N5897

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 14 OF 2014

BETWEEN:

PASTOR STEVEN BAGARI & six others whose names appear in the schedule 'A' to this Writ
First Plaintiffs

AND:

GEDI DABU – President of Kiwai Local Level Government
Second Plaintiff

AND:

BENZES KUDI ALUSI – President of Oriomu Bituri Local Level Government
Third Plaintiff

AND:

HON. JAMES MARAPE, Minister for Finance
First Defendant

AND:

SCHADRACH HIMATA, Secretary for Mining
Second Defendant

AND:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Defendant

AND:

OK TEDI MINING LIMITED
Fourth Defendant

AND:

PNG SUSTAINABLE DEVELOPMENT LIMITED
Fifth Defendant

AND:

OK TEDI DEVELOPMENT FOUNDATION LIMITED
Sixth Defendant

AND:

BANK SOUTH PACIFIC
Seventh Defendant

AND:

ANZ BANK LIMITED
Eighth Defendant

Waigani: Hartshorn J.,
2014: 26th and 28th February

 Application for stay 

Cases cited: 

Gary McHardy v. Prosec Security [2000] PNGLR 279 
Mainland Holdings Ltd v. Paul Robert Stobbs (2003) N2522 
Aina Mond & Ors v. John Kumara & Anor (2007) N4639 
Ombudsman Commission v. Gabriel Yer & Ors (2009) SC1041
Workers Mutual Insurance (PNG) Ltd (in Liq) v. Sathasivam Sivakumaran (2012) N4646 

Counsel:

Mr. S. Jubi, for the Plaintiffs
Mr. R. Habuka, for the First Defendant
Mr. A. Mana and Mr. K. Imako, for the Second and Third Defendants
Mr. R. Bradshaw and Mr. N. Kopunye, for the Seventh Defendant
Mr. M. Henao, for the Eighth Defendant

28th February, 2014

1. HARTSHORN J: This is an application by the second and third defendants, the Secretary for Mining and the State, for a stay of injunctive orders (stay application) pending an inter partes hearing of the injunctive orders. The orders were made after an ex parte hearing on 24th January 2014 (ex parte orders).
 
2. The plaintiffs' oppose the stay application. The other defendants who were represented at the hearing of the stay application do not oppose it.

3. The plaintiffs' claim substantively, declaratory relief to the effect amongst others, that certain Community Mine Continuation Agreements are unenforceable, null and void and are of no effect, that the continuous dumping of mine waste and tailings into the Ok Tedi and Fly River systems is in breach of the Mining and Environment Acts and is unlawful, that certain trust deeds and trust bank accounts are null and void and that certain trust funds are payable to the plaintiffs and others. In addition orders are sought that certain compensation funds are paid to the plaintiffs and that a permanent injunction issue against the fourth defendant Ok Tedi Mining Ltd (OTML) from operating the Ok Tedi mine until a proper waste dump or tailings dam is constructed and built to contain its waste and tailings.

4. The ex parte orders that are sought to be stayed include that:

a) OTML is restrained from dumping any more waste and tailings into the Ok Tedi Fly River Systems,

b) OTML, PNG Sustainable Development Fund, Ok Tedi Development Foundation Ltd and the State provide certain financial information disclosures and copies of documents,

c) funds held in certain Community Mine Continuation Agreement bank accounts be transferred to the National Court Registrar's Trust Account and K45 million of that be dealt with in various ways,

d) certain bank accounts be frozen,

e) outstanding and future compensation dividend funds payable by OTML or the State to certain trust accounts, are to be paid into the National Court Registrar's Trust Account.

5. The stay application is made pursuant to Order 12 Rule 1 National Court Rules and s. 155 (4) Constitution. Order 12 Rule 1 in essence allows the court at any stage of the proceedings on the application of any party to make such orders as the nature of the case requires notwithstanding that the applicant does not make a claim for those orders in the originating process. The plaintiffs' did not object to the second and third defendants' relying on this Rule for their stay application.

6. As to this court's power at this stage of the proceeding, as Injia DCJ (as he then was) said in Mainland Holdings Ltd v. Paul Robert Stobbs (2003) N2522:

"In my view, the trial Court has wide discretionary powers to control the management of the case until its substantive disposition. In terms of its interlocutory proceedings, the Court has wide powers to grant or refuse to grant, vary or set aside, dissolve or discharge an interlocutory order either on application by an interested party or upon its own motion, in a wide range of situations….."

7. Further, this court has the specific power under the National Court Rules in certain circumstances, to stay a proceeding, (Order 12 Rule 40, Order 13 Rule 21) and has the power to vary or set aside an order pursuant to Order 12 Rule 8 (3) and (4) National Court Rules. To my mind, a stay of an order is a subset of a variation or a setting aside, and is a suspension of an order; having a lesser effect upon an order than a variation or a setting aside. I am satisfied given the above, that this court has the power to stay one of its ex parte orders.

8. The second and third defendants make this stay application as they contend amongst others that:

a) the practical effect of the restraint on OTML discharging tailings or waste rock into the Ok Mani, Ok Tedi and related streams is to require OTML to shut down the Ok Tedi mine. This will result in lost revenue to OTML of US$3,150,388 per day while incurring fixed costs of US$1,112,312 per day, a loss in revenue to the State of US$353,741 per day, a loss in revenue to the Fly River Provincial Government and local businesses of US$351,890 per day and a loss in revenue or benefits to local communities including electricity of US$272,799 per day;

b) the giving of access to the plaintiffs' by the ex parte orders, to the sum of K45 million, is a gross violation of the interests of the many thousands of people who are collectively entitled to receive the benefit of those funds;

c) the plaintiffs' have no serious questions to be tried, no arguable case exists and there is absolutely no real prospects of the plaintiffs succeeding;

d) the undertakings as to damages that have been given offer no proportionate economic protection to the defendants;

e) the preservation of the status quo requires a stay and subsequent dissolution of the ex parte orders;

f) the balance of convenience overwhelmingly favours a stay and subsequent dissolution of the ex parte orders; and

g) the overall interests of justice require that the ex parte orders be stayed and subsequently dissolved.

9. The plaintiffs' contend that a stay should not be granted as amongst others that:

a) there is no Special Mining Licence in existence that permits the Ok Tedi mine to operate and for tailings and mine waste to be discharged into the Ok Tedi Fly River Systems - the only licence in existence being an exploration licence;

b) the Mining and Environmental Acts do apply to the Ok Tedi mine but are not being complied with;

c) damage is being caused to the environment by the discharge of tailings and mine waste into the Ok Tedi Fly River Systems;

d) there have been instances of fraud in the operation and management of trust and compensation funds;

e) some of the subject funds have already been transferred to the National Court Registrar's Trust Account pursuant to the ex parte orders.

Law

10. Counsel for the second and third defendants referred to the Supreme Court decision of McHardy v. Prosec Security and Communication Ltd [2000] PNGLR 279 as the authority that details the principles to be considered upon an application for a stay. Some of those principles that may be relevant to this application are:

a) whether there has been a delay in making the application;

b) possible hardship, inconvenience or prejudice to either party;

c) the nature of the judgment or order sought to be stayed;

d) the financial ability of the applicant;

e) a preliminary assessment about whether the applicant has an arguable case;

f) whether on the face of the record of the order there may be indicated apparent error of law or procedure;

g) the overall interests of justice;

h) the balance of convenience;

i) whether damages would be a sufficient remedy.
 
11. I also refer to my decisions of Aina Mond & Ors v. John Kumara & Anor (2007) N4639 and Workers Mutual Insurance (PNG) Ltd (in Liq) v. Sathasivam Sivakumaran (2012) N4646 as to the principles applicable. I note that in the case of Ombudsman Commission v. Gabriel Yer & Ors (2009) SC1041, Injia CJ said the following as to the principles to be considered:

"The grant or refusal of stay is discretionary. The principles on grant of stay are set out in McHardy v Prosec Security and Communication Ltd [2000] PNGLR 279 (McHardy case)….. In McHardy the Court said the starting point is the basic premise that the judgment creditor is entitled to enjoy the fruit of the judgment. There are ten (10) other considerations which are enumerated in that case which may be considered. The Court said the list is not exhaustive. In my view, it is not intended that the discretion should be exercised on all or selected consideration(s). The circumstances of a particular case may warrant greater or less or even no weight at all to be given to a particular consideration(s). It is open to the Supreme Court to expound on those considerations or introduce new considerations as necessitated by the circumstances of the case before it. In a case where a number of considerations are relevant, the Court must take into account the totality of those considerations in order to dispense substantive justice in the circumstances of the case before it. The onus is on the applicant to persuade the Court to exercise its discretion in his or her favour."

Arguable case

12. The first consideration in my view, is whether the second and third defendants have an arguable case that they will be prejudiced if the stay application is not granted. In this instance, the stay sought is not in respect of an adverse judgment pending the determination of an appeal, but in respect of ex parte orders that have been granted.

13. Reliance is placed upon evidence to the effect that the third defendant, the State will suffer a loss in revenue of about US$353,741 per day or US$10,612,238 per month as a consequence of the Ok Tedi mine having to close as it is restrained from discharging its tailings waste into the Ok Manu and Ok Tedi and related streams. Further, the Fly River Provincial Government, local businesses and local communities will suffer a total loss of revenue of US$624,289 per day or US$18,740,673 per month. The largest loss of revenue though will be suffered by OTML which will suffer a loss of revenue of US$3,150,388 per day or US$94,511,626 per month while continuing to incur fixed costs of US$1,112,312 per day or US$33,369,356 per month.

14. Clearly then, on the above evidence, the State, together with others will be prejudiced as a consequence of a loss of this amount of revenue. Further, the second and third defendants submit that the undertakings as to damages that have been given offer no proportionate economic protection to the defendants.

15. The undertakings as to damages would only be called upon in the event that the plaintiffs were unsuccessful in their substantive action and the defendants suffered damage. The second and third defendants in essence submit that this is likely as the plaintiffs have no serious questions to be tried, no arguable case and absolutely no real prospects of success. 

16. Counsel for the plaintiffs' did not make specific submissions on how the plaintiffs' would be prejudiced if the stay application was granted. He submitted as to the mine closing that the ex parte orders do not require this and only require that the tailings and waste not be dumped. As to whether the mine will have to close as a consequence of the ex parte orders, it is not necessary for me to make a determination on this at this stage however I am inclined to accept the evidence of Mr. Parker in this regard.

17. Another principle to be considered on an application for a stay is whether there has been any delay in making the stay application. I am satisfied that there has not been any delay in this instance.

18. As to the nature of the orders sought to be stayed, they are ex parte orders and the defendants were not heard before the orders were made. Whether on the face of the record there may be indicated apparent error of law or procedure, without going into the merits there may be an argument that some of the ex parte orders grant relief that is substantive in nature.

19. As to the financial ability of the applicants, this is not an issue as one of the applicants is the State. Having said that however, the amount of revenue that it is contended that the State may lose is quite significant.

20. As for the balance of convenience and overall interests of justice, given that there is a likelihood that a quite significant amount of revenue will be lost to the State and some of the other defendants, if the stay is not granted, which in my view will prejudice those defendants merely because of the amounts involved, and because of it being rather unlikely that the undertakings as to damages would be adequate; that the plaintiffs will not be prejudiced or not to the same extent if the stay application is granted, and that the discharge of tailings and waste has been performed in the way that it has for many years and cannot be said to be a new occurrence, I am of the view that the balance of convenience and the interests of justice favour the preservation of the status quo. I am of the further view that the balance of convenience also favours a preservation of the status quo concerning the operation of the various trust funds and accounts, again given the amounts involved, and the questions raised as to the plaintiffs' legitimate interest or standing to pursue this proceeding, and as to the plaintiffs' having any serious questions to be tried or an arguable case.

21. I am of the view for the above reasons and after considering the various decisions to which I have referred that in the circumstances the stay application should be granted.

Orders

22. The Orders of the Court are:

a) The ex parte orders of 24th January 2014 are stayed pursuant to Order 12 Rule 1 National Court Rules and s. 155(4) Constitution pending an inter partes hearing of the ex parte orders on a date to be allocated.

b) Order 6 (b) of the ex parte orders of 24th January 2014 is varied pursuant to Order 12 Rule 8 (3) (a) National Court Rules to read:

"Pending the inter partes hearing on a date to be allocated or further orders of the Court, all funds/monies that are held in the Western Province Non Community Mine Continuation Agreement (WPPDTA-Non CMCA) Regions People's Dividend Trust Account No. 1001310415 with the Bank South Pacific Ltd or have been transferred to the National Court Registrar's Trust Account are injuncted."

c) the costs of and incidental to this application are reserved.

d) the time of the entry of these orders is abridged to the time of settlement by the Registrar which shall take place forthwith.

________________________________________________________
Baniyamai Lawyers: Lawyers for the Plaintiffs 
Twivey Lawyers: Lawyers for the First Respondent 
Allens Lawyers: Lawyers for the Second and Third Respondents 
Bradshaw Lawyers: Lawyers for the Seventh Respondent
Bank South Pacific Ltd: Lawyers for the Eighth Respondent