N6394
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS No. 160 OF 2016

BETWEEN:
LAMILLER PAWUT in his capacity as Acting Administrator
and Chairman of the Provincial Forest Management Committee
First Plaintiff

AND:
NEW IRELAND PROVINCIAL GOVERNMENT
Second Plaintiff

AND:
GREGORY TABERENG
First Defendant

AND:
BASOMA HOLDINGS LIMITED
Second Defendant

AND:
VIVA SUCCESS LIMITED
Third Defendant

Kavieng:  Kangwia J.
2016:  06th May &26th May

PRACTICE AND PROCEDURE – Alleged breach of conditions under a Timber Permit – whether interim injunction should continue pending determination of substantive matters – balance of convenience did not favor the continuance of interim orders

PRACTICE AND PROCEDURE – Standing – whether Plaintiffs had standing to make claims against defendants – Plaintiffs had no standing under the Forestry Act 1991 – Plaintiffs not a party to the Timber Permit hence no standing to sue for breaches of conditions under Timber Permit

Cases Cited: 

Ambi Kamberan –v- Placer Highlands Gold, Enga Provincial Government and the State (2004) unnumbered and unreported judgment dated 3 December 2004;
Christian Life Center v Associated Mission Church of PNG (2002) N2261
Employers Federation of PNG –v- PNG Waterside Workers Union &Ors (1982) N393; 
Louis Medaing –v- Ramu Nico (MCC) (2010) N4127; 
Mt. Hagen Airport Hotel –v- Gibbes [1976] PNGLR 316;
Mainland Holdings –v- Stobbs (2003) N2552; 
Ombudsman Commission –v- Yer (2009) SC 1041; 
Soka Toligai –v- Julius Chan & Ors (2012) N4842; 

Counsel:
J. Kuwimb, for the Plaintiffs.
C. Raurela & A. Assan, for the 1st& 2nd Defendants.
D. Gavara-Nan\u & A. Maribu, for the 3rd Defendant.

26th May, 2016.

1.	KANGWIA J: The Plaintiffs by Originating Summons claimed among others an order for a complete and comprehensive audit of the entire logging operation of the 2nd Defendant under Timber Permit NO. 16-42 commencing from the day the permit was issued in 1977 to the present including compliance of clauses in the Timber Permit by an independent auditor nominated by the Plaintiffs.

2. 	They also sought orders for an audit on the incorporation, structure, management and operation of the 2nd Defendant under the leadership of the 1st Defendant.

3.	 Further orders were sought for various assets and property of the 3rd Defendant to be confiscated. Numerous orders consequential to the above orders were also sought in the summons.

4. 	Pending determination of the substantive matters the Plaintiffs moved exparte for various interim restraining orders including an order for the Defendants to suspend all their logging operations under Timber Permit 16-42.

5. 	At the hearing of the ex-parte application it was put to the Plaintiffs what the urgency of the motion was and whether the Plaintiffs had standing.

6.	 Mr. Kuwimb of counsel for the Plaintiffs submitted that the proceeding was urgent as the Timber Permit was expiring next year and if the orders were not issued the breaches would continue until the Plaintiffs had no cause of action to pursue when the Timber Permit expired.

7.	 It was also submitted that the 1st Plaintiff as Acting Administrator was the Chairman of the Provincial Forest Management Committee pursuant to s. 21 of the Forestry Act 1991 who had oversight powers over logging operations in the province hence he had standing.  The 2nd Defendant being the government of the province had authority to oversee the affairs of the province and had sufficient interest to commence these proceedings.

8. 	Without having benefit of opposing argument I granted all orders sought in the Notice of Motion except for item 2 (d) of the orders sought which sought to change the Directors of the 2nd Defendant Company as the terms of that item had the effect of a final order. The orders were made returnable on 6th May 2016.

9. 	After the interim orders were issued the Plaintiffs became aware of typing errors on the face of the interim orders with which they could not serve on the Defendants. They filed a motion to correct the errors and serve them on the Defendants in compliance with item 7 of the interim orders relating to service and for extension of the interim orders to effect the changes and service.

10. 	On 6th May 2016 when the interim orders became returnable the Plaintiffs sought leave to dispense with service requirement and move their motion to make amendments to typing errors on the face of the interim orders and effect service in compliance with item 7 of the interim orders which the Defendants opposed.

11.	 I refused the Plaintiffs leave on the basis that the grant of leave would in effect extend the interim orders that had already reached the returnable date.  

12. 	Importantly all the parties were present to argue on the issue of whether the interim orders should continue or not hence it was deemed a waste of time to revert to what was allowed to pass either by intent or default.

13. 	Following that ruling all parties were granted leave to dispense with service requirement and argue the motions that the Defendants filed.	 All parties were heard through submissions of Counsels and affidavits relied on.

14. 	The Defendants while supporting each other moved for the interim orders to be set aside and for the entire proceedings to be dismissed as abuse of process for disclosing no cause of action. The Plaintiffs resisted the applications.

15. 	Two issues arose for determination from the submissions. They were;

i.	Whether the interim orders should continue;
ii.	Whether the entire proceedings should be dismissed as abuse of process for disclosing no cause of action.

A) INTERIM ORDERS:

16. 	On the issue of whether the interim orders should continue, the Defendants submitted that the interim orders should be set aside.  They submitted that;

a)	The Plaintiffs did not come with clean hands; that they failed to serve the Court documents on the Defendants and offered no explanation for the failure to comply with orders on service of the documents hence the extension of the interim orders should be refused.

b) It was in the best interest of the Defendants for the operations to continue as they had incurred losses of K7m which was accruing daily while the interim orders were current; that irreparable damage would be caused the Defendants and the people of Central New Ireland who have relied on the operations.

c) There was no substantive relief sought from the 3rd Defendant hence the interim orders should not apply to it; that it was an abuse of process to obtain urgent relief on parties who had no business with the Plaintiffs.

d) There was no valid reason for the extension of the interim orders; that the affidavits relied on by the Plaintiffs consisted of hearsay evidence hence the Plaintiffs had not established why the interim orders should continue.

e) The affidavits of the Acting Provincial Administrator and the Governor did not contain any basis for the injunctions to continue hence there was no urgency to obtain or continue the injunctions.

f) That while the interim orders were pending, a ship was currently waiting to ferry logs and expenses were being incurred.

g) The balance of convenience did not favor the continuation of the interim orders. 

17. 	Given those considerations the Defendants submitted that the balance of convenience favored the setting aside of the interim orders.

18. 	The Plaintiffs contended that their summons asked for a Court sanctioned audit of the Defendants’ operations to recommend to the National Forest Board. They also submitted that the interim orders should be extended since there were differences between landowners over allegations of loss suffered by the 2nd defendant which was their Landowner Company.

19. 	They argued that the Defendants breached mandatory clauses under the Timber Permit which provided for the establishment of a sawmill and to not export logs by the end of the 5th year.

20. 	The Plaintiffs further argued that all the breaches would be put to light by an audit of the operations which could not be conducted when the Defendants failed to co-operate by obtaining restraining orders against them.

21. 	Therefore, it was submitted that the Defendants should not ask the Court to sanction a continued commission of the breaches by setting aside the interim orders.

22. 	The law on the Requirement for interim injunctive relief is settled starting with the off cited case of the Employers Federation of PNG –v- PNG Waterside Workers Union &Ors (1982) N393.

23.	 In that case, the Court set out two requirements which it said an applicant for interim orders must satisfy which are;

a. Whether there is a serious question to be tried or determined and;
b. Whether the balance of convenience favoured the grant of the injunctive relief sought.

24. 	Additional Requirement have featured in latter cases which included maintaining the status quo, the interest of Justice, likely or real prejudice to parties, whether an undertaking as to damages has been given, whether damages would be an adequate remedy if the interim orders were refused.(See Louis Medaing –v- Ramu Nico (MCC) (2010) N4127;Mt. Hagen Airport Hotel –v- Gibbes [1976] PNGLR 316)

25. 	It is not mandatory that all the requirements need to be satisfied before an interim injunction is granted.  (See Ombudsman Commission –v- Yer (2009) SC 1041).  This principle equally applied to applications for extension or lifting of interim orders.

26. 	That principle was applied in the present case in which the consideration of the balance of convenience was the basis for lifting the interim restraining orders in this proceeding after the submissions were heard.

27.	 Interim injunctions are equitable remedies and may be granted, extended or refused in the exercise of the Court’s discretion.  (See Mainland Holdings –v- Stobbs (2003) N2552).

28. 	Interim injunctions are temporary only and would lapse upon determination of the substantive proceeding, effluxion of time or are set aside on application whichever occurs first.

29. 	In almost all cases interim orders are to protect the interest of the party seeking it. It would serve to preserve the status quo until the substantive proceeding is tried or to prevent loss, abuse or prejudice while a substantive matter was pending determination.

30.	 In the present case the Plaintiff has not satisfied the Court that the interim orders issued on 7th April 2016 should be extended. All they said was that the Defendants breached mandatory clauses in the Timber Permit and if the interim orders were not continued the Court would sanction a continuation of the breaches.

31. 	The Plaintiffs’ ground has no basis under circumstances where the Timber Permit was signed in 1977 and was due to expire some months away in 2017.There is no evidence as to whether the breaches suspected of the Defendants will bear far greater risks than what has already been alleged if the interim orders were not extended.

32.	 In my view, an audit of the operations can be conducted without halting the operations. By the magnitude of the audit sought it seems unlikely that it would be completed come the expiry date for the Timber Permit. Substantial loss and irreparable damage will most likely be caused to the Defendants and those who benefit from the timber operations pending the completion of any Court sanctioned audit.

33.	 I agree with the Defendants that they will suffer substantial loss if the interim orders were not set aside whereas the Plaintiffs are unlikely to suffer any substantial prejudice or loss.

34. 	The 2nd Plaintiff, the State and landowners also stand to lose levies, royalties, taxes and any other benefits they are entitled to from the timber operations if the interim orders were not set aside.

35.	 Given the considerations referred to, I am of the view that the Balance of Convenience favors’ the setting aside of the entire interim orders that were lifted soon after the hearing of the motions.

B) ABUSE OF PROCESS

36. 	On the issue of whether the entire proceedings should be dismissed as abuse of process disclosing no cause of action, the Defendants submitted that the Plaintiffs had no standing under law or under the Timber Permit to bring this action against the Defendants.

37. 	They argued that the Forestry Act 1991(the Act) did not give any authority to the Plaintiffs to enforce breaches of the Timber Permit; that the 1st Plaintiff’s position as Chairman of the Provincial Forest Management Committee did not confer him authority to enforce any breach of clauses under a Timber Permit or a breach of the Act in the province. 

38. 	The functions of the 1st Plaintiff it was stressed were as laid out under s.30 of the Act which provided among others for a recommendation to be made to the National Forest Board when alleged breaches were identified.

39. 	They also argued that the Plaintiffs were not parties to the Timber Permit which was an agreement signed between the State and the 2nd Defendant Company and therefore the Plaintiffs were strangers who had no standing to commence action for enforcement of breaches under the Timber Permit.

40.	 They further argued that there was no relationship between the Plaintiffs and the 3rd Defendant nor were they directors or shareholders of Basoma Holdings Ltd hence they could not make a claim against the Defendants.

41. 	The Plaintiffs contended that the New Ireland Provincial Government was the Government of this province and was entitled to or ought to know if Companies operating in the province were complying with the requirements of the logging operations under the Timber Permit.  Therefore, it was submitted that the Court ordered audit was sought to recommend to the National Forest Board on the breaches.

42. 	The claim in the summons emanated from alleged breaches committed by the Defendants in the forestry operations conducted under Timber Permit 16-42.

43.	 The law on standing or locus stand is settled.  In Ambi Kamberan –v- Placer Highlands Gold, Enga Provincial Government and the State (2004) (unnumbered and unreported judgment dated 3 December 2004) the Court while stressing the issue of standing said; 

“Persons who are not parties to the agreement have no locus standi to enforce terms of an agreement.”

44. 	In the case of Soka Toligai –v- Julius Chan& Ors (2012) N4842 the Plaintiff sought declaratory relief that certain royalty payments referred to in a MOU relating to Lihir Gold Mining Project between the State, New Ireland Provincial Government, Nimamar Rural LLG & Lihir Mining Landowners Association, belonged to Central New Ireland LLG.  

45. 	The Court in dismissing the claim said the Plaintiff had no standing as it was not privity to the contract and also that the Plaintiff made claims against persons not named in the contract. It was there held that the Plaintiff did not have the necessary standing hence no reasonable cause of action was disclosed against the Defendants.

46.   It is apparent that the law on standing determined who was legally entitled to bring a claim before a Court and invoke its powers.  It was a condition precedent to commencing an action; that the Plaintiff must be a genuine plaintiff and not a purported plaintiff or a stranger. Standing would confer jurisdiction on the Court to deal with the matter as a genuine and valid claim.

47. 	In the present case, the Plaintiffs were not parties or signatories to the Timber Permit.  The permit shows that it was an agreement between the State and the 2nd Defendant.

48. 	According to the Doctrine of privity of contract no person can sue or be sued on a contract unless he is a party to it. Any rights conferred or obligations imposed under a contract cannot be enforced by or on anyone except the parties to it. (See Christian Life Center v Associated Mission Church of PNG (2002) N2261)  

49.	 The Plaintiffs are not parties in the Timber Permit and so they do not have the necessary standing to seek the relief that they do hence no reasonable cause of action is disclosed. The Plaintiffs have no standing to mount the claims against the 1st and 2nd Defendants for alleged breach of clauses in the Timber Permit.

50. 	As to the claim against the 3rd Defendant, the facts are clear. The 3rd Defendant was not a party to the Timber Permit.  The Plaintiffs were also not a party to the Timber Permit.  There can be no cause of action disclosed where a stranger names another stranger to an agreement.

51. 	The enabling legislation that provides for specific functions or confers authority relative to a Timber Permit is the Forestry Act 1991(the Act).The functions of the 1st Plaintiff are prescribed by s. 30 of the Act under the auspices of the Provincial Forest Management Committee. Section 30 also makes provision for enforcement of timber permit conditions and the Forestry Act 1991.  The relevant parts are these;

	s. 30	Functions of a Provincial Forest Management Committee are –
	(a)  _ _ _
	(b)  _ _ _
	(c)  _ _ _
	(d)  to make recommendations to the board on—
	      (i)  
	      (ii)
	      (iii)  the enforcement of timber permit conditions and of this Act.

52. 	The provision clearly defines the roles of the Provincial Forest Management Committee.  In respect of enforcement of Timber Permit conditions the power seems to be vested in the National Forest Board. Under s. 30 of the Act the Provincial Forest Management Committee can only recommend for enforcement of breaches to the Board but does not have the authority to enforce Timber Permit conditions. 

53. 	In like manner the Act does not confer any function or authority on the 2ndPlaintiff hence the 2nd Plaintiff is an outsider as far as Act was concerned.

54. 	It is therefore obvious that nowhere in the Forestry Act 1991 as the enabling legislation, are the Plaintiffs conferred authority or had the necessary powers to enforce breaches under the Timber Permit.

55. 	In the absence of any legislative authority the Plaintiffs are starved of standing to mount claims against the Defendants to enforce breach of conditions in the Timber Permit as has happened here. 

56.	It would be appropriate for the Plaintiffs through the Provincial Forest Management Committee to recommend to the Board to enforce alleged breaches of conditions in the Timber Permit pursuant to s 30 (d) (iii) of the Act.

57. The committee’s delegated function under the Act is to make recommendations to the National Forest Board who would have standing to enforce breaches of Timber Permit conditions. The Provincial Forest Management Committee had no standing to enforce breaches or sue to enforce breaches.

58. 	Without the necessary standing the Plaintiffs could not maintain a cause of action against the Defendants.

59. 	An issue incidental to the Plaintiffs argument arises. The Plaintiffs being overall authorities in the Province would no doubt have authority to oversee the overall performance of the timber operations in the Province hence they would have “sufficient interest” to invoke the powers of the Court to enforce breaches. 

60.   Sufficient interest would therefore confer or invite standing to the Plaintiffs to make a claim for enforcement of their claims despite the lack of standing pursuant to the Act. 

61. 	It is an issue that was not addressed in submissions. Whether the issue of sufficient interest would confer standing in situations where enforcement of breaches was regulated by statute and authority conferred on named persons or entities remains to be argued. I leave it for future argument when the issue does arise.

62. 	Having glanced through the various documents relied on by the Plaintiffs I found them to be quite impressive. A lot of government agencies and officials were involved in the formulation of the various documents filed.

63. 	I fail to understand why the Plaintiffs could not have attached those documents to recommendations similar to the interim orders sought and have them forwarded to the National Forest Board instead of languishing under a claim in Court for which they did not have the necessary standing.

64.	 Be that as it may, the threshold issue seems to revolve around the Court’s determination that the Plaintiffs had no standing under the Actor the Timber Permit 16-42 to make a claim for enforcement of breaches under the Timber Permit or under the Act, thereby disclosing no reasonable cause of action.

65. 	Therefore, it is deemed unnecessary to determine the balance of the considerations raised and argued.

66.	I make the following orders;

1. The Interim Orders lifted on 06 May 2016 are further affirmed and the interim orders issued on 7 April 2016 are set aside in their entirety.

2. The entire proceeding is dismissed for lack of standing as abuse of process thereby disclosing no cause of action.

3. Each party shall bear their own costs.

________________________________________________________________
New Ireland Provincial Government Lawyers: Lawyer for the Plaintiffs
Raurela Lawyers: Lawyer for the 1st& 2nd Defendants
Liria Lawyers: Lawyer for the 3rd Defendant