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Mauri v Garry [2020] PGNC 467; N8725 (21 September 2020)

N8725

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 132 OF 2020

BETWEEN:
REX MAURI, in his capacity as a Landowner and in his capacity as Member and President of the Nakuwi Association Inc.
First Plaintiffs

AND:
NAKUWI ASSOCIATION INC
Second Plaintiff

AND:
MR JERRY GARRY – In his capacity as the Managing Director of Mineral Resources Authority
First Defendant

AND:
MINERAL RESOURCES AUTHORITY
Second Defendant

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Defendant

Lae: Dowa AJ
2020: 21^st July & 21^st September

PRACTICE AND PROCEDURE – plaintiffs seeking declaratory orders for monies held in trust fund to be paid to them – monies subject of the proceedings are trust monies for settler communities living within the mining township – plaintiffs are not settlers but land owner leaders – law in relation to the grant of declaratory orders discussed – proceedings is an abuse of process – proceedings dismissed

Cases Cited:

Aihi v State (1981) PNGLR81
Ere v National Housing Corporation (2016) N6515
PNG Forest Products Pty Ltd v The State (1992) PNGLR 185
Untied States of America v WR Carpenters (Properties) Ltd (1992) PNGLR 185
Uma More v UPNG (1985) PNGLR 401
Makeng v Timbers (PNG) (2008) N3317

Counsel:

J. Kusip, for the Plaintiff
E. Mambei -town agent, for MRA In-house Lawyers

RULING

21^st September 2020

1. DOWA AJ: The Plaintiffs are seeking orders that the “Settlers Community Funds” totalling K2,814691.87 parked with Harmony South East Asia and Hidden Valley Services Ltd, be released in accordance with the resolution of stakeholders meeting held 7^th February 2020.
   
2. I heard the matter on 14^th and 21^st July 2020, and reserved my ruling, which I now deliver.
   

Background Facts

3. The facts are not disputed which I set them out fully hereunder.
   
4. The First Plaintiff is the President of Nakuwi Association Inc, the Second Plaintiff. The First Defendant is the Managing Director of Minerals Resources Authority, the Second Defendant.
   
5. On 5^th August 2005, the Independent State of Papua New Guinea, Morobe Provincial Government, Morobe Consolidated Goldfields Ltd, Nakuwi Association Ltd, the Wau Rural Local Level Government, the Watut Rural Local Level Government, and Bulolo Rural Local Level Government signed a Memorandum of Agreement relating to the Hidden Valley Gold Mine project “the Memorandum of Agreement.”
   
6. Amongst beneficiaries to the gold mine are ‘Settlers’ who are entitled to 2% under clause 3.3(d) of the Memorandum of Agreement.
   
1. The Memorandum of Agreement identifies and defines the Settlers as individuals or groups of people that have been granted permissive occupancy by the land owners to occupy and use land within the tenements prior to the commencement of the Memorandum of Agreement.
   
2. Clause 3.3(a) of the Memorandum of Agreement requires the Settlers’ royalties be parked with a Trust set up and managed by Morobe Consolidated Goldfields, now represented by Harmony. No trust has been set up, but Harmony maintains the funds. As at March 2020, the funds amount to K2,814,691.87.
   
3. On 4^th October 2019, a stakeholders meeting was held in Lae at the request of the Plaintiffs for the use of the ‘Settlers Community Royalty Funds’.
   
4. The Plaintiffs proposed that the Settlers funds be used to address the growing law and order problems in the mining area. The First Defendant and other Stakeholders agreed for the use of the funds only for the purpose of Law and order with necessary adjustments to the proposal by the Plaintiffs.
   
5. Due to lack of response by the First Defendant to the Plaintiffs proposal, the Plaintiffs threatened to sue the First and Second Defendants.
   
6. As a result, the Stakeholders held a second meeting on 7^th February 2020. In that meeting it was resolved that the ‘Settlers’ funds of K2,814,691.87 be drawn and used for law and order purposes. Following is the list for disbursement:
   
   1. 3 x Police Vehicles: 1 x 10 seater L/C for Wau Police Station,

1 x 10 Seater L/C for Bulolo Police Station

1 x 5 Door L/C for ACP Northerm Command

Total: =K658, 998.27 (Quote attached)

(ii) Infrastructure Contribution: Wau Police Station & Bulolo District Court Magistrate’s House Renovation = K400,000.00

(iii) Bulolo District Court: 1 x 10-Seater L/C for Bulolo District Court Magistrate = K219,664.09 (Quote attached)

(iv) Nakuwi Landowner Association: 2 x Vehicles (1x10 seater L/C & 1 x 4 Door D/CAB L/C) = K496, 029.51 (Quote attached)

(v) Nakuwi Landowner Association Law & Order Awareness Program

= K1,040,000.00 (Program/Costing Attached)

The total costing is = K2,814,691.87

7. The First Defendant was not satisfied with the resolutions as they did not reflect the Defendants’ instructions to its officers attending the meeting. On 30^th March 2020, the First Defendant wrote to Chief Executive Officer (CEO) for Harmony giving him instructions to disburse the Settlers funds which Harmony held in trust. Attached to the letter was a draft Trust guideline. The instructions contained variations in respect of funds to be paid to the Second Plaintiff from the resolutions of 7^th February 2020. These instructions are:
   
   1. Direct purchase from Ela Motors Lae Branch a total of K878,662.36 for the following:

1. Three Vehicles for the Police based on the quote for K658,998.27
   
   1. One Ten Seater Land cruiser for Wau Police Station;
   2. One Ten Seater Land cruiser for Bulolo Police Station; and
   3. One Five Door Land cruiser for ACP Northern Command.
      
2. One Ten Seater Land Cruiser for Bulolo District Court Magistrate costing K219,664.09.
   

2. Infrastructure contribution of a total of K400,000.00 to be managed by MGC and paid to a contract to carry out the maintenance and renovation, this project shall be partnership project by all parties of the Hidden Valley Project. The renovation shall be specific to the:
   
   1. Wau Police Station; and
   2. Bulolo Magistrate’s House Renovation
      
3. Direct payment to Nakuwi Association Account for the Law and Order program at a total of K300,000.00 for Village Awareness Expenses.
   
4. Direct payment to ACP Northern Command for Police Operation amounting a K150,000.00.
   

8. The First Defendant further instructed Harmony to keep and maintain the balance of the Settlers fund in trust.

9. Aggrieved by the decision of the First and Second Defendants, the Plaintiffs instituted the current proceedings.
   

Issues

(1) Whether the Resolutions of 7^th February 2020 created enforceable legal rights

(2) Whether or not, the Plaintiffs proceedings are an abuse of the process.

Law

10. The relevant law, rules and Memorandum of Agreement (MOA) referred in the proceedings are:
    
    1. Section 155(4) of the National Constitution
    2. Section 2 of the Mining Act
    100. Section 5 of the Minerals Resources Authority Act
    4. Order 12 Rule 1 of the National Court Rules
    5. Memorandum of Agreement 2005 (MOA)
       
11. Section 5 of the Mining Act 1992 provides that all minerals in PNG are the property of the Independent State of Papua New Guinea.
    
12. The Minerals Resources Authority is established by Minerals Resources Authority Act 2018 to manage the proprietary rights of Papua New Guinea.
    
13. Section 5 of the Minerals Resources Authority Act provides the functions of the Minerals Resources Authority (MRA) and I quote:

“5. FUNCTIONS OF THE AUTHORITY.

The functions of the Authority, subject to Section 8, are -

(a) to advise the Minister on matters relating to mining and the management, exploitation and development of Papua New Guinea's mineral resources; and

(b) to coordinate and promote the orderly exploration and development of mines in Papua New Guinea for the exploitation of the country's mineral resources; and

(c) to receive, assess, register. record and manage applications and dealings in mineral tenements in Papua New Guinea and provide technical expert advice and information to the Mining Advisory Council, the Minister and the State; and

(d) to oversee the administration and enforcement of the Mining Act 1992, the Mining (Safety) Act (Chapter 195A), the Ok Tedi Acts and the Ok Tedi Agreement, the Mining (Bougainville Copper Agreement) Act (Chapter 196) and the agreements that are scheduled to that Act, and any other legislation relating to mining or to the management, exploitation or development of Papua New Guinea's mineral resources; and

(e) to negotiate mining development contracts under the Mining Act 1992, as agent for the State; and

(f) to act as agent for the State. as required, in relation to any international agreement relating to mining or to the management, exploitation or development of Papua New Guinea's mineral resources; and

(g) to coordinate and monitor the implementation of the State's undertakings and obligations under agreements, and such other legal, contractual, commercial or social obligations in accordance with government policies on mining and the applicable laws that are necessary for the management of the mining sector; and

(h) to receive and collect, on its own account and on behalf of the State, any fee, levy, rent, security, deposit, compensation, royalty, cost, penalty, or other money or other account payable under the Mining Act 1992_; the Mining (Safety) Act (Chapter 195A), the Ok Tedi Acts and the Ok Tedi Agreement, the Mining (Bougainville Copper Agreement) Act (Chapter 196) and the agreements that are scheduled to that Act, or any other Act the administration of which is the responsibility of the Authority from time to time; and

(i) on behalf of the State, to receive and collect from persons to whom a tenement has been granted under the Mining Act 1992, the security for compliance with the person's obligations under the Mining Act 1992, required to be lodged with the Registrar and to hold such security received or collected; and

(j) on behalf of the State, to administer and be responsible for the administration of any public investment programme relating to mining; and

(k) to conduct systematic geo-scientific investigations into the distribution and characteristics of Papua New Guinea's mineral and geological resources, located on, within or beneath the country's land mass, soils, subsoil and the sea-bed; and

(l) to provide small scale mining and hydro geological survey data services, and occupational health and safety community awareness programmes; and

(m) to collect, analyse, store, archive, disseminate and publish (in appropriate maps and publications) on behalf of the State geo-scientific information about Papua New Guinea's mineral and geological resources; and

(n) to administer and implement National Government policies and priorities and carry out such functions as are given to the Authority by this Act or by any other law; and

(o) generally to do such supplementary, incidental, or consequential acts and things as are necessary or convenient for the Authority to carry out its functions.”

14. The relevant clauses of the 2005 Memorandum of Agreement is clause 3.2 and 3.3, which I set out below:
    

3.2. The State agrees that the distribution of the total royalties received by the recipients of royalties in Clause 3.1 above shall be as follows:

1. Provincial Government

MPG – Five year Provincial Development Plan 42%

(i) Provincial Government 36%
(ii) Mumeng LLG 3%
(iii) Waria LLG 2%
(iv) Buang LLG 1%

1. Immediate Impact Area Local Level Governments 14%
   

(i) Wau/Rural LLG 5%

(ii) Watut LLG 5%

(iii) Wau/Bulolo Urban LLG 4%

2. Affected Communities 2.5%
   • (i) Highway Communities 0.5%
   • (ii) River Communities 0.5%
   • (iii) Subsidiary Landowner Communities 1.5%
     

100. Others 2.5%
     • (i) Settler Communities (Claims) 2.0%
     • (ii) Wafi LOA 0.5%
       

4. Landowners 39%
   
   • (i) NAKAWI Association 2%
   • (ii) Future Generation Trust 2%
     

First two (2) years of Operation:

(i) Nauti People 20%
(ii) Kuembu People 7.5%
(iii) Winima People 7.5%

After first two (2) years of Operation:

(i) Nauti People 17.5%
(ii) Kuembu People 8.75%
(iii) Winima People 8.75%

3.3 The royalties shall be paid in the following manner:-

(a) In the case of the Provincial Government” into the Morobe Provincial Government Consolidated Revenue Account.
(b) In the case of the Local Level Governments into their respective operating accounts.
(c) In the case of the affected communities funds will be managed by Nakwi Association Inc. and distribution to be determined by subsidiary landowners in consultation with other project stakeholders.
(d) In the case of Settler Communities, a trust shall be set up and maintained by MCG to cater for payments in a separate Trust Deed. In the case of Wafi Landowner Association representing YDA and HLA will be deposited into the Wafi Landowner Association operating account.
(e) In the case of NAKUWI Association Inc. into the NAKUWI Association Inc. operating account.
(f) In the case of the Future Generation Trust into the Future Generation Trust Account.

Submissions of Counsel

15. Mr Kusip for the Plaintiffs submitted, the Defendants and the other stakeholders/ signatories to the Memorandum of Agreement (MOA) agreed to establish a Trust Fund. Mr Kusip submits, that in the absence of the Trust, all Stakeholders being signatories to the Memorandum of Agreement (MOA), have agreed and resolved on 7^th February 2020 on how the Settlers funds are to be disbursed. Mr Kusip submitted that the resolutions of 7^th February 2020 is made within the frame work of the 2005 MOA, and the First and Second Defendants are obliged under Section 5 of the Minerals Resources Act to give effect. Mr Kusip submitted, that the National Court has powers under Section 155(4) of the Constitution and Order 12 Rule 1 of the National Court Rules to grant the reliefs sought by the Plaintiffs.
    
16. Mr Mambei, counsel for the Defendants, submitted under section 5 of the Mining Act, all minerals belong to the State. The Second Defendant, Minerals Resources Authority is given the role of managing the proprietary rights of the State, and other Stakeholders. It is on this basis that the Memorandum of Agreement was established so everyone benefits from the mineral resources.
    
17. Mr Mambei Counsel for the Defendants submitted that the 2% royalty payment and establishment of Trust Fund was for the ‘Settlers’ community, for the use and benefit of Settler Community and that the Plaintiffs are landowners and cannot speak for the Settler Community.
    
18. Mr Mambei submitted that the decision or stance taken by the Defendants was for those reasons, as the monies proposed to be paid out to the Plaintiffs were substantial and not beneficial to the Settler Community. Mr Mambei submitted, the Defendants are under an obligation under section 5 of the Mineral Resource Authority Act to protect the interest of the State and Stakeholders. The Defendants are duty bound under clause 3. 3(d), of the 2005 Memorandum of Authority to protect the funds for the Settler community, and use the funds in accordance with the draft trust guidelines.
    

Reasons for Decision

19. In the present case, the Plaintiffs are seeking declaratory orders, firstly that the resolutions of 7^th February 2020 be declared valid and binding on the Defendants. A further declaration that the First Defendant is duty bound under section 5 of the Minerals Resources Authority Act to disburse Settlers funds in accordance with the resolution of 7^th February 2020. Finally, an order, in the nature of mandamus requiring the Defendants to expeditiously facilitate disbursement of funds as per the resolution of 7^th February 2020.
    
20. The Plaintiffs submitted that the court has power under section 155(4) of the Constitution and Order 12 Rule 1 of the National Court Rules to grant the reliefs they are seeking.
    
21. The law relating to Declaratory orders is settled in this jurisdiction. The factors to be considered are summarised by His Honour, Hartshorn J in Ere v National Housing Corporation (2016) N6515, at paragraphs 11 to 14 of his judgment:

“11. As the plaintiffs’ seek declaratory relief, it is necessary to consider the factors that are required to be established before a declaratory order can be made. These factors are set out in The Russian Commercial and Industrial Bank v. British Bank for Foreign Trade Ltd [1921] 2 AC 438. This case has been referred to in various cases including Ok Tedi Mining Ltd v. Niugini Insurance Corporation and Others (No 2) [1988-89] PNGLR 425; Placer Dome (PNG) Ltd v. Yako (2011) N4691; Independent State of Papua New Guinea v. Central Provincial Government (2009) SC977; Dr. Onne Rageau v. Kina Finance Ltd (2015) N6175 and National Fisheries Authority v. New Britain Resources Development Ltd (2009) N4068.

12. The factors are:
    
    1. There must exist a controversy between the parties;
    2. The proceedings must involve a right;
    100. The proceedings must be brought by a person who has a proper or tangible interest in obtaining the order;
    4. The controversy must be subject to the court’s jurisdiction;
    5. The defendant must be a person having a proper or tangible interest in opposing the plaintiff’s claim;
    6. The issue must be a real one. It must not be merely of academic interest, hypothetical or one whose resolution would be of no practical utility.
       
13. In the High Court of Australia decision, Ainsworth v. Criminal Justice Commission [1992] HCA 10; (1991-1992) 175 CLR 564, Brennan J. referred to the Russian Commercial case (supra) and said that notwithstanding the wide discretion that exists in deciding whether a declaration should be made, it was not appropriate to grant a declaration if there was no real controversy to be determined.
    
14. Also, recently, the Supreme Court in considering the issue of standing to seek declaratory orders in Pius Pundi v. Chris Rupen (2015) SC1430 held amongst others that:

“A declaration is a discretionary remedy that should only be granted where there exists a real controversy between the parties to the proceedings, a legal right is at issue, the party seeking it has a proper or tangible interest in obtaining it, the controversy is within the court’s jurisdiction, the defendant has a proper or tangible interest in opposing the plaintiff’s claim and the issues involved are real, and not merely of academic interest or hypothetical.”

What rights do the Plaintiffs have?

22. What rights do the Plaintiffs have which they seek to protect and enforce? The Plaintiffs are one of the seven (7) stakeholders and signatory to the 2005 Memorandum of Agreement (MOA). Under clause 3.2(e) of the MOA, the State agreed to pay 2% royalty payment to Settler communities. “Settlers” is defined as individuals or groups of people that have been granted permissive occupancy by the landowners to occupy and use land within the tenement prior to the commencement of this agreement. They are different and distinct from the Plaintiffs, who are landowners.
    
23. The settlers’ funds were to be used in accordance with a Trust Deed. There were no guidelines put in place at the time of the stakeholders’ meeting on 7^th February 2020. The resolutions of the stakeholders of 7^th February 2020 appears to be an endorsement of the Plaintiffs’ proposal for the disbursement of the funds for carrying out the law and order programme. In implementing the resolutions, the First Defendant made variations to the disbursement of the funds. This was done in accordance with clause 5 of the draft trust guidelines the Defendants proposed. This resulted in the reduction of the funds allocated to the Plaintiffs.
    
24. In my view, the First Defendant has executed his statutory function under Section 5 of Minerals Resources Authority Act by instructing Harmony to disburse funds for the law and order programme with variations to the figures allotted to the Plaintiffs. In my view there is no real controversy between the parties. The Plaintiffs are just one of the stakeholders. The decision by the stakeholders did not create enforceable rights to the Plaintiff. In my view the resolutions of the stakeholders did not bind the Defendants from making the variations in the performance of their statutory function. The Plaintiffs do not have any legal rights to institute recovery proceedings against the defendants who were executing a statutory function in the interest and for the benefit of the settler community and the stakeholders.
    
25. The Plaintiffs submitted that the court has power under section 155(4) of the Constitution and Order 12 Rule 1 of the National Court Rules to grant the reliefs they are seeking. However, section 155(4) of the Constitution does not give the Court primary power and or create any primary rights. The inherent jurisdiction of court under section 155(4) is invoked only in aid of existing primary rights conferred by law. Refer: Aihi v State (1981) PNGLR81, Uma More v UPNG (1985) PNGLR 401 and Makeng v Timbers (PNG) (2008) N3317. In Makeng v Timbers, Injia DCJ (as he then was) said this at paragraph 34:

“34. Does s 155 (4) of the Constitution confer a primary power on this Court to grant a stay or other interim relief before leave to apply for judicial review is granted? In my view s 155 (4) of the Constitution is not applicable to O 16 r 3 (8). That section is not the source of primary jurisdictional power. The Court’s primary power or jurisdiction is given by O 16 r 3 (8) of the National Court Rules. Section 155 (4) confers jurisdiction on the Court to issue facilitative orders in aid of enforcement of a primary right conferred by law, whether such right be conferred by statute or subordinate legislation enacted under the enabling statute: SCR No. 2 of 1981 [1982] PNGLR 150 at 154, Uma More v UPNG [1985] PNGLR 401 at 402. “

26. The funds the subject matter of the resolutions belong to the Settler community. The decisions made by the Defendants are for the benefit of the Settler Community and in accordance with the draft trust guidelines. The Defendants have not done any wrong to the Plaintiffs in so far as the disbursement of the Settler Community royalty funds are concerned. The Plaintiffs have no proper or tangible interest in obtaining the orders sought.
    
27. For these reasons, I refuse to grant the orders sought by the Plaintiffs.
    

Abuse of the process

28. Even if I am wrong in my decision, there is another reason why these proceedings should be dismissed. In the present case, the Plaintiffs are seeking prerogative orders, challenging the decision of the First Defendant. The First Defendant made decisions in the performance of his statutory functions under section 5 of the Minerals Resources Authority Act. The Plaintiffs proceedings are effectively asking the Court, to review the decision of the First Defendant and use its inherent jurisdiction under Section 155(4) of the Constitution to grant the reliefs. As discussed earlier, section 155(4) can only be invoked where there is a gap in the law.
    
29. In the present case, proceedings can be and should have been instituted under Order 16 of the National Court Rules by way of Judicial Review. The option was and has been available. Prerogative orders can be granted under Order 16 of the National Court Rules. Under Order 16 Rule 3, leave for review is a mandatory requirement. Although the parties have not addressed this issue in their submissions, the Court has inherent powers on its on volition to determine the fate of the proceedings. (See: PNG Forest Products Pty Ltd v The State (1992) PNGLR 85 and United States of America v WR Carpenters (Properties) Ltd (1992) PNGLR 185, and Ere v National Housing Commission (2016) N6515.
    
30. Since the proceedings were not brought under Order 16 of the National Court Rules, by way of Judicial Review, the proceedings are an abuse of the process. For this reason, the Proceedings can also be dismissed.
    

Orders

31. The court orders that:
    
    1. The Plaintiffs Proceedings are dismissed
    2. The Plaintiff pay the cost of the proceedings to be taxed, if not agreed.
    100. Time be abridged

____________________________________________________________________

Kusip Lawyers: Lawyers for the Plaintiffs

Solwai Lawyers: Lawyers for the Defendants