N5830

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1072 OF 2008

BETWEEN:

SIMON EKANDA for himself and as a landowner representative and the other landowner representatives of Petroleum and Gas Fields known as HIDES, ANGORE, JUHA, KUTUBU, GOBE and MORAN
First Plaintiffs

AND:

HENRY AKI & JOHNSON TIA for themselves and as landowner representatives and other landowner representatives
Second Plaintiffs

AND:

RENDLE RIMUA, in his capacity as the Secretary for the Department of Petroleum & Energy
First Defendant

AND:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

AND:

ESSO HIGHLANDS LIMITED, ESSO PNG JUHA LIMITED, AMPOLEX (PAPUA NEW GUINEA) LIMITED, AMPOLEX (HIGHLANDS) LIMITED, AMPOLEX (PNG PETROLEUM) INC., MERLIN PACIFIC OIL COMPANY LIMITED, OIL SEARCH LIMITED, OIL SEARCH (TUMBUDU) LIMITED, OIL SEARCH (PNG) LIMITED, MERLIN PETROLEUM COMPANY, PETROLEUM RESOURCES KUTUBU LIMITED, PETROLEUM RESOURCES GOBE LIMITED, AGL GAS DEVELOPMENTS (PNG) Pty LIMITED, SANTOS HIDES LIMITED, LAVANA LIMITED, EDA OIL LIMITED
Third to Eighteenth Defendants

Waigani: Hartshorn J.
2014: June 27th,
: October 10th
 
 Application for Directions – determination of separate questions

Cases cited: 

Timothy Lim Kok Chaun v. Simon Goh Say Beng (2004) N2753
MAPS Tuna Ltd v. Manus Provincial Government (2007) SC857

Counsel:

Mr. D. Mamu, for the Plaintiffs
Mr. R. J. Webb S.C. and Mr. A. Mana, for the Third to Eighteenth Defendants

10th October, 2014

1. HARTSHORN J: This matter returned to court for a directions hearing pursuant to an order made on 26th May 2014. Counsel for the plaintiffs, in the course of his submissions, applied for an adjournment. I refused that oral application in an ex tempore ruling.

2. As to directions that were sought, Counsel for the third to eighteenth defendants informed the court that they sought directions that certain questions in the proceeding be determined separately prior to other issues pursuant to Order 10 Rule 21 (a) National Court Rules. Counsel relied upon the affidavit of Kenneth Imako sworn 24th June 2014. In that affidavit, Mr. Imako deposes that amongst others, on behalf of the third to eighteenth defendants, the other parties had been served on 23rd May 2014, with a draft order which included orders for the separate determination of a number of issues separately from and prior to any other issues pursuant to Order 10 Rule 21 (a) National Court Rules.

3. I note that no notice of motion seeking the relief pursuant to Order 10 Rule 21 (a) was filed. Counsel for the plaintiffs however did not take issue with the court's power to grant such relief at a directions hearing in the absence of a notice of motion. Counsel for the plaintiffs merely informed the court that the plaintiffs wanted all issues to go to full trial. He did not make submissions as to why this position was taken.

4. I am satisfied that this court is able to make an order for certain questions to be heard separately, pursuant to Order 10 Rule 21 (a) in the absence of a motion seeking the relief, pursuant to Order 10A Rules 16 and 17 National Court Rules which provide amongst others; Rule 16 - that the Commercial List Judge may make such orders or give such directions as are appropriate to ensure the just, efficient and expeditious disposal of cases; and Rule 17 - at the first directions hearing orders will be made and directions given with a view to the just, quick and cheap disposal of the proceedings.

5. As to why certain questions in the proceeding should be determined separately, counsel for the third to eighteenth defendants submitted that amongst others:

a)	the claims made by the plaintiffs in the proceeding do not include any allegation of wrongful conduct on the part of the third to eighteenth defendants. All of the plaintiffs claims concerned alleged failures on the part of the Minister or the State given particular provisions in the Organic law on Provincial and Local Level Governments and the Oil and Gas Act.

b)	this would be the most efficient way of dealing with the proceeding. A separate hearing of the proposed questions would take about one day to be heard. If all of those questioned were determined adversely to the plaintiffs, the proceeding would be dismissed. If some or all of the questions were determined adversely to the defendants, there would need to be a further final hearing which would involve contested issues of fact. This final hearing would not complete in less than two weeks.

c) 	the third to eighteenth defendants have invested substantial resources into establishing and maintaining a good and cooperative relationship with different land owning groups whose land is within the area to which the Gas Agreement relates. A hearing in which there are involved questions of fact including whether the plaintiffs' have sufficient standing to claim the declaratory relief sought, whether the proceeding should be dismissed as an abuse of process and whether there was consultation by the Minister in accordance with any such requirement contained in the Oil and Gas Act and the Organic Law, will have the potential to adversely impact on those relationships and general landowner support for the project to which the Gas Agreement relates, into the future.

6. The questions that the third to eighteenth defendants wish the court to decide separately are:

a)	Whether compliance with the requirements of s. 115 Organic Law on Provincial and Local Level Governments is mandatory or directory (Statement of Claim 25 and 26).

b)	Whether in light of the answer to question (a) above, an agreement made by the State pursuant to s. 184 Oil and Gas Act 1998 (the Act) without compliance with s. 115 Organic Law is void. (Statement of Claim 25).

c)	Whether compliance with the requirements of s. 52 (2) of the Act is mandatory or directory. (Statement of Claim 26).

d)	Whether s. 52 (2) of the Act includes the requirement that Provincial and Local Level Governments liaise fully with affected landowners (Statement of Claim 27).

e)	Whether in light of the answers to questions (b) and (c) above, an agreement made by the State pursuant to s. 184 of the Act without compliance with s. 52 (2) of the Act is void or of no force or effect (Statement of Claim 26 and 27).

f)	Whether clause 15 of the Gas Agreement diminishes or removes the requirements of s. 47 of the Act. (Statement of Claim 28 (1)).

g)	Whether clause 10.9 (b) of the Gas Agreement diminishes or negates s. 175 and s. 179 of the Act (Statement of Claim 28 (2)).

h)	If the answer to either of the questions at (f) and (g) above is "yes", is either of clause 15 or clause 10.9 (b) of the Gas Agreement illegal, a nullity and of no force or effect. (Statement of Claim 29).

i)	Whether s. 48 of the Act requires that NEFC prepare a cost and benefit analysis in respect of each petroleum project for which a development forum is convened pursuant to s. 48 (1) prior to it being thus convened. (Statement of Claim 28 (3)).

j)	Whether s. 179 of the Act requires that the National Gas Corporation be involved in any agreement executed by the State pursuant to s. 184 of the Act. (Statement of Claim 28 (4)).

k) 	If the answer to either of the questions at (h) and (i) above is "yes" whether the Gas Agreement is illegal, a nullity and of no force or effect (Statement of Claim 30), what orders should be made pursuant to Order 10 Rule 24.

7. The Supreme Court in MAPS Tuna Ltd v. Manus Provincial Government (2007) SC857 approved and adopted the following principles that were set out in Timothy Lim Kok Chaun v. Simon Goh Say Beng (2004) N2753 as to the circumstances under which certain issues or questions arising in proceedings may be determined separately from issues on the main trial. They include:

"1. Where there is a preliminary question of fact or law that is critical to the disposition of the proceedings, so that if decided one way, it will necessarily dispose of the proceedings.

2. Where resolution of separate question may result in early resolution of the proceedings or by narrowing the disputed issues, avoid additional expenses or delay.

3. Where issues are clearly separable.

4. Where liability issue can be determined ahead of the final assessment of damages."

8. The questions that are sought to be decided separately by the third to eighteenth defendants are questions of law concerning the proper construction of a provision or provisions of the Organic Law on Provincial and Local Level Governments or the Oil and Gas Act and also concerning the proper construction of the Gas Agreement between the State and the third to eighteenth defendants in May 2008. 

9. After considering the submissions of both counsel and the proposed questions, and from a perusal of the pleadings and the relief sought by the plaintiffs, and in the absence of reasons in opposition by counsel for the plaintiffs, I am satisfied that the resolution of the proposed questions may result in the resolution of the proceeding or the narrowing of the disputed issues and the avoidance of additional expense or delay.

10. Further, notwithstanding the lack of submissions in this regard by counsel for the plaintiffs I am of the view that the plaintiffs will not be prejudiced by having the proposed questions decided separately.

11. Consequently, I make orders in terms of the draft order that is annexure "A" to the affidavit of Kenneth Imako sworn 24th June 2014. I will hear counsel as to the date to be fixed for the hearing of the separate questions. 
____________________________________________________________

Haiara's Legal Practice: Lawyers for the Plaintiffs 
Greg Manda Lawyers: Lawyers for the First and Second Defendants 
Allens Lawyers: Lawyers for the Third to Eighteenth Defendants