Lohoro v PNG Forest Authority [2004] N8201

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    Landowners from the Vailala Block 2&3 logging concession successfully sued Frontier Holdings Limited, a subsidiary of Rimbunan Hijau, for over K4.75 million in unpaid premiums.

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  • N8201
    PAPUA NEW GUINEA
    [IN THE NATIONAL COURT OF JUSTICE]

    OS (JR) NO. 403 OF 2004

    JAMES HARIVA LOHORO
    First Plaintiff

    And
    ERE KILAVI INCORPORATED LAND GROUP Within the Vailala TRP
    area
    Second Plaintiff

    And
    KORE EVERE
    Third Plaintiff

    And
    LAULA MEAHU INCORPORATED LAND GROUP Within the Vailala TRP
    area
    Fourth Plaintiff

    And
    KILALA KARIKARA
    Fifth Plaintiff

    And
    AVOILA CLAN INCORPORATED LAND GROUP Within the Vailala TRP
    area
    Sixth Plaintiff

    And
    JOE MERE
    Seventh Plaintiff

    And
    KAO HARUIPI NO.02 INCORPORATED LAND GROUP Within the Vailala
    TRP
    Eighth Plaintiff

    And
    MORGAN MUKARI
    Ninth Plaintiff

    And
    MIARO CLAN INCORPORATED LAND GROUP Within the Vailala TRP

  • Page 2 of 7

  • Tenth Plaintiff

    And
    EVAN EVARAPO
    Eleventh Plaintiff

    And
    LULU CLAN INCORPORATED LAND GROUP Within the Vailala TRP
    Twelfth Plaintiff

    And
    IVAN KEO URUMA
    Thirteen Plaintiff

    And
    MIHIRE OUKA INCORPORATED LAND GROUP Within the Vailala TRP
    Fourteenth Plaintiff

    And
    MORGAN SARE
    Fifteen Plaintiff

    And
    ALUVE INCORPORATED LAND GROUP Within the Vailala TRP
    Sixteenth Plaintiff

    And
    ANDREW MUKARI
    Seventeenth Plaintiff

    And
    WEE -4 INCORPORATED LAND GROUP Within the Vailala TRP
    Eighteenth Plaintiff

    V
    PAPUA NEW GUINEA FOREST AUTHORITY
    First Defendant

    And
    MICHAEL OGIO, MINISTER FOR FOREST
    Second Defendant

    And
    FRONTIER HOLDINGS LIMITED
    Third Defendant
    Waigani: Miviri J
    2019: 25th October

  • Page 3 of 7

  • PRACTISE & PROCEEDURE – Judicial Review & appeals – Substantive
    notice of Motion – Forestry Act 1991– Sections 73, 75, and 77 Timber Permit –
    Entitlement to Premium payments – Payment by permit holder whether
    compliance of agreements with landowner companies – Premium payments
    owing – Land owner companies deregistered – ILG paid in place of – No error
    in process – Judicial review granted.

    Cases Cited:

    Asiki v Zurenuoc , Provincial Administrator [2005] PGSC 27; SC797
    Counsel:
    A.M. Ona, for First to Sixteenth Plaintiffs
    B. Francis, for Seventeenth & Eighteenth Plaintiffs
    S. Mitige, for First & Second Defendant
    B. Frizzell, for Third Defendant

    RULING

    21st February, 2020

    1. MIVIRI, J: This is the ruling on the substantive Notice of Motion of the
    parties after mediation on the 3rd June 2015 which referred the following issues.

    (i) Whether the plaintiffs are entitled to any premium payments
    made by the third Defendant to the Landowner companies pursuant
    to Timber Permit TP 2-16 up until 2008,

    (ii) Whether premium payments made by Frontier Holdings
    Limited to the Landowner companies were in compliance with the
    agreements between the third defendant and those landowner
    companies,

    (iii) Whether the Plaintiffs are to pursue the relief sought in these
    proceedings and

    (iv) Whether they have standing to maintain the proceedings

  • Page 4 of 7

  • (v) Whether other parties are to join in these proceedings

    2. The plaintiffs are entitled to the premium payments made by Frontier
    Holdings Limited the third defendant. They are not Landowner companies
    described by the timber permit TP 2-16 issued on the 24th June 1992 clause 4.4.5
    recounted that, “The permit holder shall pay to the Landowner companies, seven
    (7) days after each log shipment, the rate of 5% of the FOB price of logs
    exported”. But the permit has been amended so that in the absence of landowner
    companies Incorporated land Groups from that area Vailala block 2 and 3 can
    receive the landowner’s premium on behalf of the landowners. Which is consistent
    with section 46 of the Forestry Act 1991 that fully recognizes and respects the
    customary rights of the owners of the forest resources. And which is substantiated
    by section 57 as to obtaining consent of the customary owners to forest. Here it is
    settled that title of the customary owners to the subject land for forestry shall be
    vested in a land group or land group incorporated under the land Groups
    Incorporation Act 1974 or registration of title by law. Read together with the Land
    Groups Act section 3 powers of Incorporated Land Groups this is complete as to
    the management of land its use and related matters because custom is
    underpinning with a Constitution of the land Group. And clearly by section 11 of
    that law status of recognized land group as a corporation with perpetual succession
    can be sued in its name by its Constitution. It is a legal person so to pay to it what
    is due from and under the timber permit 2-16 is not wrong in law. Because the land
    groups that have signed the Forest Management Agreement have standing to
    maintain this proceeding. Here Laula Meahu, Kao Haruipi No.2, Aluce, Miaro,
    Lulu and the others who have signed this agreement parties named in this
    proceeding fall into that category. And the law discussed above allows for the
    payment of this premium benefits to them on behalf of the landowners of that
    timber permit area. They are incorporated land groups of the Timber Permit 2-16
    of Vailala block 2 and 3. They are entitled to receive a total sum of K 4, 751, 553.
    90 as Landowner premium benefit on behalf of the landowners.

    3. It is undisputed and established that leave for Judicial review was granted on
    the 6th April 2005. That mediation was on the 3rd June 2015 between the parties
    which settled all matters except for the referral above. The subject emanated from
    a timber project covered by the Forestry Act 1991. And from which the timber
    permit was granted for Vailala blocks 2 and 3 after an application was made to the
    Minister for Forests pursuant to sections 73, 75, and 77 of the Forestry Act 1991.
    Which also set out the roles and responsibilities of the parties. Timber was
    harvested from the Vailala Block 2 and 3 project area by the third defendant
    Frontier Holdings Limited. The timber permit TP 2-16 issued on the 24th June
    1992 clause 4.4.5 recounted that, “The permit holder shall pay to the Landowner
    companies, seven (7) days after each log shipment, the rate of 5% of the FOB
    price of logs exported”. The third defendant Frontier Holdings Limited was
    discharged. But disputed because an agreement was entered into with the

  • Page 5 of 7

  • Landowner companies on the 5th December 1998. This was without the consent of
    the resource owners and the Papua New Guinea Forestry Authority Board. It
    amended the rate of the Premium set out in the Timber Permit to K5 per cubic
    meter of the timber exported from the timber areas, Central Vailala, Popo and
    Opuma. This amount was further reduced to K3 per cubic meter. Hence the issues
    raised and referred.

    4. The mediation has settled with the independent engagement of Public
    Accountant and Auditors Leslie Wungen & Co that based upon 5% FOB value of
    the export a total sum of K 4, 751, 553.90 is the deficit that remains unpaid to the
    landowners. Using that formula it would give the figure K 9, 118, 938.35 out of
    which incorrect payment was made based on the incorrect value of K5 per cubic
    meter and K 3 per cubic meter giving the figure K 4, 364, 384.45 which was paid
    to the landowner companies. And this is set out in the affidavit of one Andrew
    Tion the company operations manager of Frontier Holdings Limited.

    5. Because what has happened in the amendment and variation has breached
    section 79 of the Forestry Act 1991. There has been no application made by the
    holder of the timber permit in this case Frontier Holdings Limited for the
    amendment or surrender of that timber permit. The process set out here under
    section 79 (1) (2) and (3) of the Forestry Act and the agreement by the landowner
    companies with the permit holder the third defendant on the 5th December 1998
    was illegal and no consequences binding in law flow from it. It means any
    premium payments calculated therefrom will not be binding in law, hence the
    figure set out above due to the landowners. On the converse by section 46
    Customary Resource Ownership the rights of the customary owners of forest
    resources shall be recognized and respected in all the transactions effecting the
    resource. And this is sealed further by section 57 also of the same Act, Obtaining
    consent of customary owners to Forest. Title to land where it is proposed to enter
    into a Forest Management Agreement over customary land which is vested in a
    land group, or land groups incorporated under the land Groups Incorporation Act.

    6. The plaintiffs are entitled to the premium payments to the sum of K 4, 751,
    553.90 as Landowner premium benefit on behalf of the landowners of Vailala
    block 2 and 3 timber permit TP 2-16. To heed the third defendant that all plaintiffs
    are not landowner companies nor are corporate entities would be parting company
    with the law and the facts and circumstances presented here. And these are pointed
    out above in sufficient detail. It is not necessary to join landowner companies that
    are no longer in existence as legal entities under the Investment promotion
    Authority register of the same maintained. Any issues emanating were no doubt
    explicitly attended to and disposed by the mediator. It need not the time of this
    court to venture there except to the issue here raised. Addressing representative
    actions are clear that here is Integrated land Groups and therefore are legal entities

  • Page 6 of 7

  • to be sued and sue as here.

    7. The premium payments made by Frontier Holdings Limited to the
    Landowner companies there and then were in compliance with the agreements
    between the third defendant and those landowner companies but since those
    landowner companies have been now deregistered and are no longer on the
    register of the Investment Promotion Authority, the authority for payment of all
    premium benefits is now the plaintiffs and registered landowner groups registered
    under the land Groups Incorporation Act 1974 originating from the timber permit
    TP 2-16 area of Vailala Blocks 2 and 3. The amount due is the difference
    calculated from 5% FOB and K5 per cubic meter per the agreement of the total
    sum of K 4, 751, 553.90.

    8. It follows that the plaintiffs have standing to pursue this matter because of
    the reasons set out above. It is not necessary to join any further parties to the cause
    and costs will be in the cause.

    9. It is not necessary to address separately the issue of the adjournment applied
    for by 17th and 18th Plaintiff as their interests have been settled in the way the
    facts circumstances and law has unfolded here. No prejudice has been caused to
    them. To allow would have procrastinated this cause of action outstanding since
    2004. Justice delayed is justice denied. Adjournments must be on substantial cause
    underpinning and would have the propensity to deny Justice. That is not the case
    here by the facts, circumstances and the law. Judicial review is primed on
    procedure rather than substance: Asiki v Zurenuoc , Provincial Administrator
    [2005] PGSC 27; SC797 (28 October 2005).

    10. Accordingly it is ordered that Judgement is entered in the sum of K 4, 751,
    553.90 to be paid forthwith to the principle plaintiff with the assistance of their
    lawyers Ona Lawyers for disbursement or distribution in equal parts or portion or
    share to all the incorporated land groups of Vailala Blocks 2 and 3 Forest
    Management Agreement under the Timber Permit TP 2-16.

    11. The costs will be in the cause.
    Orders Accordingly.
    __________________________________________________________________

    Ona Lawyers : Lawyer for First to Sixteenth Plaintiff/Applicant

  • Page 7 of 7

  • Warner Shand Lawyers : Lawyer for the Third Defendants
    PNG Forest Authority : Lawyer for First & Second Defendants