated that in the event of a dispute over ownership of
    the land, the monthly rental fees for the land were to be paid into a Trust Account. Clause
    4 is in these terms:

    4. That should there be a dispute over the true Customary Landownership, the
    rental fee of K500.00 per month be paid into a Trust Account – (Passbook). The
    trustee to be the Local Land Court Magistrate Magarida.

    81. This breach of the MOU is a circumstance of aggravation because the breach was
    deliberate, the defendant’s actions in that regard amounted to reckless disregard of the
    plaintiff’s rights and interests. The defendant had in so doing also acted in breach of s. 46
    of the Forestry Act and the scheme of the Act. Section 46 provides:

    s. 46. The rights of the customary owners of a forest resource shall be fully
    recognized and respected in all transactions affecting the resource.

    82. The plaintiff has also pleaded that the defendant had acted in breach of the Land Act.
    In that regard, the Court has found that the defendant in trespassing and continuing to
    trespass onto the land for eight years breached ss. 144 and 145 of the Land Act.

    83. From the evidence it is clear that the defendant was more interested in its logging
    activities, including exporting logs for its own enrichment than being concerned with the
    interests of the landowners, hence its reckless disregard of the rights and interests of the
    plaintiff. As I said, the defendant carried on its logging activities unabatedly on the land
    for eight years without meaningfully addressing the plaintiff’s concerns. Such an attitude
    requires deterrence: Mark Hosea Sinai Customary Legal Representative of Buekau clan v.
    Kei Buseu Kampani Pty Ltd & Ors N935. The defendant is a well established and well
    known logging company which is extensively involved in logging businesses throughout
    Papua New Guinea and such unscrupulous logging practices should be met with equally
    strong punitive damages against the defendant. The damages awarded should also
    provide general deterrence to other logging companies from engaging in similar
    practices.

    84. In the circumstances, I consider that amount of K150,000.00 should be awarded for
    this claim.

    85. I therefore award K150,000.00 in exemplary damages.

    Special damages

    86. These damages are such losses which will not be presumed by law. They are expenses
    actually incurred such as out of pocket expenses which the plaintiff incurred up to the
    date of the hearing. Such expenses should relate to these proceedings, not to any other
    proceedings. Expenses for medical treatment, transportation, accommodation and food

  • Page 17 of 18

  • would fall into this head of damages. Unlike general damages, these types of damages
    should be specifically pleaded, particularized and strictly proven: Roselyn Cecil Kusa v.
    MVIT (2003) N2328, this case and many other cases have adopted and stressed the
    principle stated by Lord MacNaghton in Strom Bruks Aktie Bolag v. Hutchinson [1905]
    AC 515 at 525 – 526, where his Lordship said:

    “General damages are such as the law will presume to be the direct natural or
    probable consequence of the action complained of. Special damages on the other
    hand, are such as the law will not infer from the nature of the act. They do not
    follow in ordinary cause. They are exceptional in character and therefore they
    must be claimed and proved strictly.”

    87. In Papua New Guinea however, this principle has been applied with qualification
    especially in cases where the plaintiff is illiterate or in cases where it is shown that there
    were expenses incurred but it was not possible to keep records of the expenses. In such
    cases the Courts have, after satisfying themselves from evidence that there were expenses
    incurred, made reasonable estimates of expenses incurred. A typical example is expenses
    incurred for a funeral in a village: Eva Aglum & Ors v. MVIT (1988) N678; Inabari v.
    Sapat and Independent State of Papua New Guinea [1991] PNGLR 427; Robert Brown v.
    MVIT [1980] PNGLR 409 and Susanna Undapmaina v. Talair Pty Ltd [1981] PNGLR
    559. This case is obviously one such case, as such, although no receipts have been
    produced by the plaintiff, I am satisfied that the plaintiff did incur expenses to attend the
    hearings. I will therefore estimate an amount in special damages which in my judgment is
    reasonable. In so doing I keep in mind that the plaintiff has not produced any records of
    expenses incurred at all. The proceedings were commenced on 25 October, 2005. The
    plaintiff comes from a remote village in the Abau District of the Central Province, he
    would have travelled to Port Moresby from his village to instruct his lawyers and would
    have from the date of filing the writ visited Port Moresby many times to attend to the
    case. In those trips he would have incurred costs in transport to come to Port Moresby
    from his village and back either by canoe or PMV. He would have also incurred costs on
    food and accommodation. For these costs I bear in mind that when staying in Port
    Moresby he would have stayed with relatives which is cheaper and affordable for him
    than staying in a hotel. The case was finally tried on 10 December, 2007, that is a period
    of two years two weeks from the date of filing the writ. The damages claimed are for that
    period.

    88. In the circumstances I assess the plaintiff’s special damages at K5,000.00. I therefore
    award K5,000.00 to the plaintiff in special damages.

    89. Thus the total amount awarded to the plaintiff in damages is K4,201,084.00
    (K4,046,084.00 + K150,000.00 + K5,000.00).

    90. The rate of interest that should be awarded is discretionary. I have decided that
    interest should be at 4%, which is calculated from the filing of the writ which is 25
    October, 2005 to the date judgment which is 28 September, 2011. That is a period of 5
    years 11 months. For this period the amount awarded in interest is K994,256.51

    91. Thus the total amount awarded to the plaintiff in damages and interest is
    K5,195,340.51

  • Page 18 of 18

  • 92. The defendant will pay the plaintiff’s costs and incidentals to these proceedings.

    93. Orders accordingly.

    ___________________________
    Yandaken Lawyers: Lawyers for the plaintiff
    Warner Shand Lawyers: Lawyers for the defendant