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Minister for Lands v Frame [1980] PNGLR 433 (28 November 1981)

Papua New Guinea Law Reports - 1980

[1980] PNGLR 433

SC186

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

THE MINISTER FOR LANDS

V.

WILLIAM ROBERT FRAME

Waigani

Greville Smith J., Kapi J., Pratt J.

1-2 April 1981

3 September 1981

28 November 1981

RESUMPTION AND ACQUISITION OF LAND - Resumption under statutory power - “Compensation” - Quantum of assessment - Appeal against determination of - Powers on appeal - Whether power to alter amount determined in manner inconsistent with prescribed factor - Lands Acquisition Act 1974 ss. 19, 20, 22, 23 - Constitution s. 53(2), s. 68.

EVIDENCE - Admissions - Admissions against interest - Admissions contained in report - Intention to confirm by oral evidence - Subsequent application to withdraw document - Consent of opposing party not forthcoming - Contents of document admissible.

Section 19 of the Lands Acquisition Act 1974 (the Act) sets out the principles for determining the amount of compensation payable by the Government when land is acquired by compulsory process under the provisions of the Act, which in respect of developed land, in production for not less than five years, is—“the product of the average net profit received in relation to that land over the five financial years immediately preceding the date of acquisition, as determined by the Valuer-General, and the prescribed factor for the land:” the prescribed factor being fixed by regulation by the Governor-General in Council after receiving a report from the Valuer-General.

Section 23 of the Act provides that a claimant who is “dissatisfied with a determination made by the Minister under s. 22 may appeal to the National Court, against the determination”.

On appeal by a naturalized but non-automatic citizen against the Minister’s determination, the appellate court increased both the figure determined by the Valuer-General as the average annual net profit and the prescribed factor. (See Frame v. Minister for Lands, Surveys and Environment [1979] P.N.G.L.R. 626.)

On appeal from this decision on the grounds that it was (a) contrary to s. 53 and s. 68 of the Constitution; (b) s. 19 of the Act had been wrongly applied, and (c) it was against the weight of the evidence:

Held:

(1)      (Per Greville Smith J.) The word “compensation” in the Act means and connotes the value in money, to the owner, of the land taken from him,

In re An Arbitration between Lucas and the Chesterfield Gas and Water Board [1908] UKLawRpKQB 128; [1909] 1 K.B. 16 at pp. 29, 30;

Australian Apple and Pear Marketing Board v. Tonking [1942] HCA 37; (1942) 66 C.L.R. 77;

Nelungaloo Pty. Ltd. v. Commonwealth (1948) 75 C.L.R. 495;

The Commonwealth v. Hazeldell, Ltd. [1918] HCA 75; (1918) 25 C.L.R. 552;

Carltona, Ltd. v. Commissioners of Works and Others [1943] 2 All E.R. 560; and

Re MacDonald and Toronto (1912) 27 O.L.R. 179, applied.

(Per Pratt J.) “Compensation” under the Act means just compensation in accordance with s. 53 of the Constitution; it must be reasonable from the point of view of both parties when a balance is struck between their competing interests and evidence of what are just terms will require to be examined in the light of the National Goals and Directives Principles and the national interest.

(2)      The quantum or measure of compensation under the Act will be the same whether the claimant is an automatic or non-automatic citizen.

(3)      (Per Greville Smith J. and Kapi J., Pratt J. dissenting.) A person whose land is compulsorily acquired under the Act is entitled to “compensation under the Act”, in the sense of meaning the money value of the land to him in accordance with the machinery provided by s. 19 of the Act: s. 16 of the Act precludes the concept of “just terms” under s. 53 of the Constitution being read into the Act.

Frame v. The Minister for Lands, Surveys and Environment [1979] P.N.G.L.R. 626 overruled in part.

(4)      An appeal under s. 23 of the Act against the Minister’s determination, is an appeal against the correctness of the amount of money determined in accordance with the formula prescribed under s. 19 measured in the light of the meaning of the word “compensation”.

(5)      (a)      (Per Greville Smith J.) The appellate court has power to amend or alter the amount determined by the Minister in a manner inconsistent with the particular prescribed factor; there being nothing in the Act requiring the appellate court to use the prescribed factor, or any factor at all in assessing the rightness of the determination appealed against.

(b)      (Per Pratt J.) The power given to a claimant under s. 23(1)(c) of the Act to appeal against the use of an incorrect prescribed factor gives the appellate court the concomitant right to determine on the evidence before it what is the correct figure.

(c)      (Per Kapi J. dissenting.) The prescribed factor as a matter of legislative enactment cannot be questioned by a court.

(6)      (Per Greville Smith J. and Pratt J., Kapi J. dissenting.) In the circumstances there was no good reason for disturbing the reassessment of compensation made by the appellate court.

(7)      (Per Greville Smith J.; Kapi J. and Pratt J. not deciding.) A report which is put in evidence with the intention of having it confirmed by oral evidence, insofar as it contains admissions, cannot be withdrawn without the consent of the opposing party, and where consent is not forthcoming, admissions against interest contained therein may be relied upon by the opposing party.

Appeal.

This was an appeal pursuant to s. 4(2) of the Supreme Court Act 1975, against judgment of the National Court given on appeal under s. 23 of the Lands Acquisition Act, 1974 against a determination of compensation made by the Minister for Lands under s. 22(1) of the Act (See Frame v. The Minister for Lands, Surveys and Environment [1979] P.N.G.L.R. 626.) The grounds of appeal were as follows:

1.       The decision of the judge is wrong in law in that it is contrary to s. 53 and s. 68 of the Constitution.

2.       The judge erred in law in that his Honour wrongly applied s. 19 of the Lands Acquisition Act 1974.

3.       The order of the judge is wrong in that it is against the weight of evidence.

Counsel:

L. Lucas, for the appellant.

T. Morling Q.C. and C. Kirke, for the respondent.

Cur. adv. vult.

28 November 1981

GREVILLE SMITH J.: This is an appeal, and an application for leave to appeal, under the provisions of s. 4(2) of the Supreme Court Act 1975 against a judgment of the National Court. The judgment appealed against was itself given by the National Court upon an appeal under the provisions of s. 23 of the Lands Acquisition Act 1974, as amended (hereinafter sometimes called “the Act”) by the present respondent against a determination by the Minister for Lands made under the provisions of s. 22(1) of the Act of the amount of compensation payable under the provisions of the Act to the respondent for certain land, the property of the respondent, which was acquired by compulsory process under the provisions of s. 7 of the Act.

Section 7 of the Act provides that if certain conditions are fulfilled the Minister for Lands may by notice in the Government Gazette declare that the land specified in the notice is acquired by compulsory process under the Act, and that upon the publication of such notice of acquisition the land to which the notice applies is, inter alia, by force of the Act, vested in the Government.

Section 12 of the Act provides, so far as is relevant to this appeal, that the interests of every person in land to which a notice of acquisition applies is, on the date of acquisition, converted into a right to “compensation under the Act”.

Section 19 of the Act, so far as it is applicable to the land in question, provides inter alia as follows:

“19.    Principles for Determining the Amount of Compensation Payable by the Government

(1)      The Government shall, in respect of any land acquired by compulsory process under this Act, pay by way of compensation for that land—

(a)      ...

(b)      ...

(c)      in the case of land which has been developed or partly developed for the purpose of returning an income and which at the date of acquisition of the land—

(i)       has been in production for not less than five financial years—the product of the average annual net profit received in relation to that land over the five financial years immediately preceding the date of acquisition, as determined by the Valuer-General, and the prescribed factor for that land;”

Section 20 of the Act provides that the Governor-General in Council may, for the purpose of prescribing the factors to be used in determining the compensation payable by the Government under s. 19, after receiving a report from the Valuer-General, by regulation fix a factor in relation to, inter alia, a particular parcel of land.

Section 23 of the Act provides as follows:

“23.    Appeal to the Supreme Court

(1)      A claimant whose claim has been accepted by the Minister and who is dissatisfied with a determination made by the Minister under Section 22 may, within three months after the date on which a copy of the determination was served on him or such further time as the Supreme Court may allow, appeal to the Supreme Court against the determination on all or any of the following grounds:—

(a)      that the valuation determined by the Valuer-General for the improvements to the land is an incorrect valuation; and

(b)      that the average annual net profit which was received, or which would have been received, in relation to the land, as the case may be, as determined by the Valuer-General, is incorrect and;

(c)      that the Minister used an incorrect prescribed factor when assessing the compensation payable for the land or the improvements.”

In respect of the parcel of land acquired from the respondent the Valuer-General determined the average annual net profit at a figure which was on appeal increased by his Honour the learned judge of the appellate court of first instance, for the purpose of calculating what the compensation should have been, to a figure of K54,317.

The Governor-General, after receiving a report from the Valuer-General, had fixed a factor of four in respect of which his Honour observed: “... in my opinion justice would be done in this case by applying a factor of a little over five.”

His Honour did in fact increase the amount of the compensation payable to a figure of K290,500, indicating a factor of 5.348 applied to the average annual net profit of K54,317 as his Honour had determined it.

Against his Honour’s determination, the Minister for Lands now appeals. In so doing he does not dispute the figure of K54,317 employed as the average annual net profit by his Honour but rests his appeal on a contention that his Honour was in error in “altering” the Governor-General’s factor of four.

The first argument of the appellant, which may be designated the constitutional argument, employs reference to the following sub-sections of sections of the Constitution, namely ss. 53(1), (2) and (7), 68(4) and 86(2) and (4). The provisions of the Constitution just mentioned provide as follows:

“53.

(1)      Subject to Section 54 (special provision in relation to certain lands) and except as permitted by this section, possession may not be compulsorily taken of any property, and no interest in or right over property may be compulsorily acquired, except in accordance with an Organic Law or an Act of the Parliament, and unless—

(a)      the property is required for—

(i)       a public purpose; or

(ii)      a reason that is reasonably justified in a democratic society that has a proper regard for the rights and dignity of mankind,

that is so declared and so described, for the purposes of this section, in an Organic Law or an Act of the Parliament; and

(b)      the necessity for the taking of possession or acquisition for the attainment of that purpose or for that reason is such as to afford reasonable justification for the causing of any resultant hardship to any person affected.

(2)      Subject to this section, just compensation must be made on just terms by the expropriating authority, giving full weight to the National Goals and Directive Principles and having due regard to the national interest and to the expression of that interest by the Parliament, as well as to the person affected.

...

(7)      Nothing in the preceding provisions of this section applies to or in relation to the property of any person who is not a citizen and the power to compulsorily take possession of, or to acquire an interest in, or right over, the property of any such person shall be as provided for by an Act of the Parliament.

...

68.

(4)      Notwithstanding anything in a Constitutional Law, during the five years after Independence Day only persons who become citizens of Papua New Guinea under Section 65 (automatic citizenship on Independence Day) shall have the rights conferred by Section 53 (protection from unjust deprivation of property) except that during this period the rights of a person who becomes a citizen otherwise than under Section 65 (automatic citizenship on Independence Day) in respect of his property shall not be less than those accorded by law to non-citizens.

...

86.

(2)      Except as provided by Section 96(2) (terms and conditions of employment), in the exercise and performance of his privileges, powers, functions, duties and responsibilities the Head of State shall act only with, and in accordance with, the advice of the National Executive Council, or of some other body or authority prescribed by a Constitutional Law or an Act of the Parliament for a particular purpose as the body or authority in accordance with whose advice the Head of State is obliged, in a particular case, to act.

...

(4)      The question, what (if any) advice was given to the Head of State, or by whom, is non-justiciable.”

I must confess to having had more than a little difficulty grasping learned counsel’s exposition of the appellant’s constitutional argument, notwithstanding that it was supported by written submissions, but as I understand it it may be stated as follows:

Though the appellant has at all relevant times been a naturalized citizen he has not been an automatic citizen and so by virtue of the provisions of s. 68(4) of the Constitution the right to “just compensation ... on just terms” provided by s. 53 of the Constitution does not apply to him. But his rights in respect of his property are, again by virtue of s. 68(4) not less than those accorded by law to non-citizens. Section 53(7) provides that the power to compulsorily acquire the property of a person who is not a citizen shall be as provided for by an Act of Parliament. The Lands Acquisition Act provides for the acquisition of land without distinguishing in its terms between the land of persons who are citizens and the land of persons who are non-citizens, or between the land of citizens who are citizens by naturalization and the land of automatic citizens. It was under the provisions of this Act that the respondent’s land was acquired, and his appeal in the first instance was properly brought under the provisions of s. 22 of the Act.

It is clear that the average annual net profit is examinable on appeal. It is the Valuer-General’s job to value, and to value correctly, and if he does not do so and determines a wrong figure the product reached is not the product of the average annual net profit and the prescribed factor as required by s. 19(1)(c)(i) of the Act.

But it is equally clear that the prescribed factor is not in the case of a person who was at all relevant times a non-automatic citizen effectually examinable. This comes about as follows.

Because the Governor-General acts, under s. 20 of the Act, only with and in accordance with the advice of the National Executive Council, and by virtue of s. 86(4) of the Constitution the question “What advice was given?” is non-justiciable, the court cannot examine this advice to see if it was correct or incorrect, by whatever standards, because the court is not allowed to concern itself with what that advice was. In the case of an automatic citizen the court, without concerning itself with what the Executive Council’s advice was, might nevertheless come to a conclusion that the prescribed factor was an incorrect one. This is because a citizen is entitled under the Constitution to “just compensation ... on just terms” as defined in s. 53 of the Constitution, and if the court comes to the conclusion in a particular case, by examining the question directly, that the compensation arrived at by a purported application of the formula prescribed, for example, in s. 19(1)(c)(i) of the Act, does not constitute “just compensation”, and (to simplify) also comes to the conclusion that the average annual net profit figure is correct, then since the Governor and the Executive Council are obliged to observe the law, the conclusion must follow that the prescribed factor is incorrect. It is incorrect because it does not result in just compensation.

If the court by its own calculations on evidence it accepts comes to a higher figure which it is satisfied represents just compensation, then it cannot substitute its own figure, howsoever arrived at, without going through the circular ploy adopted in this case, because the Government is bound by the formula prescribed for payment of compensation. But the court can and should proceed to correct the compensation figure by correcting the incorrect factor. Such a course does not involve adjudication upon the question of what advice was given to the Governor-General which question is not adverted to.

However, this method cannot be applied to the respondent in this case because he is not an automatic citizen, and so has no constitutional guarantee of just compensation, so that in his case the appellate court has no specified or designated compensation that it can determine, and from which it can work back to adjust a thus-made-manifest incorrect factor. And it cannot look for error in the content of the advice of the Executive Council upon which the Governor-General acted, because it cannot enquire what that advice was. Such advice must be the accounting element in any departure in the dimension of the factor fixed from that suggested by the one discoverable and therefore examinable, element used in the fixation of the factor, namely the Auditor-General’s report, and a coincidence of the factor fixed with any factor suggested in or by the Auditor-General’s report might be no more than mere coincidence affording no basis for inference that any error by the Auditor-General had been perpetuated in the fixing of the factor. In any event, the court would have no criterion upon which to base any determination of ultimate error because the compensation to which the non-automatic citizen is entitled is not “just” compensation but simply such sum as is derived by application of the formula prescribed by the Act.

It thus follows that the court’s function, so far as s. 23(1)(c) is concerned is, in the case of non-automatic citizens, limited to ensuring that the Minister used the correct factor, in the sense of the factor actually prescribed by the Governor in Council, and it cannot examine the inherent correctness of that factor, that is, the correctness of the factor fixed. This was the intention of the legislature. This was the fundamental design of the legislation and the purpose of allocation of one of the two component parts of the compensation to fixation by the Governor-General in Council.

That, as I perceive it from what learned counsel for the appellant has said, and the necessary implications of what he has said, is the appellant’s constitutional argument.

Let me say at once that if the legislative intent was as the appellant contends, then the legislature has been devious indeed in effecting its purpose in the piece of legislation concerned, and has disguised such purpose well. Provisions opening the door in certain cases to virtual confiscation by executive action without appeal have been introduced by stealth. Such a concept is abhorrent and I decline to entertain it in the absence of compelling reasons, of which I find none.

The legislation concerned could hardly be called a masterpiece of legislative draftsmanship. However, applying proper principles of legal construction, and viewing the Act as a whole, I think that its meaning, as it applies to the appeal before this Court, is clear enough.

As has already been noticed, s. 12(1) of the Act provides that the interest of every person in land acquired under the Act is on the date of acquisition converted into a right to compensation under the Act. The Act does not define “compensation”.

In the interpretation of statutes words are to be construed in their ordinary meaning or common or popular sense, unless such a construction would lead to manifest and gross absurdity, or unless the context requires some special or particular meaning to be given to such words. (Halsbury’s Laws of England, (3rd ed.) vol. 36, par. 587, p. 392).

The ordinary meaning of “to compensate” is “to counter-balance, make up for, make amends for, to make equal return for” (Shorter Oxford English Dictionary (1950) vol. 1, p. 354) and the word “compensation” has of course a corresponding meaning. From the foregoing it will be seen that in its ordinary meaning the word connotes adequacy.

Additionally, the meaning first given for the term “compensation” in Jowitt’s Dictionary of English Law, (2nd ed.), vol. 1, p. 400, is “making things equivalent”.

Furthermore the meaning and import of the word “compensation” when used in statutes such as the Act with which the court is now concerned have been the subject of a long line of authoritative judicial exposition. In re An Arbitration between Lucas and the Chesterfield Gas and Water Board[dccviii]1 Lord Moulton (then Fletcher Moulton L.J.), in a passage which was later adopted by the Privy Council in Cedars Rapids Manufacturing and Power Co. v. Lacoste[dccix]2 and Corrie v. MacDermott[dccx]3 said:

“The principles upon which compensation is assessed when land is taken under compulsory powers are well settled. The owner receives for the lands he gives up their equivalent, i.e., that which they were worth to him in money. His property is therefore not diminished in amount, but to that extent it is compulsorily changed in form.”

In the Australian Apple and Pear Marketing Board v. Tonking[dccxi]4 Latham C.J. states: “... reg. 12 gives a right to compensation—which means fair and adequate compensation” and again; “As already stated, compensation means adequate compensation—an amount which really is compensation.”

And in Nelungaloo Pty. Ltd. v. The Commonwealth[dccxii]5 Dixon J. (as he then was) said:

“... ‘compensation’ is a very well understood expression. It is true that its meaning has been developed in relation to the compulsory acquisition of land. But the purpose of compensation is the same, whether the property taken is real or personal. It is to place in the hands of the owner expropriated the full money equivalent of the thing of which he has been deprived.

Compensation prima facie means recompense for loss, and when an owner is to receive compensation for being deprived of real or personal property his pecuniary loss must be ascertained by determining the value to him of the property taken from him. As the object is to find the money equivalent for the loss or, in other words, the pecuniary value to the owner contained in the asset, it cannot be less than the money value into which he might have converted his property had the law not deprived him of it.”

(The emphasis in the foregoing excerpts is of course mine.)

In my view there is nothing in the Act itself to suggest that the term “compensation” is used in other than what has been judicially defined as its ordinary meaning when used in legislation such as that with which we are now concerned. In fact the formula provided in s. 19(1)(c)(i) constitutes evidence that the “compensation” aimed at was to be “the money value into which he might have converted his property had the law not deprived him of it” (vide dicta of Dixon J., (supra)). This is so because the formula employed is, as is apparent from the Valuer-General’s report, to which I shall refer again later, not an original creature of the Act, but a formula used generally as one method of real property valuation —a sort of capitalization of profits; another method being to look at sales of comparable lands in the same area.

Then there is the provision for appeal provided by the Act. The power in s. 23(1)(c) (which is in terms unrestricted) to examine the prescribed factor, and the implicit concept that that factor may be correct or incorrect as prescribed, in itself presupposes the existence of an ascertainable criterion available for the court to apply. As the provisions of the Act are aimed, inter alia, at giving the owner compensation and as such term is not defined in the Act the quantum must be discovered by giving the word “compensation” a firm and constant meaning which, in the absence of any indication to the contrary must be its ordinary meaning in context. I would add that the meaning of the term in the Act cannot fluctuate depending on the status of the person concerned.

In addition to the foregoing there is this. Although under the Constitution the legislature was left untrammelled in the means whereby, by Act of Parliament, it might provide for the compulsory acquisition of the land of non-automatic citizens and so was not obliged to provide for anything at all in payment in a statute authorizing the resumption of land from such persons yet the well recognized rule for the construction of such statutes is that, unless the words of the statute clearly so demand, a statute is not to be construed so as to take away a person’s property without payment. (Attorney-General v. DeKeyser’s Royal Hotel Ltd.[dccxiii]6; Union of South Africa (Minister of Railways and Harbours) v. Simmer & Jack Mines Ltd.[dccxiv]7; Commissioner of Public Works (Cape Colony) v. Logan[dccxv]8.) In The Commonwealth v. Hazeldell Ltd.[dccxvi]9 the Chief Justice Sir Samuel Griffith and Rich J., in a joint judgment said:

“If this is the law, persons in the position of the respondents may be suddenly and arbitrarily and without compensation dispossessed of valuable rights of property. It is a settled rule of construction that such an intention cannot be imputed to the Legislature unless expressed in unequivocal terms incapable of any other meaning.” (Emphasis mine.)

The same may be said mutatis mutandis of the Act under consideration. If the term “compensation” therein were unclear, then the above rule of construction would require that it be given the meaning which would not allow a virtual confiscation, say by the prescription of a factor of .001, or a less blatant partial confiscation, or any degree of confiscation at all.

In my opinion the word “compensation” as used in the Act means and connotes the value in money, to the owner, of the land taken from him, as settled in the foregoing line of cases. Such was clearly the view of the learned judge at first instance, and his Honour proceeded to conclusion on that basis.

That view, in my opinion, is fortified in that it allows a full and natural and constant meaning (whether the claimant is an automatic or a non-automatic citizen) to be given to s. 23(1)(c).

Since I have stated hereinbefore that there is nothing in the Act itself to suggest that the term “compensation” is used in other than its ordinary meaning, I must now make reference firstly to s. 15 of the Act and secondly to the requirement in s. 20 that in fixing a factor the Governor in Council is to do so by regulation.

As to s. 16, that section is the first section of Pt. III of the Act. Part III is entitled “COMPENSATION”. Section 16 provides as follows:—

16.     “Notwithstanding the provisions of Section 14 of the Human Rights Act of 1972 and any other law, the succeeding provisions of this Part apply to all land acquired and to be acquired under this Act.”

Section 14 of the Human Rights Act 1972, now repealed provided inter alia as follows “No person shall be deprived compulsorily of his property except in accordance with law and on just terms.”

Section 5(2) of the Human Rights Act provided as follows:

5.       (2)      “Unless the contrary intention appears, whether by express reference or necessary implication, each law of the Territory, whether made before or after the commencement of this Ordinance, shall be read and construed as being subject to the provisions of this Ordinance.”

It has been argued by the appellant that the words “Notwithstanding the provisions of Section 14 of the Human Rights Act 1972 ...” in s. 16 indicate an intention in the legislature at the time of the passing of the Act that the word “compensation” in the Act should not be given any firm connotation as to quantum.

In my opinion this does not follow. Section 16 refers to “the succeeding provisions of this Part”. There are a number of such provisions which limit access to compensation under the Lands Acquisition Act and which must do so to have operation, or reasonable operation, thereunder. The right to which, by virtue of the Lands Acquisition Act, the interest of the person from whom land is acquired is converted by s. 12 of the Act is a right as we have seen to compensation “under this Act”. For instance a person entitled to compensation under the Lands Acquisition Act loses such entitlement by operation of s. 17(2)(a) if he does not make his claim within a limited time. Section 17(1) limits such a person’s right to obtain compensation by specifying a particular method by which, if he wishes to exercise his right, he may exercise it. There are no such limitations to the right that was given in the Human Rights Act to “just terms”.

Other provisions in Pt. III which limit or might be seen to limit the right, or the enforcement of the right, to compensation given by the Lands Acquisition Act are s. 18(5), s. 19 which provides that the Government shall (subject of course to the right of appeal, which however has a time limit, provided by s. 23) pay “by way of compensation” a sum calculated according to the specified formula, which sum might not in a particular case be “the value in money to the owner”, but which it is open to the former owner to accept, and s. 34(2)(b)(ii) and (iii).

In the circumstances of a particular case it may well have been open to be argued that the restrictions so imposed did not result in “just terms”, and so to preserve their uniform application it was necessary to exclude the operation of s. 14 of the Human Rights Act. Under the Lands Acquisition Act in my view, the person from whom land is received is entitled to “compensation under the Act”, in the sense of meaning the money value of the land to him, on the terms prescribed by the Act.

It is not necessary, in my view, for the purposes of this judgment, to attempt to define the expression “just compensation ... on just terms”, as it appears in the Constitution, any more than to attempt to define the expression “just terms” in the now repealed Human Rights Act. The two expressions as so used may have the same meaning, or a closely analogous meaning, and the word “compensation” in the former case may not have the same meaning as the word “compensation” in the Lands Acquisition Act. Qualified by the word “just”, and in the context in which it appears, it may have a different meaning.

The effect of the foregoing can be compendiously put by saying that in my view the saving of the succeeding provisions of Pt. III by s. 16 from the operation of the provisions of s. 14 of the Human Rights Act did not by implication or otherwise cut down or qualify the natural meaning of the word “compensation” in the Act in any way which would assist the appellant’s contentions.

It seems to me that the money “value of the land taken from him”, obtained by the procedures and subject to the terms laid down by the Act, might in some cases amount to “just compensation ... made on just terms” within the meaning of s. 53(2) of the Constitution and in some cases might not, depending in each case on all the circumstances and relevant considerations. If in a particular case involving an automatic citizen “just compensation ... on just terms” did not result, then in that case the operation of the Act would be overridden for the purposes of that case by the provisions of the Constitution. But the relevant provisions of the Act are not rendered invalid, or inapplicable in the first instance, or the meaning of their provisions changed by such a possibility.

I turn now to a further argument by the appellant, which rests upon the provision contained in s. 20 of the Act that the mode of fixation of the factor by the Governor in Council is fixation by regulation. The court on an appeal, says the appellant, has no power to alter the amount of compensation the Government is to pay on the basis that the factor prescribed by the Governor in Council was an incorrect factor. This follows, says the appellant, from the fact that the factor was fixed by regulation. To alter the factor would be to “amend” a regulation, which is, because it is a legislative Act, something that a court cannot do. This, it is said, indicates that “compensation” in the Act has no connotation, or no constant connotation as to quantum but it only means whatever “compensation”, whatever sum, the factor fixed results in.

I do not think that this argument has a valid basis, and I need not carry the matter beyond that basis. When the legislature has said in effect, as it has in s. 19(1)(c)(v) that the Government shall, in respect of a particular kind of acquired land pay, by way of compensation, the product of the annual net profit and a prescribed factor, and then, in successive sections provides for the fixing of the factor (s. 20), the determination of the annual net profit (s. 21), that the Minister shall determine the amount payable (s. 22) and then that a claimant who is “dissatisfied with a determination made by the Minister under s. 22 may appeal to the National Court against the determination”, (s. 23) it would seem to me quite clear that what the claimant is given a right of appeal against is the correctness of the size, of the amount, of money the Minister’s determination, the application of the formula prescribed under s. 19, has arrived at, measured in the light of the meaning of the word “compensation” as I view it. The appellant is required by s. 23 to give particulars as to where he thinks the formula operated defectively, whether by use of an incorrect average annual net profit, or an incorrect factor, or both. That is all, in my view, on a proper construction of the section, that is meant by the provision as to “grounds”. But the end function of the court is not to correct any of these things except, when appropriate, notionally in the course of its own calculations. It is to correct the Minister’s determination; that is, to specify the amount that should have been determined but was not, due to an error or errors somewhere along the line, to calculate and specify what amount would be the real compensation, the true compensation, the value of the land.

The factor fixed by regulation by the Governor in Council was not really “altered” by the learned judge at first instance. His Honour did not “amend” the regulation. The factor was fixed under s. 20 for use by the Minister, not the appeal court, and was (subject to what is said later) used by the Minister. There is no requirement in the Act that the appellate court should use the “prescribed factor”, or any factor at all in assessing the rightness of the determination appealed against. If it sees that the prescribed factor was incorrect in the sense that it was not one calculated to lead to a right result, then it may employ in carrying out its own duty, if it chooses to think in that fashion, a different one, a “correct” one.

There is another aspect of the matter to mention.

Section 44 provides as follows:

“Section 44.   REGULATIONS

(1)      The High Commissioner in Council may make regulations, not inconsistent with this Act, prescribing all matters that by this Act are required or permitted to be prescribed, or that are necessary or convenient to be prescribed, for carrying out or giving effect to this Act, and in particular for prescribing—

...

(f)      the factors to be used in determining compensation;

(2)      Notwithstanding the provisions of any other law, a regulation made under this Act—

(a)      comes into operation on the date on which it is published in the Government Gazette; and

(b)      unless renewed by resolution of the House of Assembly, expires at the end of 21 sitting days of the House after the making of the regulation.

(3)      Where a regulation expires under Sub-section (2), the expiry of the regulation shall have the same effect as a repeal of the regulation, except that, if the regulation amended or repealed any law in force immediately before that regulation took effect, the expiry of that regulation shall revive the previous law from the date of that expiry as if the expired regulation had not been made.”

The regulation fixing the factor, namely Statutory Instrument No. 15 of 1978 dated 7th June, 1978, was published in National Gazette No. G58 on July 6, 1978 and therefore came into operation on that date. It is clear that at the date of publication of the determination, namely 28th November, 1978, the regulation had, by operation of sub-s. (2)(b), expired unless renewed by resolution of the House of Assembly. No renewal had occurred.

There are two views that might be taken of the consequences of this situation. One is that when the regulation expired there ceased to be a prescribed factor within the meaning of s. 23(c), that is a current prescribed factor, that in consequence the Minister could not be said to have used a prescribed factor, correct or otherwise, and that therefore Mr. Frame had no right of appeal involving a “prescribed factor”; that the “determination” by the Minister was a nullity, and that both parties must start all over again, have the Minister fix a factor again and proceed from there.

Another view that might be taken is that what the Minister used was a prescribed factor within the meaning of s. 23(c), a factor which had been prescribed, and which was none the less a prescribed factor because the regulation had expired. On this view, apart from the correctness of the figure prescribed from the point of view of quantum, it was correct for the Minister to use it even though the regulation had expired. If one takes that view one would say on the view of the adequacy of the factor, as fixed, that I shall express, that the Minister correctly used an incorrect prescribed factor. On this view an appeal would lie under (c) of s. 23.

Which view should be taken? In my view simply looking at sub-s. 23(1)(c) alone the latter is the more natural meaning. However, if I am right in my view of the meaning in the Act of the word “compensation”, and that the aim of s. 23 is the correcting of the quantum of an amount fixed as compensation which is inadequate, howsoever arrived at by the Minister, it follows that a competent appeal in any event lay notwithstanding the mishap.

In any event no argument that the Minister’s determination was a nullity was put forward or relied upon by either party either in this Court or the court below. All that occurred was that the expiration of the regulation before the date of the determination came to light late in the hearing of this appeal and there was some speculation between the court and counsel as to possible consequences. In my view it was then too late for counsel for the appellant to rely on it and he did not attempt to do so. Counsel on both sides seemed appalled at the thought of proceedings having to recommence virtually de novo. Understandably so.

Incidentally, the expiration of the regulation by effluxion of time would have afforded an ad hoc additional argument against the appellant’s argument that the appellate court at first instance was not entitled to “alter the factor” as this would be to amend a regulation.

I now come to the matter of the increase awarded by the learned judge at first instance namely an increase from K200,000 to K290,500. The appellant before this Court says that there is no evidence to justify such an increase. In my view there is ample evidence.

There was expert evidence before the learned trial judge which was not contradicted and which he was entitled to accept that profits for the years ending 30th June, 1974, 30th June, 1975, 30th June, 1976 and 30th June, 1977 were respectively K22,249, K18,069, K77,057 and K123,362 and that for the six months ending 31st December, 1977, the profit was K68,837 with every indication that that rate would be sustained in subsequent years then to come. In consequence the steep rise indicated, which took place in the middle of the five year period in question, had the effect of making the average annual net profit for those five years quite an inadequate reflection of profits to be expected in the three to five years following acquisition, and the use of such average annual net profit was no way to arrive at the money value of the plantation at the relevant time. There was evidence from one Geoffrey Morley Cottrell that in establishing the value of a particular business it is usual to have regard to future maintainable profits. This gentleman gave evidence, inter alia, that a fair calculation of value of businesses of a similar type to the plantation in question would be to take the equivalent of four or five times future maintainable profits after tax, and that in the case of the plantation in question, for reasons that he gave, the multiplier should be nearer to five.

If one takes the profit for the year ending 30th June, 1977, at K123,362 and the profit of K68,837 for the immediately ensuing six months, together with the evidence to the effect that there was every indication that the new level of profits would be sustained for several years it becomes reasonable to work on an annual net profit of about K120,000. Allowing for tax of 33 1/3 per cent this leaves an annual profit after tax of about K80,000. If one takes a multiplier of four years one arrives at a sum of K320,000 which is somewhat more than the learned judge at first instance awarded.

Additionally, if more were needed, there was a document in evidence which emanated from the Valuer-General himself which tended to confirm that a factor of four when applied to the prescribed annual average net profit would not give a fair valuation as at the time of acquisition. Such document was exhibit “4”.

This document contained the Valuer-General’s valuation and was put in evidence by counsel for the Minister for Lands at the hearing before the appellate court of first instance, with the evident intention on the part of such counsel of confirming the valuation by viva voce evidence of the Valuer-General himself. Counsel then changed his mind, the Valuer-General was never called, and the contents of the document were never confirmed as intended. In these circumstances his Honour the learned judge at first instance took the view that insofar as he could use the contents of the document he could use them against the Minister as containing admissions against interest, but not against Mr. Frame, as the contents had not been confirmed, or admitted by Mr. Frame. Counsel for the Minister at the hearing before this Court stated that he had “withdrawn” this document upon deciding not to confirm it. However he was not, insofar as it could be regarded as containing admissions, entitled to do that without the consent of the opposing party, and he did not have consent. Accordingly the learned judge at first instance was right in the view he took of the evidentiary nature of the document.

The document contained the following:

“One method of valuing plantations is to assess average annual profit and multiply this by a factor (years purchase) as revealed by sales. The annual profit is based on prices averaged over a number of years. In times of high prices, such as at present, an additional allowance is made for super profit. The factor used for coffee plantations, after allowing for super profit, is slightly in excess of 4. Plantations are being purchased by the Government at these prices. Private sales which have been analysed have revealed figures ranging from 3.5 to 7. These figures are based on production costs at the time of sale. The most recent sales have been very high and have undoubtedly been influenced by the existing high crop prices and the availability of finance.

...

It is respectfully recommended that Your Excellency determine under the provisions of Section 20(d) of the Lands Acquisition Act that the factor be fixed at four (4) for those particular parcels of land known as ‘Kama Plantation’, being more particularly described in the schedule hereunder.”

The declaration of compulsory acquisition dated 9th May, 1978, was published in National Gazette G41 dated 15th May, 1978, and the Valuer-General’s report to the Governor-General was dated 19th May, 1978. The relevant time for the calculation of compensation is the date of the conversion of the respondent’s right from a right in land to a right to compensation, which is the date of publication namely 15th May, 1978. By his report to the Governor-General dated four days later the Valuer-General said that private sales which had been analyzed revealed factor figures ranging from 3.5 to 7 and that “the most recent sales have been very high ...”

On the face of the report those “very high” sales should have been taken into account but were not. In Willoughby Municipal Council v. The Valuer-General[dccxvii]10 it was held by the learned judge in the New South Wales Land and Valuation Court that the court should not be entitled to cut down the figures to the limit. And in Commissioner of Succession Duties v. Executor Trustee and Agency Company of South Australia Ltd. and Ors[dccxviii]11 Dixon J. stated that “doubts are resolved in favour of a more liberal estimate”.

There was also the matter of the Coffee Industry Fund, a stabilization fund into which the respondent had paid, which would have tended, once coffee prices had risen, to maintain profits over subsequent years and, as the Secretary of Primary Industry said “have a powerful influence on subsequent values of properties” (see appeal book p. 158). There were other things also, supporting the reassessment of the learned judge at first instance.

It is not quite clear to me how his Honour arrived at his figure of K290,500 and from that, as I think occurred, derived a factor of “a little over five” which final step, I might add, was one which in my opinion it was not necessary for his Honour to take. I was at first intrigued to notice that the mean between the two extreme factors mentioned by the Valuer-General is “a little over five”, but I am sure his Honour did not arrive at his result by any such simplistic calculation. In my view his Honour’s conclusion as to the “quantum” of compensation is well justified by the evidence. The onus is on the appellant and in my view that onus has not been discharged.

I would add that I wholeheartedly agree with the view expressed by my brother Pratt J. as to representation in this Court of Ministers of State in matters such as this. Where, as here, refined arguments are to be advanced involving fundamental principles, with very serious potential both for individuals and for this country, then if the State Solicitor is unable himself to appear as counsel, he should engage senior counsel of experience and high standing.

I would dismiss the appeal, and the application for leave to appeal, and confirm the determination and order of the judge at first instance. The respondent should have his costs. I would certify that the employment of senior counsel from Australia was reasonable, and that costs should be allowed accordingly.

KAPI J.: This is an appeal from a decision of the National Court. The matter came before the National Court by way of an appeal under s. 23 of the Lands Acquisition Act 1974. The appeal to the National Court was from a determination of compensation fixed by the Minister for Lands under the Act. The facts are as follows: Mr. Frame, the respondent, owned a plantation known as Kama Coffee Estate in the Eastern Highlands. On 15th May, 1978, the National Government compulsorily acquired portions of the said property under the Act.

Under s. 12 of the Act, a person whose land is acquired by the Government has a right to compensation at the time of the acquisition of his land. Prior to the acquisition of the property, the parties had been negotiating the price for the property. In these negotiations Mr. Frame suggested the sum of K220,000 for this land. The Minister for Lands determined the amount of compensation for this land at K200,000 under s. 22 of the Act. It was from this determination that Mr. Frame appealed to the National Court.

On appeal, the National Court fixed the average annual net profit at K54,317 and fixed a factor of 5.348, an increase from a factor of 4, which had been fixed by the Governor-General under a regulation pursuant to the Act. By multiplying these two figures, the National Court awarded the sum of K290,500. It is from this determination that the Minister for Lands has appealed to this Court.

The grounds of appeal are as follows:

1.       The decision of the judge is wrong in law in that it is contrary to s. 53 and s. 68 of the Constitution.

2.       The judge erred in law in that his Honour wrongly applied s. 19 of the Lands Acquisition Act 1974.

3.       The order of the judge is wrong in that it is against the weight of the evidence.

There is a ground of application for leave to appeal but both counsel at the hearing of this appeal did not rely on this ground in support of their case and so I do not consider it in my judgment.

This appeal raises one fundamental question and that is, what is the measure of compensation provided for under the Lands Acquisition Act? Before considering the provisions of the Lands Acquisition Act, it may be helpful to look at the existence of legislation before the Lands Acquisition Act to see the measure of compensation provided for by law in relation to property which is compulsorily acquired. The starting point is the Land Act 1962. Part III of that Act deals with the acquisition of land. Compulsory acquisition of land is for a wide range of public purposes set out under the Act. The right to compensation is conferred on the owners of land by s. 20 which is in similar terms to s. 12 of the Lands Acquisition Act. Part X, Div. 3, sets out the principles on which compensation is assessed. Section 96 of the Land Act sets out the principles of assessment in the following terms:

“96.

(1)      In the determination of the amount of compensation payable in respect of land acquired by compulsory process under this Act, regard shall be had to—

(a)      the value of the land at the date of acquisition;

(b)      the damage (if any) caused by the severance of the land from other land in which the claimant had an interest at the date of acquisition; and

(c)      the enhancement or depreciation in value of the interest of the claimant, at the date of acquisition, in other land adjoining or severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.

(2)      In determining the value of land acquired under this Act, regard shall not be had to any increase in the value of the land arising from the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.

(3)      Where the value of the interest of the claimant in other land adjoining the land acquired is enhanced or depreciated by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, the enhancement or depreciation shall be set off against, or added to, as the case requires, the amount of compensation otherwise payable to the claimant.” (Emphasis mine.)

I am not aware of any authority in this jurisdiction on the interpretation of this section. However it seems to me that the principles for assessing compensation set out under s. 96 of the Land Act are somewhat similar to ss. 49 and 63 of the Lands Clauses Consolidation Act, 1845 of Great Britain. It is only necessary to set out s. 63 of that Act:

“In estimating the purchase money or compensation to be paid by the promoters of the undertaking, in any of the cases aforesaid, regard shall be had by the justices, arbitrators, or surveyors, as the case may be, not only to the value of the land to be purchased or taken by the promoters of the undertaking, but also to the damage, if any, to be sustained by the owner of the lands by reason of the severing of the lands taken from the other lands of such owner, or otherwise injuriously affecting such other lands by the exercise of the powers of this or the special Act, or any Act incorporated therewith.”

The measure of compensation determined by juries under s. 49 of the Lands Clauses Consolidation Act, 1845 is the same as under s. 63. See Holt v. The Gas Light and Coke Company[dccxix]12 per Blackburn J. In interpreting the Lands Clauses Consolidation Act, 1845 Fletcher Moulton L.J. in In re an Arbitration between Lucas and The Chesterfield Gas And Water Board[dccxx]13 said:

“The principles upon which compensation is assessed when land is taken under compulsory powers are well settled. The owner receives for the lands he gives up their equivalent, i.e., that which they were worth to him in money. His property is therefore not diminished in amount, but to that extent it is compulsorily changed in form. But the equivalent is estimated on the value to him, and not on the value to the purchaser, and hence it has from the first been recognized as an absolute rule that this value is to be estimated as it stood before the grant of the compulsory powers. The owner is only to receive compensation based upon the market value of his lands as they stood before the scheme was authorized by which they are put to public uses. Subject to that he is entitled to be paid the full price for his lands and any and every element of value which they possess must be taken into consideration in so far as they increase the value to him.” (Emphasis mine.)

The courts in England have worked out in various cases a number of matters which should be taken into account in assessing the value of land. It is not necessary to set these matters out in detail in this case. In my view, where compensation is assessed upon compulsory acquisition under the Lands Act 1962, as amended, the English cases dealing with the Lands Clauses Consolidation Act, 1845 would apply. However, it should be remembered that the principles of assessing compensation under the Lands Clauses Consolidation Act, 1845 were altered by the Acquisition of Land (Assessment of Compensation) Act, 1919, s. 2:

“In assessing compensation, an official arbitrator shall act in accordance with the following rules:—

(1)      ...

(2)      The value of land shall, subject as hereinafter provided be taken to be the amount which the land if sold in the open market by a willing seller might be expected to realise ...” (Emphasis mine.)

In Horn v. Sunderland Corporation[dccxxi]14 Sir Wilfrid Greene M.R. in interpreting the Acquisition of Land (Assessment of Compensation) Act, 1919, said: “It will be seen at once that this principle of valuation differs from that adopted under the Lands Clauses Acts since the test adopted is that of a willing seller in the open market.” (Emphasis mine.)

Scott L.J. in the same case at p. 40 said:

“The main object of the Act of 1919 was undoubtedly to mitigate the evil of excessive compensation which had grown up out of the theory, evolved by the Courts, that because the sale was compulsory the seller must be treated by the assessing tribunal sympathetically as an unwilling seller selling to a willing buyer. The word ‘compensation’ almost of itself carried the corollary that the loss to the seller must be completely made up to him, on the ground that, unless he received a price that fully equalled his pecuniary detriment, the compensation would not be equivalent to the compulsory sacrifice. The 1919 Act, by its abolition of the ten per cent. addition for compulsory purchase, (s. 2, r. 1), and by its special rules in rr. 3, 4 and 5, undoubtedly contributed to the intended reform, but perhaps the provision which was most likely to check exaggerated prices for the land sold was the reversal by r. 2 of the old sympathetic hypothesis of the unwilling seller and the willing buyer which underlay judicial interpretation of the Act of 1845.” (Emphasis mine.)

The judicial interpretation of statutes in England on compulsory acquisition illustrate that the measure of compensation is provided by the statute and it is a matter of statutory interpretation. The question is whether the provisions of the Lands Acquisition Act are different from the principles of assessment of compensation under the Land Act 1962.

In addition to the matters set out in the Land Act 1962, a claim for compensation must also be considered together with the terms of s. 14 of the Human Rights Act 1972 (repealed) which provided, inter alia:

“(1)    No person shall be deprived compulsorily of his property except in accordance with law and on just terms.” (Emphasis mine.)

This was an important provision because whatever the measure of compensation provided under the Land Act, that compensation must be on just terms.

The provision of compensation provided for under the Land Act can be described as more sympathetic towards the owner of the land based on the idea of the unwilling seller realizing a price on the open market evolved by the English courts and the requirement of just terms under the Human Rights Act.

I have been at pains to explain the law before the Lands Acquisition Act because, in my view, that will have a bearing on interpreting the provisions of the Lands Acquisition Act. As Lush J. said in South Eastern Railway Co. v. The Railway Commissioners[dccxxii]15:

“... while we are to collect what the legislature intended from what it has said, we must look, not at one phrase or one section only, but at the whole of the Act, and must read it by the light which the state of the law at the time ... throws upon it.” (Emphasis mine.)

I now consider the provisions of the Lands Acquisition Act 1974. This Act came into operation on 19th December, 1974. It is therefore a pre-Independence Act. The Act was repealed by the Laws Repeal Act 1975 immediately before Independence and was adopted under sch. 2:6 of the Constitution. The Act was adopted in exactly the same terms as it was before Independence. The Act therefore has the same meaning as it had before Independence. However, the Act is to be read subject to the Constitution (s. 10 of the Constitution). I will consider later the impact or the effect of the Constitution on the Act.

A special set of circumstances led to the enactment of the Act. In order to understand and appreciate the provisions of the Act, the background to the Act must be looked at. In Thomson v. Lord Clanmorris[dccxxiii]16 Lord Lindley, M.R. said: “... in construing any other enactment, regard must be had not only to the words used, but to the history of the Act, and the reasons which led to its being passed. You must look at the mischief which had to be cured as well as at the cure provided.” (Emphasis mine.) See also Herron v. Rathmines and Rathgar Improvement Commissioners[dccxxiv]17; The Queen v. The Dean and Chapter of Hereford[dccxxv]18 and Green v. The Queen[dccxxvi]19.

The reason for the enactment of this Act goes back to the alienation of customary land from Papua New Guineans during the colonial days. This led to the shortage of land among many Papua New Guineans.

Alienation of land in Papua goes back to the time of the establishment of the British Protectorate in 1884 and in New Guinea this goes back to the early German traders in the late 1800s. This is not the place for tracing the history and the legislation under which land was alienated from the natives. This can be found in work by other people such as:

1.       Article by Peter Lalor, former Public Solicitor and a judge of this Court—“Land Law and Registration”, Fashion of Law by Brown, p. 137.

2.       Land Between Two Lands by Peter G. Sack.

Alienation of land during this period led to much dispute over ownership between the Government and the traditional owners of land during the Australian administration. It is not necessary to go through the decided cases which are now reported in our law reports. Some of these cases illustrate the ignorance of technical procedures and documents in relation to purchase of land by the native people. This led to a feeling of frustration towards the Government and the expatriate landowners. In many instances this led to a breach of the law as in the East New Britain area in the early 1970s. The murder of the District Commissioner of East New Britain, Jack Emmanuel, was deeply rooted in land problems.

The breach of the law because of this land problem was a constant worry to the administration. This was one of the major reasons for the establishment of the Commission of Inquiry into Land Matters. It is unnecessary to refer to the report in detail. The nature of complaints and the frustrations of the people were expressed by the Commission:

“It is apparent that many groups are short of land and/or deeply aggrieved at the way land was alienated in the first place. In many areas they have been complaining through official and legal channels for a very long time. In some places their patience is exhausted and direct action, by occupying the plantation, is taking place.”

(See Commission of Inquiry into Land Matters Report, 26th October 1973, p. 50 par. 4.12.) I have referred to this report only because it correctly states the historical background which led to the Lands Acquisition Act. It is significant to bear in mind this historical background. The main aim of this Act was to overcome the shortage of land, and lawlessness. This was intended to benefit the people of this country. This is borne out by s. 1 of the Act which sets out the purpose of the Act:

“(a)    making land available to non-overseas persons—

(i)       for subsistence farming where other land for that purpose is insufficient in any area; or

(ii)      for economic development so that they may share in the economic progress of Papua New Guinea; or

(b)      for the resettlement of residents of urban areas; or

(c)      for any educational, social welfare or community development purpose where other suitable land is either unavailable or insufficient,

so as to implement the policies of the Government to develop the rural areas of Papua New Guinea and to assist, where necessary, the non-overseas residents of the urban areas of Papua New Guinea to achieve a better standard of living.”

As will be seen from the consideration of the provisions of the Act, there is a shift away from the more sympathetic view towards the owner of property as provided for in legislation before this Act, such as the Land Act and the Human Rights Act.

WHAT IS THE MEASURE OF COMPENSATION PROVIDED UNDER THE ACT?

The measure of compensation under this Act cannot be the same as provided for by the Land Act 1962, as amended. First, the Parliament chose to pass a different Act from the Land Act. If the principles contained in the Land Act were intended to apply, the Parliament would simply have amended the Land Act to include the type of compulsory acquisition of land as provided for in the Lands Acquisition Act. By passing an entirely different Act it intended a different measure of compensation. Determination of compensation under s. 19 of the Lands Acquisition Act differs greatly from s. 96 of the Land Act. The Parliament’s intention to differ from the existing laws of assessment of compensation is put beyond doubt by s. 16 of the Lands Acquisition Act, which is in the following terms:

“Notwithstanding the provisions of Section 14 of the Human Rights Act 1972 and any other law, the succeeding provisions of this Part apply to all land acquired and to be acquired under this Act.” (Emphasis mine.)

This section specifically excludes the application of s. 14 of the Human Rights Act. That being so, no concept of “just terms” can be read into the Act. To do so would be against the clear intention of s. 16 of the Act. The Human Rights Act was repealed by the Statute Law Revision (Independence) Act 1975 on 15th September, 1975. The reference by s. 16 of the Lands Acquisition Act to s. 14 of the Human Rights Act which is now repealed does not affect the construction of the Lands Acquisition Act. The Act is to be construed with the repealed provision of the Human Rights Act. The authorities referred to by my brother Pratt support this view.

In my view it is misleading to attempt to give any descriptive name or definition to the word “compensation” under the Act, such as “adequate”, “fair” or “just”. It is clear it cannot be “just”. The Act itself does not give a descriptive name. I do not intend to give it one either. Whatever it is, the measure of compensation is in accordance with the machinery provided under s. 19 of the Act.

Section 16 excludes any other measure of compensation provided by any other law. The measure of compensation is provided for by Pt. III, Div. 2, of the Act. It seems to me to be inconsistent to suggest a different meaning to the word “compensation” other than the compensation provided for by the formula in Pt. III, Div. 2, of the Act.

As I read the Act there is only one way of assessing compensation and that is under s. 19 of the Act. Under s. 12 of the Act where land or interest in land is compulsorily acquired the owner’s right is “converted into a right to compensation under this Act”. Compensation under the Act is provided for under s. 19 of that Act. Section 19 commences as follows:

“(1)    The Government shall, in respect of any land acquired by compulsory process under this Act, pay by way of compensation for that land ...” (emphasis mine), and then the section goes on to provide the formula for the different types of land that may be acquired. Section 23 of the Act provides for grounds of appeal from the determination of compensation by the Minister under s. 19 of the Act. These grounds relate to the matters set out under s. 19 of the Act which provide the formula for determining compensation. Section 34 of the Act also begins with the following words:

“(1)    Where the amount of compensation to which a person is entitled has been determined under Section 19, the amount shall ...” (Emphasis mine.)

It is clear from all these provisions that compensation referred to under this Act is compensation pursuant to s. 19 of the Act. In view of the clear terms of s. 16 of the Act no other meaning can be attributed to the word “compensation” as far as the measure of compensation is concerned.

In my view no assistance can be gained by going to the English cases on the definition of “compensation”. As I have tried to point out earlier in my judgment the English cases deal with different statutory provisions to those of the Lands Acquisition Act. Legislation in England is similar to the Land Act 1962 and the basis of compensation is on the “value of land”. The word “compensation” cannot mean the same under the Lands Acquisition Act. Our legislature intended something altogether different in the Lands Acquisition Act.

Even in England the measure of compensation under the Lands Clauses Consolidation Act 1845 is different from that under the Acquisition of Land (Assessment of Compensation) Act 1919.

In The Edinburgh Street Tramways Company v. Torbain[dccxxvii]20 Lord Blackburn said:

“I quite agree that in construing an Act of Parliament we are to see what is the intention which the Legislature has expressed by the words; but then the words again are to be understood by looking at the subject-matter they are speaking of and the object of the Legislature, and the words used with reference to that may convey an intention quite different from what the self-same set of words used in reference to another set of circumstances and another object would or might have produced.” (Emphasis mine.)

The word “compensation” cannot be given any other meaning than it was intended to have with the historical background leading to the enactment of the Act. The meaning intended is clearly expressed in s. 19 of the Act.

It now remains to be seen what the principles of assessing compensation are under s. 19 of the Act. This is a matter of interpretation of the Act.

I now turn to consideration of s. 19 of the Act. This section provides for the calculation of compensation to be paid for the various types of land that may be acquired under the Act. There are six types of land which may be acquired and for each type of land acquired the Act sets out how compensation is to be calculated. In this case we are concerned with s. 19(1)(c)(i) of the Act. That section, insofar as it is applicable, provides, inter alia, as follows:

“19.    (1)      The Government shall, in respect of any land acquired by compulsory process under this Act, pay by way of compensation for that land—

(c)      in the case of land which has been developed or partly developed for the purpose of returning an income and which at the date of acquisition of the land—

(i)       has been in production for not less than five financial years—the product of the average annual net profit received in relation to that land over the five financial years immediately preceding the date of acquisition, as determined by the Valuer-General, and the prescribed factor for the land.” (Emphasis mine.)

“(3)    The Valuer-General shall—

(a)      in determining the average annual net profit for the purposes of Subsection (1)(c)(i) ...

have regard to the accepted principles of valuation practice and shall have regard to the current value of any improvements on the land and any chattels the property of the owner or owners of the land being used on the land in connexion with the development of, or production from, the land.”

This is the formula for arriving at the compensation under this provision. Compensation is average annual net profit times the prescribed factor (C = AANP X PF). It is necessary to look at each of the elements in the formula separately.

(a)      “... the average annual net profit received in relation to that land over the five financial years immediately preceding the date of acquisition ...” (AANP).

The annual net profit for each year is determined in accordance with s. 21 of the Act. Section 19(1)(c)(i) of the Act specifically refers to average annual net profit in relation to the land over the five financial years immediately preceding the date of acquisition. It is irrelevant what was the annual net profit of this land at the time of acquisition, or annual net profit following the date of acquisition. On appeal to the National Court, the trial judge calculated the average annual net profit over this period at K54,317. There is a right of appeal by a claimant on the determination of annual net profit, see s. 23(1)(b) of the Act. There has not been a ground of appeal or cross-appeal in relation to the determination of the average annual net profit and therefore this finding must stand undisturbed. As there is no issue about the determination of the average annual net profit, I need not consider it in detail. However, the principles for determining the annual net profit are set out under ss. 19(3) and 21 of the Act. Whether or not the figure of K54,317 was determined according to the proper principles is not open to this Court to investigate. I say no more about it.

(b)      “... the prescribed factor ...” (PF).

On careful study of the Act, I find that the fixation of a factor by the Governor-General for purposes of compensation under this Act is a legislative enactment, that is, a statutory instrument made pursuant to the Lands Acquisition Act. Section 20 is to be read together with s. 44 of the Act. Under s. 44 of the Act the Governor-General may make regulations prescribing the matters which are set out under s. 44(1)(a) to (h) of the Act. One of the matters set out under s. 44(1)(f) of the Act is the prescribed factor to be used in determining compensation. Where the Governor-General, under ss. 20 and 44 of the Act, properly makes a regulation which is not inconsistent with the Act, such a regulation fixing the factor becomes a statutory instrument and therefore has the same force and effect as that of the provisions of the Act itself. The power given to the Governor-General to make regulations is a delegation of legislative power by the Parliament under the Act. See Ch. 13 of Craies on Statute Law (7th ed.) on “Delegated Legislation”.

When the prescribed factor is fixed by the Governor-General in a statutory instrument and is not inconsistent with the Act, that is the end of that matter. It is the law. It seems to me that the court has no right to question the adequacy of the factor fixed by a statutory instrument made under the Act. In Carltona, Ltd. v. Commissioners of Works and Ors.[dccxxviii]21 the Court of Appeal was dealing with a Defence (General) Regulation where the Commissioners of Works requisitioned the premises of a factory under the regulations. Lord Greene M.R. said this:

“It has been decided as clearly as anything can be decided that, where a regulation of this kind commits to an executive authority the decision of what is necessary or expedient and that authority makes the decision, it is not competent to the courts to investigate the grounds or the reasonableness of the decision in the absence of an allegation of bad faith. If it were not so it would mean that the courts would be made responsible for carrying on the executive government of this country on these important matters. Parliament, which authorises this regulation, commits to the executive the discretion to decide and with that discretion if bona fide exercised no court can interfere. All that the court can do is to see that the power which it is claimed to exercise is one which falls within the four corners of the powers given by the legislature and to see that those powers are exercised in good faith. Apart from that, the courts have no power at all to inquire into the reasonableness, the policy, the sense, or any other aspect of the transaction.” (Emphasis mine.)

The Master of Rolls in this passage referred to the question of “bad faith” because the regulations require that the requisitioning authority, in exercising the power, should consider the interests of public safety, defence of the realm and supplying essential services to the life of the community. In the instant case, the Governor-General is given the legislative power to fix the factor. There is nothing in the Act which either limits or gives any guide lines as to how a factor may be fixed in the regulation. The report of the Valuer-General under s. 20 of the Act is not subject to any of the principles under s. 19(3) of the Act which governs the determination of annual net profit, improvements, and the report by the Valuer-General under s. 19(1)(c)(iii) of the Act. This is not surprising as the Parliament has unlimited power of law-making. It may make any laws as deem to it to be proper. The law-making power of fixing the factor has been delegated to the regulations. No question of the invalidity of the regulation arises.

WHAT THEN IS THE RIGHT OF APPEAL UNDER S. 23(1)(C) OF THE ACT?

In order to understand s. 23(1)(c), it is necessary first to consider the functions of the Minister under the Act in relation to calculation of compensation. Under the principles for determining the amount of compensation under s. 19 of the Act, the Minister is only referred to in relation to s. 19(1)(c)(iii). Under this provision it is the function of the Minister to fix the amount of compensation after receiving a report from the Valuer-General in relation to land under this provision. In relation to other types of land under s. 19 the Minister is not referred to. However, under s. 22 of the Act, the Minister determines the compensation for each type of land by using the respective formulae set out under s. 19. In the case of s. 19(1)(c)(i) the Minister uses the formula set out under this provision, that is, the product of the average annual net profit which is determined by the Valuer-General and the prescribed factor which is fixed in the regulation by the Governor-General.

It is clear that the Minister does not determine the average annual net profit and prescribed factor. It is obvious that he merely uses the figures that are provided by the Valuer-General in the case of the average annual net profit, and by the Governor-General in the case of the prescribed factor. The right of appeal set out under s. 23(1)(c) only relates to the use of these figures. In my opinion the right of appeal here is not in relation to the determination of the prescribed factor, which is made the subject of regulations under the Act.

It is significant to contrast the terms of s. 23(1)(a) and (b) on the one hand, and s. 23(1)(c) of the Act on the other. Section 23(1)(a) and (b) are appeals against determinations and s. 23(1)(c) against use only. They raise different issues. It follows that the ground of appeal under s. 23(1)(c) is not against the determination of the prescribed factor, but the use of the correct prescribed factor. The appeal is against the Minister’s use of the factor and not the determination of the factor. The Minister does not determine the factor. The determination of the factor by the Governor-General in the regulation is not in question.

Appeal against determination of annual net profit and improvements under s. 23(1)(a) and (b) is possible because there are principles by which the Valuer-General can determine these matters. A court, exercising the power of review, can determine whether annual net profit and improvements are incorrectly determined by applying these principles (s. 19(3) of the Act).

If s. 23(1)(c) was interpreted to mean an appeal against the determination of the factor by the Governor-General, then what principles should guide the court in determining whether a factor is too low or too high? Factor is not defined in the Act. I am not aware of any common law principle known as “factor” for purposes of determining compensation upon compulsory acquisition. Principles set out under s. 19(3) of the Act do not apply to the report of the Valuer-General under s. 20 of the Act. In my view the trial judge fell into error when he said, on p. 9 of his judgment: “In my opinion the setting of the factor is very much a valuer’s task.” The setting of a factor is a matter of legislative enactment by regulation.

If the legislation intended the setting of a factor to be a matter for the Valuer-General, it would have provided for the determination of it in the same way as the determination of the annual net profit, and the improvements.

Where a factor is validly fixed under a regulation there can be no right of appeal. This is consistent with s. 19(1)(a) of the Act. The amount to be paid for undeveloped land is a matter of regulation under s. 44(d) of the Act. There is no right of appeal provided for under the Act for the same reason that where a regulation is validly made, no court has power to question its reasonableness. Again, if the Act had intended this matter to be made a subject of appeal, it would have made the same provision as for the determination of annual net profit and improvements.

To interpret s. 23(1)(c) as is contended by counsel for the respondent would lead to a conflict of well established principles. That is, it would be inconsistent for this Act, on the one hand, to delegate the power of legislating the fixation of the factor to the Governor-General through regulation, and at the same time giving the court the power to review the power of legislating the factor. It is a well settled principle of interpretation of statute that an Act should be interpreted as a whole so that, as far as possible, the clauses are in harmony with one another. See Maxwell on Interpretation of Statutes (12 ed.) Ch. 9 “Construction to avoid collision with other Provisions”.

Having regard to the whole of the Act I am bound to come to the conclusion that s. 23(1)(c) does not allow an appeal against the determination of the factor, but against the Minister’s use of a factor other than the one provided for in the statutory instrument.

There is also another reason why I would not adopt the view that it is open to a claimant to appeal against the determination of the factor in the regulation. To do so would be reading into the Act the concept of value of land on the “open market”. In fact, the trial judge increased the factor on the basis of the evidence of Mr. Cottrell, the accountant, Mr. Frame and Mr. Jones. Briefly, the effect of their evidence is that the “market value” of coffee, and improvements, was high and was likely to be maintained for some time. The trial judge also referred to the report of the Valuer-General in which reference was made to the use of factors in government and private sales on the “open market” which were much higher than the factor of four.

What the trial judge did was against the very intention of this legislation. As I have pointed out earlier in my judgment, compensation provided for by the Land Act 1962 was compensation based on the “market value” of the land. By setting up a different formula under the Lands Acquisition Act it was the clear intention of the Act not to adopt the concept of price on the “open market”. The matter is put beyond all doubt when one refers to the Parliamentary debates on the introduction of the Bill in the then House of Assembly.

As to whether a court may look at Hansard or not is well settled. A court may not look at Hansard and the reasons for this rule are well stated in Beswick v. Beswick[dccxxix]22 per the judgment of Lord Reid. I am in agreement with the reasons for the rule. However, Lord Reid in Warner v. Metropolitan Police Commissioner[dccxxx]23 said:

“And the authorities show that it is generally necessary to go behind the words of the enactment and take other factors into consideration. That being so the layman may well wonder why we do not consult the Parliamentary Debates, for we are much more likely to find the intention of Parliament there than anywhere else ... I am bound to say that this case seems to show that there is room for an exception where examining the proceedings in Parliament would almost certainly settle the matter immediately one way or the other.”

The instant case is a unique legislation. I have been unable to find any other Act like it. It is also significant that the Act was intended to solve a serious shortage of land which led to the breach of the law in certain parts of the country. It was an Act passed by a House mainly of Papua New Guineans in an attempt to resolve the alienation of land during the colonial period. It is appropriate, therefore, to refer to Hansard to discover the intention of the House on the question of compensation on the “open market”, or “market value”.

Going to the debates, the following passage appears in Hansard on the second reading of the Bill. See Hansard vol. III, No. 33 (19th August to 23rd August, 1974), p. 4289. This is the speech by the then Minister for Lands, Mr. Thomas Kavali:

“Before looking at the clauses of the Bill, I wish to make a few preliminary points. Members might wonder why the Bill sets up special machinery for assessment of compensation, instead of using the principles for compensation set out in the Land Act 1962. There are a number of reasons for this. The first reason is the Land Act 1962 requires consideration of the ‘value of the land’. This refers to the market price of the land and its improvements. The concept of a ‘market price’ is not appropriate, firstly because the Government has restricted transfers of plantation land between expatriates, so there is no open market for plantation land, and secondly because the market price does not represent a just value to Papua New Guineans in all the circumstances. It was for these reasons that the Commission of Inquiry into Land Matters expressly rejected the concept of a ‘free market price’ for the land and improvements as the basis for compensation.”

A little later on Mr. Kavali went on to say:

“In determining the value of a property, the Government cannot simply look at what is fair for the property owner to receive. It must also look at what is fair for Papua New Guineans to pay. Otherwise the price of properties will be beyond the reach of many Papua New Guinean groups. A country on the verge of independence is entitled to prefer the rights and interests of its citizens to those of expatriates which were acquired during the colonial period. It is for this reason that Section 14 of the ‘Human Rights Act 1972’ has been excluded.”

It is clear from all this that there is no room for the value of land on the open market. This cannot be a ground for appealing against the fixation of factor.

It is also clear that the government would legislate on the factor without restriction. This seems to me to be the only explanation why principles of valuation under s. 19(3) do not apply to the fixation of factor.

It is also clear that there is no room for the concept of “just terms” and there is no room for appealing against the factor on the basis that the Governor-General did not have proper regard to the market value of the land in the regulation.

The only instance where a claimant may appeal for not having regard to principles of valuation, proper value of improvements and assets, is in the determination of the annual net profit (see s. 19(3) and s. 23(1)(a) and (b) of the Act).

The right to compensation under this Act was conferred on Mr. Frame on the date of the acquisition of his land, which was 15th May, 1978, the date on which the declaration of compulsory acquisition was gazetted. By 15th May, 1978, the Minister had already received the offer by Mr. Frame to dispose of this property for K220,000. This offer was contained in a letter dated 14th November, 1977, addressed to the Director of the Department of Natural Resources by the solicitors for Mr. Frame.

The factor for this land was fixed by the Governor-General in Regulation No. 15 of 1978. This regulation came into operation on 6th July, 1978, the date on which it was published in the Government Gazette. Section 44(2)(b) of the Lands Acquisition Act, provides that the regulation fixing the factor expires at the end of twenty-one sitting days of the Parliament after the making of the regulation unless renewed by a resolution of the Parliament. This regulation expired before the date of determination which was in November 1978 and under s. 44(3) of the Act it is to be regarded as repealed. However, in my view this is of no consequence. At the time the regulation came into force and during the period of its existence Mr. Frame had a right to compensation and the factor to be used was four under the regulation. He had a claim. In my view it is of no consequence that the actual determination by the Minister was made after the expiration of the regulation. It is also of no consequence that the appeal to the National Court was determined after the regulation had expired and similarly it is of no consequence that the Supreme Court is now considering the appeal after the date of the expiration. The relevant time is not at the time of the determination of the appeal to the National Court, or to this Court, but at the time the regulation came into force and during its existence. The repeal of the regulation does not affect its previous operation and the right acquired at the time of its existence. See Interpretation (Interim Provisions) Act 1975, ss. 63 and 67.

Admittedly, it would be unfair for a claimant to have no right of appeal on the fixation of factor. However, the Parliament has power to pass any law which may seem to be unfair to others, including the courts. The question is not what the courts think is fair, but what is the intention of the Parliament as expressed in the Act. The provisions of the Act are to be understood by the subject matter they deal with and the object of the Parliament passing the law. In this case, the Act deals with the serious shortage of land amongst Papua New Guineans and the buying back of land alienated during the colonial period. With this background and the provisions of the Act which I have considered, it is clear that the Government has control over the prices it would offer for land under this Act as far as fixation of factor is concerned.

Having come to the conclusion I have reached, I must give effect to it whether I like it or not. The words of the Earl of Halsbury L.C. are fitting in Cooke v. The Charles A. Vogeler Company[dccxxxi]24:

“But a court of law has nothing to do with the reasonableness or unreasonableness of a provision ...”

On the same page he went on to say:

“If the law has intended, and has expressed its intentions ... no Court has any jurisdiction to disregard what the Legislature has enacted. And if, on the other hand, it is manifest that the language of the statute does not reach the case supposed, no Court has jurisdiction to enlarge the ambit of ... legislation beyond what the Legislature has permitted.”

The construction of this Act, which I have given so far, applied before the Constitution came into existence. it applied to all persons. However, in reality the Act was intended only to acquire land from expatriates for distribution among Papua New Guineans. It did not apply to Papua New Guineans because customary land does not come under the Act.

WHAT IS THE IMPACT OF THE CONSTITUTION ON THE ACT?

As I have pointed out earlier, this Act was adopted under Sch. 2:6 of the Constitution. The Constitution adopted the Act in its original meaning, which has not changed. However, the Act is to be construed subject to the Constitution (s. 10 of the Constitution). This is a general provision and must not be used to give blanket application of the provisions of the Constitution to any Act. The specific provisions of the Constitution dealing with the same subject matter must be closely examined.

Section 53 of the Constitution deals with compulsory acquisition and compensation. On compensation, s. 53(2) provides that:

“just compensation must be made on just terms ... giving full weight to the National Goals and Directive Principles and having due regard to the national interest and to the expression of that interest by the Parliament, as well as to the person affected.”

It is significant that s. 53(7) restricts the application of s. 53 to citizens only. The importance of the application of this section is contained in this sub-section. It applies to the recipient of compensation, namely the citizen. It is not a blanket application to all persons like s. 14 of the Human Rights Act. Section 53(7) of the Constitution goes on to provide that power to compulsorily acquire property of a person who is not a citizen, and the protection of the rights of such persons, shall be provided for by an Act of the Parliament.

It is clear from this that the Government’s power of compulsory acquisition, and the provisions of compensation for non citizens, is not to be found in the Constitution but in Acts of Parliament. The Constitution adopted two pre-Independence laws, which also apply to non citizens, being the Land Act 1962 and the Lands Acquisition Act 1974. In this case we are concerned with the Lands Acquisition Act.

While the Government intended to acquire land from expatriates only under the Act before Independence, many of these people have now become naturalized citizens after Independence. So that, after Independence, in acquiring alienated land under this Act, the Government, in some instances, will acquire land from naturalized citizens. The respondent in this case is a naturalized citizen. This is significant because there is clear discrimination between a non citizen and a citizen as far as protection from unjust deprivation of property is concerned.

Whether a person is a citizen or not, any claim for compensation under the Act must begin with the provisions of the Act, for it applies to all persons. The principle of assessing compensation is the same for all persons under the Act. When an amount of compensation is reached under the Act, that is as far as the Act can go. Where the claimant is a citizen, compensation calculated under the Act must be read subject to the provisions of the Constitution (s. 10 and s. 53 of the Constitution). Under s. 53(2) of the Constitution the court can inquire further as to whether the amount of compensation reached under the Act is “just compensation made on just terms”.

In the case of a claim for compensation by a non citizen, the claim must be calculated only by the scheme provided for calculation of compensation under the Act. This compensation is not subject to s. 53(2) of the Constitution.

It can be said that compensation claimed by a citizen under the Act can be measured against the yardstick provided under s. 53 of the Constitution, whereas in the case of a non citizen, he does not have such protection.

It could be said from this that compensation claimed by a citizen pursuant to the provisions of the Constitution may be different from compensation claimed by a non citizen pursuant to the Act alone.

It is now necessary to consider the effect of s. 68(4) of the Constitution. Mr. Frame, the respondent, is not an automatic citizen but is a naturalized citizen. Section 68(4) of the Constitution must be considered as to whether it deprives Mr. Frame of the protection of the terms of s. 53 of the Constitution or not. Counsel for the appellant submits that under s. 68(4) of the Constitution, during the first five years after Independence, only automatic citizens may claim the protection provided for by s. 53 of the Constitution. He submits that since Mr. Frame is a naturalized citizen and that his claim is made within the first five years after Independence, compensation under the Act is not subject to the provisions of s. 53 of the Constitution.

Counsel for the respondent, on the other hand, submits that under s. 68(4) of the Constitution, it would be competent for the Parliament to pass a law depriving non-automatic citizens of the right to compensation in respect of the land resumed. He submits that the Parliament has not passed such an Act. He further submits that the acquisition of Mr. Frame’s land was made under the Lands Acquisition Act and that has only one meaning, and therefore s. 68(4) of the Constitution has no relevance.

With respect, I do not think that the submissions made by counsel for the respondent are correct. Section 68(4) of the Constitution does not require that an Act of the Parliament should make special provision for non-automatic citizens whose land is acquired during the first five years after Independence. The sub-section quite clearly says that citizens other than automatic citizens shall not have less rights than those accorded by law to non citizens. The right of compensation by naturalized citizens in the first five years after Independence is the same as the rights given to non citizens by the law. As I have pointed out earlier, the rights of non citizens are provided for under the Act.

It is quite clear from these provisions of the Constitution that the protection given under s. 53 of the Constitution was intended only for automatic citizens for the first five years after Independence. These provisions are consistent with the intentions of the founding fathers of our Constitution. They recognized that there was an element of control of the economy by foreigners and the impact of multi-national corporations on this country before Independence, and their desire was for Papua New Guinean automatic citizens to take control of their own economy after Independence. (Final Report of the Constitutional Planning Committee dated 13th August, 1974. See "Impact of Multi-national Corporations on Development” pars. 78-86 on pp. 2/10 to 2/11; and see "Protection from Deprivation of Property” pars. 85-91 pp. 5/1/14 to 5/1/15.) (See s. 24 of the Constitution.)

It is necessary to consider the effect of s. 55 of the Constitution in view of the fact that the rights that are conferred by virtue of s. 68(4) seem to differentiate between classes of citizens under the Constitution; that is, the rights conferred by s. 53 can only apply to automatic citizens, and not naturalized citizens, within five years after Independence. Section 55 of the Constitution provides that all citizens have the same rights, privileges, obligations and duties irrespective of race, tribe, etc. The question is whether s. 55 of the Constitution overrides the provision of s. 68(4). It appears that s. 68(4) of the Constitution has an overriding effect over s. 55 since s. 68(4) reads: “Notwithstanding anything in a Constitutional law ...” Section 55 therefore is to be read subject to the provisions of s. 68(4) of the Constitution.

Having regard to all these considerations, I have come to the conclusion that naturalized citizens, for the first five years after Independence, do not have the protection in terms of s. 53 of the Constitution by virtue of s. 68(4) of the Constitution.

Section 86(4) of the Constitution.

The view I have expressed, namely that the determination of the factor may not be appealed against, is even stronger in the light of s. 86(4) of the Constitution.

Under s. 20 of the Act, the Governor-General may fix a factor. He may do this after receiving the report from the Valuer-General. Section 86 of the Constitution sets out the functions of the Head of State (Governor-General):

“(2)    Except as provided by Section 96(2) (terms and conditions of employment), in the exercise and performance of his privileges, powers, functions, duties and responsibilities the Head of State shall act only with, and in accordance with, the advice of the National Executive Council, or of some other body or authority prescribed by a Constitutional Law or an Act of the Parliament for a particular purpose as the body or authority in accordance with whose advice the Head of State is obliged, in a particular case, to act.” (Emphasis mine.)

I would interpret this section in the following way. Where an Act of Parliament or organic law requires the Head of State to act in accordance with the advice of some authority, he may only act in accordance with that authority. In other words, he may only act in accordance with either one and not both. If the Act or organic law does not require the Head of State to act in accordance with the advice of a body or authority, then he shall act in accordance with the advice of the National Executive Council. The interpretation is in accordance with the decision of The State v. The Independent Tribunal; Ex parte Sasakila[dccxxxii]25. Under s. 144(4)(b)(i) of the Constitution, the Head of State, acting with, and in accordance with, the advice of the Prime Minister: “may dismiss a minister”. In the instrument of dismissal of Moses Sasakila, the instrument only required the advice of the Prime Minister and not that of the National Executive Council.

The question in this case is this: Is there any provision under the Lands Acquisition Act which requires or obliges the Head of State, as far as fixation of factor is concerned, to act in accordance with the advice of that body or authority?

Section 20 of the Act says that the Head of State may fix a factor “after receiving a report from the Valuer-General”.

First, I do not see that the Head of State is obliged to act in accordance with this report. There is no such clear intention expressed in the section or in any other part of the Act.

Secondly, a report is not advice to the Head of State. (See judgment of Frost, C.J. in The State v. The Independent Tribunal; Ex parte Sasakila (supra).

A report of the Valuer-General does not come within the words of s. 86(2) of the Constitution: “... or of some other body or authority prescribed by a Constitutional Law or an Act of the Parliament for a particular purpose as the body or authority in accordance with whose advice the Head of State is obliged, in a particular case, to act.”

It therefore follows from s. 86(2) of the Constitution that the Head of State shall act in accordance with the advice of the National Executive Council.

This is, in fact, what happened in the statutory instrument (regulation) fixing the factor for this case. The regulation recites: “Made by the Head of State, acting with and in accordance with the advice of the National Executive Council, after receiving a report from the Valuer-General, under the Lands Acquisition Act 1974.”

It follows, from the provision of s. 86(2) that the Governor-General acted in accordance with the advice of the National Executive Council. Under s. 86(4) and sch. 1:7 questions concerning the nature of that advice is beyond the power of this Court. In The State v. The Independent Tribunal; Ex parte Sasakila[dccxxxiii]26 Frost C.J., in considering the advice of the Prime Minister, said:

“The reason is that the Instrument not only recites the recommendation from the appropriate Tribunal, but goes further and recites, as an additional ground, that the Governor-General has acted with, and in accordance with, the advice of the Prime Minister, and as any question concerning the nature of that advice is beyond the power of this Court the prosecutor’s dismissal from his ministry must stand.”

In this case, the Governor-General acted in accordance with the advice of the National Executive Council. This Court cannot question the advice of the National Executive Council. The fixation of the factor must stand.

It has been suggested in argument that when the court changes the factor on appeal it is not questioning the advice of the Governor-General. I find this difficult to accept in view of the clear provisions of s. 86 and Sch. 1:7 of the Constitution. What the Governor-General does in this case is in accordance with advice. When the court questions the factor it is questioning the advice in accordance with which he has acted.

If the Parliament had intended to avoid the consequences of these provisions in the Constitution, it would have amended the Act so that this would not have been part of the function of the Governor-General. However, the Parliament did not intend that this should be so. This is entirely consistent with the construction I have given on the legislative nature of fixation of the factor and the right of appeal under s. 23(1)(c) of the Act.

Section 10 of the Constitution requires that all Acts are to be read subject to the Constitution. As far as the functions of the Head of State are concerned, the provisions of the Constitution will override any Act which might be inconsistent with it. It appears from s. 86 of the Constitution that the Head of State shall act only with the advice of the National Executive Council under the Lands Acquisition Act. Under s. 86(4) and Sch. 1:7 of the Constitution the advice according to which the Head of State is required to act cannot be questioned by any tribunal or court of law. In other words, the advice received cannot be questioned by any tribunal or court of law. In this case the advice received was that the factor should be four. In so far as appealing against this factor is concerned, if the Act gives the right of appeal this would be against the Constitution (s. 86, Sch. 1:7). So it follows from this reasoning that even if I am wrong about the right of appeal under s. 23(1)(c), the alternative view would be inconsistent with the Constitution and would be invalid to that extent. There is one exception to this; under Sch. 1:7 of the Constitution the jurisdiction of the Ombudsman Commission is not excluded.

However, under Sch. 1:21(b) of the Constitution, where the Governor-General acts in accordance with the will or opinion of the Queen, he is not subject to the jurisdiction of any person or authority including the Ombudsman Commission.

Reading the provisions of the Act in relation to fixation of factor by the Governor-General in the light of the Constitution (s. 10 of the Constitution) the legislature intended that the determination of the factor be given to the Head of State. The non-justiciability of this advice under s. 86 and Sch. 1:7 of the Constitution overrides any other contrary intention under the Act.

INVALIDITY OF THE ACT.

It is obvious from my reasoning so far that no question of the validity of the Act arises because there is nothing in s. 53 which applies to a naturalized citizen in the first five years after Independence. There is nothing in the Constitution which limits the power of the Parliament to pass a law, as it pleases, regarding the compulsory acquisition of property, and provision for compensation, in regard to a naturalized citizen within the first five years of Independence.

However, I am bound to consider the effect of s. 53 because the Act applies to both citizens and non citizens.

The legislative power is vested in the National Parliament (s. 100 of the Constitution). This power, however, is made subject to the other provisions of the Constitution. Where restrictions or limitations are placed by the Constitution, the Parliament may only legislate within these bounds; or where the Constitution provides for something, no Act of Parliament may be passed so as to be inconsistent with that provision. Where there is such inconsistency the Act, as to the inconsistency, is invalid and ineffective. This is because the Constitution is the supreme law. (Section 11 of the Constitution.)

What then is the nature of s. 53 of the Constitution?

Section 53(1) provides that no property of a citizen may be taken except in accordance with an Act or organic law and if that property is required for a public purpose. There are also other considerations, but it is not necessary to refer to these for the purposes of the present case. No question arises in this case on these matters because the compulsory acquisition was pursuant to an Act, the Lands Acquisition Act 1974, and that Act was amended by Act No. 43 of 1976 so that the purpose expressed in s. 1 of the Act is a public purpose. The amendment reads:

“(2)    For the purposes of Section 53 (protection from unjust deprivation of property) of the Constitution, the purpose expressed in Subsection (1) is a public purpose.”

The next matter for consideration is s. 53(2) of the Constitution. This is the crucial provision. It is in these terms:

“(2)    Subject to this section, just compensation must be made on just terms by the expropriating authority, giving full weight to the National Goals and Directive Principles and having due regard to the national interest and to the expression of that interest by the Parliament, as well as to the person affected.” (Emphasis mine.)

This is a unique provision because the Constitution provides for compensation to be paid to the citizen. It gives no room for the Parliament to legislate on the measure of compensation. Any Act of the Parliament which sets down anything less than this is to be regarded as inconsistent and therefore invalid.

This provision is different from the Australian Constitution. Section 51(xxxi.) of the Australian Constitution provides:

“51.    The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to ...

(xxxi.) The acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws.”

The Australian Constitution does not give a person entitlement to compensation. It merely gives the power to the Parliament to make a law which must provide for just terms. A person in Australia cannot make a claim on the provisions of the Constitution alone. That person must go to a law passed by the Parliament.

Under our Constitution, a citizen has a right to compensation which must be on just terms. When a citizen’s property is acquired pursuant to any existing legislation, that is, the Land Act and the Lands Acquisition Act, he does not have to go to those Acts for the assessment of compensation. If he does not agree with the assessment under the Act he simply makes his claim under s. 53(2) of the Constitution. In other words, where an Act also provides for assessment of compensation for citizens, like the Act under consideration, the citizen has two alternative ways of claiming. He may agree to accept the compensation provided for under the Act or claim for compensation under s. 53(2) as an independent claim. He may make his claim in accordance with procedures set out under the National Court Rules, or he may seek ad hoc directions from the court under s. 185 of the Constitution.

Consequently I find that s. 19 of the Act is not the only means a citizen has of claiming compensation. Section 19 therefore remains valid and has some work to do as far as non citizens and naturalized citizens within five years of Independence are concerned.

The approach I have taken in the construction of the Act and the Constitution is consistent with the approach of the majority decision of the High Court in The Australian Apple and Pear Marketing Board and Another v. Tonking[dccxxxiv]27. If s. 53 merely gave the power of making laws for acquisition of property on just terms, like the Australian Constitution, then the provision under s. 19 would be the only way of claiming. If that was the case then I would have no difficulty in finding that s. 19 is invalid, in which case it would be invalid for all purposes.

WHAT IS “JUST TERMS”?

I do not find it necessary to consider this in detail as the respondent is not entitled to “just terms” for the reasons I have already given. “Just terms” has been given judicial interpretation in the U.S.A. and Australia. This will form the basis of the meaning of “just terms” in this jurisdiction. However, under s. 53(2) of the Constitution, the courts must interpret this in the light of the National Goals and Directive Principles, and the national interest. This is an indication that “just terms” under the Constitution may not be the same “just terms” as understood by the courts in the U.S.A. and Australia.

Section 53 of the Constitution was clearly made discriminatory. The Constitutional framers gave consideration to the Lands Acquisition Bill. Their understanding of it was that it did not provide for “just terms”. Section 53 was put in to protect citizens. This is independent protection; it in no way changed the meaning of the Act as far as measure of compensation is concerned.

All this is evident in the report of the Constitutional Planning Committee dated 13th August, 1974, at p. 5/1/15. The court may have regard to this report under s. 24 of the Constitution.

“88.    After very careful consideration we have decided to recommend that the constitutional protection of property interests should be limited to our own citizens. The interests of foreign citizens can be protected in a number of ways by the Government of the day—by legislation such as that proposed for the establishment of the National Investment and Development Corporation, by agreement between the Government and particular enterprises, or by a general law concerning a certain type of property. Our aim is to give the Government of the day sufficient flexibility to deal with the acquisition of foreign owned property and payment for it in an appropriate way, according to the particular circumstances with which it is faced. We believe that this view is in line with the position taken by the great majority of countries of the Third World.

89.     The Land Acquisition Bill 1974, which is at present before The House of Assembly, is a good example of the kind of legislation which we believe our government ought to be able to put forward without having the problem of a constitutional restriction on its legislative power.” (Emphasis mine.)

In summary, the measure of compensation provided for under the Lands Acquisition Act was intended to be different from compensation provided for under the Land Act, which is similar to English legislation. The Act also expressly excluded the concept of “just terms” under the Human Rights Act. The measure of compensation is set out under s. 19 of the Act. The annual net profit is determined by the Valuer-General in accordance with the principles set out under s. 19(3) of the Act. A person who is dissatisfied with the determination of the annual net profit may appeal on the basis of the principles set out under s. 19(3) of the Act. (See s. 23(1)(b) of the Act.) The factor is a matter of legislative enactment in a regulation and cannot be questioned by a court. The Governor-General, in fixing the factor, acts in accordance with the advice of the National Executive Council. The advice in accordance with which the Governor-General acts cannot be questioned by a tribunal or court (s. 86 and Sch. 1:7 of the Constitution). The Act applies to all persons, citizens as well as non citizens.

The discrimination on “just terms” comes about by the clear and expressed provisions of the Constitution. It follows from this that the citizen has two alternative ways of claiming for compensation, under the Act and the Constitution, while the non citizen and naturalized citizens within five years of Independence have only one claim under the Act.

The end result of my reasoning is that I would allow the appeal. Proper compensation in this case would be the product of the annual net profit and the prescribed factor fixed in the regulation—54,317 X 4 = K217,268.

PRATT J.: William Robert Frame is a naturalized Papua New Guinea citizen, who prior to 15th May, 1978 was the owner of a coffee plantation in Goroka. For some time before that date negotiations had been under way between himself and the State concerning purchase of the plantation. However, these negotiations broke down and on the date already mentioned a declaration of compulsory acquisition under the provisions of the Lands Acquisition Act 1974 was published in the Government Gazette, whereby the property then became vested in the Government of Papua New Guinea. On 28th November, 1978, the Minister for Lands determined the amount of compensation payable to the present respondent in the sum of K200,000. From that determination the present respondent appealed to the National Court on the three grounds set out in s. 23 of the Lands Acquisition Act, thereby disputing valuation of improvements, determination of the figure for average annual net profit and the use by the Minister of the prescribed factor, claiming that the proper amount for compensation was K461,264. The matter came on for hearing before Mr. Justice Raine, the then Deputy Chief Justice, at Goroka and in Port Moresby on and after 11th December, 1979. Although the State and the then appellant hotly contested the matters comprising the original appeal, this was mainly implemented on the State’s part by way of submission, and to a much lesser extent by cross-examination of the witnesses called on behalf of the appellant. For reasons best known to the State, it decided not to call any evidence at all, but to rely entirely on what its legal advisers apparently understood to be an unassailable interpretation of the law.

The judge of first instance determined that the figure representing the average annual net profit was the sum of K54,317. This figure was certainly not accepted without considerable dispute by the State and was the subject of much debate during the original hearing. Nevertheless, that was the figure eventually determined as the proper one for representing the average annual net profit over the five years immediately preceding the acquisition. It then became the task of the court to examine that figure in the light of the multiplier used by the Governor-General in Council to arrive at a total sum of compensation payable. The figure chosen by the Governor-General, on advice of the Executive Council and published in the Gazette dated 6th July, 1978, was the figure four. Using that factor therefore against the average annual net profit of K54,317, one arrives at a final figure of K217,268. (I think the sum referred to in his Honour’s judgment included in the appeal book, namely K217,218, must be a typing error.) However, his Honour found that the amount of compensation was “obviously too low and demonstrably so”. He found that the amount awarded “was palpably unjust”, and in order to arrive at a “just” figure he chose a factor of “a little over 5” and thereby arrived at a compensation figure of K290,500. It is from this figure that the Minister appeals. However, the grounds of appeal are stated in very broad terms. They are as follows:

1.       The decision of the judge is wrong in law in that it is contrary to s. 53 and s. 68 of the Constitution.

2.       The judge erred in law in that his Honour wrongly applied s. 19 of the Lands Acquisition Act 1974.

3.       The order of the judge is wrong in that it is against the weight of the evidence.

In the light of the broad generalities expressed in these grounds of appeal, it is perhaps not surprising that the respondent did not cross-appeal. It became apparent during argument, however, that the real bone of contention between the State and the respondent was the trial judge’s decision to vary the factor from the figure 4 to one of “a little over 5”. It was clear on this appeal that both parties agreed on the figure of K54,317 as properly representing the average annual net profit, although counsel for the respondent did not regard himself as precluded from basing certain arguments on the assumption that such figure could be reworked.

I have not only had the benefit of detailed submissions in this matter, but also from reading draft judgments of the two other members making up this Court. I do not pretend that I have found the solution to the problems presented in any way easy. As the arguments of counsel have been set forth in the judgments of my brothers, I do not propose to recapitulate them in detail.

There are two major matters for determination. The first and subsidiary one is what rights are given to an appellant in relation to appeal against a factor with which he is dissatisfied. Secondly, what is the true or legal meaning of the term “compensation” within the context of the Lands Acquisition Act.

Under the Lands Acquisition Act 1974, the Minister may “acquire land by compulsory process”, but in accordance with provisions set forth in the Act itself (see s. 5). To do this, the Minister must publish a notice in the Government Gazette declaring that “the land specified in the notice is acquired by compulsory process under this Act”, (s. 7). A number of provisions are then enumerated in the Act which thereby set out the steps to be taken on acquisition by compulsory process, inter alia, stipulating that the interest of every person whose land is affected is “converted into a right to compensation under this Act”, on the date of acquisition (s. 12(1)).

Part 3 of the Act then sets out a number of matters concerning compensation. Section 16 reads:

“Notwithstanding the provisions of Section 14 of the Human Rights Act 1972, and any other law, the succeeding provisions of this Part apply to all land acquired and to be acquired under this Act.”

To this section I shall not only return a little later, but will, of necessity, spend some considerable time.

Section 19 sets out the principles which are to be used by the various government authorities for the purpose of determining what amount of compensation will be paid for land acquired by the government. So far as the facts of this case are concerned, the relevant provisions are as follows:

“19.    (1)      The Government shall, in respect of any land acquired by compulsory process under this Act, pay by way of compensation for that land—

(c)      in the case of land which has been developed or partly developed for the purpose of returning an income and which at the date of acquisition of the land—

(i)       has been in production for not less than five financial years—the product of the average annual net profit received in relation to that land over the five financial years immediately preceding the date of acquisition, as determined by the Valuer-General, and the prescribed factor for that land;”

By sub-s. 3 of s. 19, in determining what is the average annual net profit for the purpose of the section, the Valuer-General must have regard “to the accepted principles of valuation practice and shall have regard to the current value of any improvements on the land”. In this appeal the court was not called upon to interpret the provisions of s. 19(3) and more particularly the relationship of sub-s. 3 to sub-s. 1. The area certainly bristles with difficulties. Counsel for the respondent did place before us certain submissions to the effect that it was clearly his Honour’s view that had he not allowed the appeal against the factor, he would have achieved the same result by increasing the amount of the annual average net profit. Despite the fact that there was no cross-appeal by the respondent, I considered that the broadness of the grounds of appeal relied upon by the State permitted the respondent to place such submissions before the court, but I do not find it necessary to make any determination upon them.

Section 20 of the Act stipulates that the Governor-General in Council, after a report is received from the Valuer-General, may by way of regulation “fix a factor” to be used for the purpose of arriving at a final figure, such factor being the multiplying “factor” referred to in s. 19(1)(c)(i). In support of this appeal, Mr. Lucas spent some time developing an argument based on s. 86(4) of the Constitution, which says that the nature of the advice given to the Head of State is non-justiciable. I could not then, and I still cannot, appreciate the point of this submission. At no stage has the respondent ever concerned himself with whether or not the Governor-General received advice, or whether or not it was given to him by the Valuer-General or someone else. There was never any attack on what took place between the Governor-General and any other persons. It is not the advice, or what was contained in that advice, or who gave that advice which forms the point of contention before this Court. What is contended is that the final figure, determined upon by the Governor-General is an incorrect figure. It is the result of the advice, the conclusion reached following consideration of whatever, if any, advice the Governor-General received which is the point in issue. In my view, the question of non-justiciability simply does not arise.

The Governor-General, of course, must act on the advice which he receives. There is no discretion vested in him as Head of State (the Constitution, s. 86(2)). Having received advice, the Governor-General then gazettes the result of that advice—in this instance a figure to be used as a multiplier, by way of regulation to operate under the Act. Like any other regulation, it is of course subject to the Act and must not be ultra vires the Act. It is this figure which the Minister is obliged to use under s. 22 of the Lands Acquisition Act for the purpose of arriving at the amount of compensation payable to the claimant. To maintain that because the Governor-General has caused a regulation to be published in the Gazette following on advice, and because the advice received by the Governor-General is non-justiciable means that no consequent regulation can be challenged as ultra vires is a proposition of law so fundamentally misconceived as to warrant no further consideration.

If the claimant is dissatisfied with the figure which is arrived at by the Minister as a result of such Minister exercising his powers under s. 22, the claimant may then appeal to the National Court on all or any of the following grounds:

“23.

(1)

(a)      that the valuation determined by the Valuer-General for the improvements to the land is an incorrect valuation; and

(b)      that the average annual net profit which was received, or which would have been received, in relation to the land, as the case may be, as determined by the Valuer-General, is incorrect; and

(c)      that the Minister used an incorrect prescribed factor when assessing the compensation payable for the land or the improvements.”

As we have seen, the landowner in this case appealed on all three grounds. The existence of s. 23(1)(c) makes it unnecessary in my view to decide whether or not the regulation gazetted by his Excellency on advice is intra vires or ultra vires.

It was contended by counsel for the appellant on this appeal however, that s. 23(1)(c) had a very limited application indeed. In his submission the only practical application of this particular sub-section amounted to an appeal in those cases where the Minister for some reason or other had used an incorrect figure, that is, incorrect because either the figure which he picked up from his table was not the figure gazetted, because it was misread, or that some error in transcription had occurred between the figure decided upon by the Governor-General and the figure which the Minister eventually used. It is obvious that the Minister must use the factor which arrives before him by way of publication in the Government Gazette. It is also obvious that if the Minister makes some mechanical error and uses a figure which is not published in the Gazette, there is no need for any special provision in the Act to allow an appeal against such error. All that a dissatisfied claimant need do, would be to approach the Minister and point out the error, whereupon the Minister would rectify the situation by using the correct factor. In the event of the unimaginable and extraordinary situation arising that the Minister refused to rectify his manifest error, the claimant need simply come to court under the general law and request issue of the appropriate order to ensure that the Minister carried out properly thoses functions which he was obliged to perform under the Act.

Section 23(1)(c) does not refer merely to an incorrect factor, but an incorrect prescribed factor. Such a factor can only be prescribed if it is determined by regulation following deliberation by the Governor-General in Council. Until that is done, and the result published, it is not a prescribed factor. To give the sub-section any meaning at all, it must mean that where the claimant considers that the figure which has been tabled by regulation is one which he considers to be incorrect, then he may appeal. Some time was spent by both counsel in establishing the proper interpretation to be given to the term “incorrect”. But it seems to me that both commonsense and the ordinary rules of grammar dictate that the descripive word “incorrect” qualifies and relates to the compound noun “prescribed factor”. The factor is said by the claimant to be incorrect because it is wrong. It is wrong because it is a factor which leads to a result that is inappropriate or a figure which is too low. In the instant case the factor may have been four, it may have been five, or it may even have been one. The Minister does not have any discretion in arriving at the total figure to be paid out. What he must do is use the factor gazetted as the multiplier against the average annual net profit as determined by the Valuer-General. If he chooses a factor which was not gazetted, then he has not used the prescribed factor. Just as clearly, he has not carried out the duty laid upon him by the Parliament. If he has used the prescribed factor and there is a provision in the Act for the landowner to appeal on the basis that such prescribed factor is incorrect, then in my view it can only be incorrect because the claimant is dissatisfied with the figure itself as gazetted—in short, that the factor is too low because when used as the multiplier against the average annual net profit, it arrives at a compensation sum which the claimant considers does not reimburse him for his loss.

In providing a right of appeal under s. 23(1)(c), it is not surprising that the legislature has seen fit to draft the grounds in such a way that it is the Minister, and not the Governor-General, who must defend the use of the factor before the courts. It is the Minister who is charged with the administration of the Act and it is the Minister who, in the words of s. 23, must make a determination under s. 22. Consequently it would obviously be the Minister against whom one appealed under sub-s. 1(a) or (b), on the basis that the Minister had fallen into error because the Valuer-General had arrived at either incorrect valuations or incorrect average annual net profit figures, or finally that the prescribed factor determined by regulation, and therefore used by the Minister in order to achieve the final compensation figure, was incorrect. It would be neither seemly nor in the interest of good government to have the Governor-General or the National Executive Council brought before the courts because an individual was dissatisfied with the result of their deliberations. Unlike counsel for the appellant, I can see no reason why the Minister should not be selected as the person responsible for legally justifying the use of the factor rather than the Governor-General. He is the one who must use the factor, he is the one who must finally decide the figure to be paid out in compensation and authorize the appropriate finance authorities so to do, and he must do that within the directions given to him under the Act and material supplied to him by the Governor-General.

During argument, some time was also spent on discussing whether or not the changing of the factor by the court would amount to an amendment by judicial decree of a regulation passed by the National Executive Council under an Act of Parliament. It seems to me that this particular problem may be approached in several ways. First, the regulatiton is in existence for a particular period of time only and on the completion of that period the regulation ceases any longer to exist (see s. 44(2) of the Lands Acquisition Act). The purpose of the regulation has been fulfilled, namely the factor has been gazetted and has been used by the Minister and having been used, a compensation figure has then been offered to or paid over to the claimant. In such circumstances therefore, any appeal by the claimant against the use of the factor would not result in the court amending any regulation; it would simply mean that the court, having upheld the right of appeal, determined that the factor was incorrect and in the light of the evidence produced before it has then ascertained what the correct factor should be.

Secondly, it may be said that where the regulation fixing the factor leads to a compensation figure which is inadequate, then such regulation was ultra vires the Act. This argument would depend on the definition to be given to the word “compensation”, which appears time and again throughout the Lands Acquisition Act. If the Act said that one was to receive compensation and if the term “compensation” is interpreted to mean a sum of money which in one way or the other is a sum which can be regarded as adequate for the acquisition of the property acquired from the individual owner, then the determination by the Governor-General of a factor which leads the Minister into arriving at an inadequate figure is clearly not in accordance with the Act and therefore does not have the support of the Act. Being without such support, the regulation falls to the ground. Under the general law, quite apart from any provision in the Act itself, the claimant could approach the courts for a declaration that such regulation was ultra vires. Under such circumstances it may of course be doubtful whether the court could do anything else other than make such declaration and it would be unable to determine what an appropriate figure should be.

For this reason I think the third approach is clearly the correct one—namely that a power is given under the Act itself by way of s. 23(1)(c) for the claimant to appeal on the use of an incorrect prescribed factor. If the court is given a power to review the factor itself, then surely it must be given the concomitant right to determine, on the evidence before it, what is the correct factor, what should have been the factor determined by the Governor-General in Council. To give a right of appeal which could lead to no final result from the point of view of the parties concerned, would to my mind be to create a situation which would fly in the face of established practice. The whole justification of a court system is to resolve matters between disputing parties, and in so doing to reach a result which will, subject to any further appeals granted by the legislation, determine the issues between them. To my mind, the granting of a right to appeal without inferring thereby a duty and a right in the court to supply a remedy would require the clearest legislative direction. We would be faced by the situation that in order to determine whether the factor was correct or incorrect it would be necessary for the court to ascertain what would be “proper compensation”. In order to decide what would be “proper compensation”, the court would have to examine a number of matters including the factor used. In arriving at the “proper compensation” it would have to specify a particular factor and use that factor as the multiplier. I cannot conceive that the legislation would by implication require a court to return the matter to the Governor-General in Council with a suggestion that in order to arrive at “proper compensation”, the Governor-General might care to use the factor found necessary by the court. This would be to make a mockery of the courts and place the Governor-General in an impossible situation.

I turn now to the major area of difficulty in this case. The submissions of counsel for the appellant have been well summarized in the judgment of my brother Greville Smith. Reduced to their basic form they amount to this—that so far as concerns a non citizen or a citizen by naturalization, it does not matter whether the compensation he receives in return for his land is just or unjust. There is a formula set out in the Act and in arriving at the end result the government is not concerned with whether the amount of compensation granted by the formula is just or otherwise. It is conceded however, that the citizen does have certain guarantees granted under the Constitution which prevent unjust deprivation of property, but it is said that that section has no relevance to the present case as the respondent is a naturalized citizen of less than five years standing.

The relevant sections of the Constitution are as follows:

“53.    PROTECTION FROM UNJUST DEPRIVATION OF PROPERTY.

(1)      Subject to Section 54 (special provision in relation to certain lands) and except as permitted by this section, possession may not be compulsorily taken of any property, and no interest in or right over property may be compulsorily acquired, except in accordance with an Organic Law or an Act of the Parliament, and unless—

(a)      the property is required for—

(i)       a public purpose; or

(ii)      a reason that is reasonably justified in a democratic society that has a proper regard for the rights and dignity of mankind,

that is so declared and so described, for the purposes of this section, in an Organic Law or an Act of the Parliament; and

...

(2)      Subject to this section, just compensation must be made on just terms by the expropriating authority, giving full weight to the National Goals and Directive Principles and having due regard to the national interest and to the expression of that interest by the Parliament, as well as to the person affected.

(3)      For the purposes of Subsection (2), compensation shall not be deemed not to be just and on just terms solely by reason of a fair provision for deferred payment, payment by instalments or compensation otherwise than in cash.

...

(7)      Nothing in the preceding provisions of this section applies to or in relation to the property of any person who is not a citizen and the power to compulsorily take possession of, or to acquire an interest in, or right over, the property of any such person shall be as provided for by an Act of the Parliament.”

It is then necessary to go to s. 68 of the Constitution which provides; as follows:

“68.    SPECIAL PROVISIONS RELATING TO NATURALIZATION.

...

(4)      Notwithstanding anything in a Constitutional Law, during the five years after Independence Day only persons who become citizens of Papua New Guinea under Section 65 (automatic citizenship on Independence Day) shall have the rights conferred by Section 53 (protection from unjust deprivation of property) except that during this period the rights of a person who becomes a citizen otherwise than under Section 65 (automatic citizenship on Independence Day) in respect of his property shall not be less than those accorded by law to non-citizens.

...”

Lest it be thought that the section has been overlooked, there is nothing pertinent in the provisions of s. 54 in the Constitution either in the view of counsel before this Court or in my own view, which is relevant to the issues for decision before us. In part, that section reads:

“54.    SPECIAL PROVISION IN RELATION TO CERTAIN LANDS.

Nothing in Section 37 (protection of the law) or 53 (protection from unjust deprivation of property) invalidates a law ... that provides—

(a)      for the recognition of the claimed title of Papua New Guinea to land where—

...

(ii)      if the land were acquired compulsorily the acquisition would comply with Section 53(1) (protection from unjust deprivation of property); or

...”

We are not of course concerned with either the invalidity of a law or the claiming of title, and consequently it is not surprising that neither counsel made any reference to this section in a case dealing only with a question of compensation. The validity of the acquisition of title was never in dispute by the respondent. What he is disputing is his compensation amount.

To my mind, the appellant has overlooked the essential theme running through s. 53 of the Constitution, namely that what the section does is guarantee certain rights to a citizen but it does not prohibit other classes of citizens or indeed other persons or corporations within the country from enjoying similar rights if they are granted by either the underlying law or Act of Parliament. What this amounts to is simply this. If an Act is directed at deprivation of property on terms which must be regarded as unjust or may be regarded as unjust by some, then such Act may well and properly do so. The non citizen could not complain because the Constitution did not provide him with any guarantees. However, in the case of a citizen, if the amount of compensation were proved to be unjust, then he could call upon the provisions of the Constitution to require the court to declare the Act or Regulation invalid. It has never been a part of the respondent’s case that the legislature was prevented in any way, or inhibited in any way, from passing legislation which related to non citizens or naturalized citizens and specified that in such circumstances property may be acquired for any figure thought fit and proper by the legislature. If for example the Lands Acquisition Act declared that the government may acquire land from a non citizen or a naturalized citizen (within five years of Independence) for such amount as the Governor-General in Council may determine, then the respondent concedes that he would have no ground for complaint before the courts.

The appellant submits however, that there is no necessity for the Act to be so specific. He says the Act applies equally to citizens and non citizens but where as a result of applying the formula stipulated by the Act the end result is one which is unjust to a citizen, he may then come to court and appeal against such amount of compensation because the protection given to him by the Constitution has been breached by dint of a regulatory factor which leads to an unjust payment. In the case of a non citizen or a naturalized citizen however, the appellant maintains that as such person has no protection under the Constitution, he cannot complain about the end result because he has no guarantee given to him under the Constitution.

I must admit to having felt some attraction towards this argument when it was originally put forward, but on further reflection, I think the respondent’s submissions in reply are clearly beyond reproach. I agree that the Act will have one construction, and one construction only. It cannot be that the Act will be construed in one way for a citizen and in another way for a non citizen, so that the court will determine a result in accordance with the status of the party before it. I think Mr. Morling is correct when he says there is a danger inherent in examining the guarantees given by the Constitution alongside the construction of an Act of Parliament which is applicable to all persons in the country. It is so applicable, for as it has not purported to distinguish between one citizen or one kind of citizen and another or between citizens and non citizens, it cannot mean, as counsel said, “one thing today and another tomorrow ... it must have the same meaning as a piece of legislation”. With certain defined exceptions, the Act applies to all land in the country and it applies to all persons in the country (other than those persons of course who are owners of exempted land). To say that the Act meant one thing in the case of one litigant and a totally different thing in the case of some other type of litigant, would be to shake the very foundations of legal interpretation and the administration of the law. It is clear that s. 1 of the Act indicates that certain groups of people, more particularly “non-overseas persons” (defined in s. 2 of the Act, to be the beneficiaries of any application by the government of the provisions of the Act. Section 3 of the Act shows that the purpose of the government is to acquire undeveloped land or land used for primary production. If the Act is for the benefit of “non-overseas persons” and is directed to the acquisition of land used for primary production, it does not require much exercise of the imagination to conclude that the persons affected basically by the provisions of this Act would be those persons who were in possession of alienated land and were using that land for plantation purposes. But the point here, I think, is that although mention is made of those who will stand to acquire benefits or rights from the land, no mention is made of those from whom the land is to be acquired. Certainly no distinction is drawn between a citizen and a non citizen. Thus before Independence Day in 1975, the Act applied to everyone in Papua New Guinea and applied in such a way that in my view no person could complain because he failed to receive “just terms”. Since Independence, the Act still applies to all persons without distinction and without separation. Consequently, as will become apparent from what I say a little later, all persons are subject to the same form of acquisition, all persons are subject to the same provisions of the Act and all persons must receive the same result from the Act in the absence of any stipulation as to status or class mentioned in the Act itself. I cannot see how an Act could be valid for one litigant and invalid for another. Once this basic proposition is grasped, the situation becomes far less murky.

There still remains one major problem which goes to the whole nub of the matter, namely the meaning to be attributed to the term “compensation” as used throughout the Act itself.

By s. 12(1), the interest of every person on whom a notice of acquisition has been served is “converted into a right to compensation ...”. He thus has a fight to compensation under the Act. The Minister may either accept the claim for compensation or reject such claim (s. 17). Division 2 then sets out the principles for determining the amount of compensation payable. In other words, a formula is set out in the Act in order to arrive at compensation. The specific wording of s. 19(1) is that “the Government shall ... pay by way of compensation for that land ...” (emphasis mine); and the Governor-General must fix a factor under s. 20 which will determine the “compensation payable by the Government”. This factor, by virtue of s. 22, is a factor to be used by the Minister in order to determine “the amount of compensation payable to the claimant”. The wording however of s. 23 avoids the use of the term “compensation” but states that where a claimant is dissatisfied with “the determination made by the Minister”, he may then appeal. “Determination” can only be “the end result” arrived at by the Minister.

The point of this exercise is to illustrate that the word “compensation” is used time and again throughout the Act. That word has over the years received from the courts a clear and defined meaning, the generality of which I do not think is in any way inhibited or cut down by virtue of the fact that in most instances the courts both in the United Kingdom and in Australia, were examining their own legislation dealing with land acquisition. The legislature has chosen a word which, in the absence of any indication to the contrary, must be taken to have its ordinary and plain meaning. That is a basic principle of legal interpretation. I do not propose to spend any length of time in dealing with this area. The judgment of Mr. Justice Greville Smith sets out fully the various cases dealing with the definition of compensation and I restrict myself to the briefest review of the authorities for the purpose of explaining the development of the reasoning which follows.

In In re An Arbitration between Lucas and The Chesterfield Gas and Water Board[dccxxxv]28 Fletcher Moulton L.J. says:

“The principles upon which compensation is assessed when land is taken under compulsory powers are well settled. The owner receives for the lands he gives up their equivalent, i.e., that which they were worth to him in money. His property is therefore not diminished in amount, but to that extent it is compulsorily changed in form. But the equivalent is estimated on the value to him, and not on the value to the purchaser, and hence it has from the first been recognized as an absolute rule that this value is to be estimated as it stood before the grant of the compulsory powers.” (Emphasis mine.)

There are two aspects in particular which I wish to emphasize. First, the owner receives what the land was worth to him in the equivalent of monetary terms. Second, that monetary equivalent is estimated at the value to the landowner and not the value or cost to the acquiring authority. As Greville Smith J. points out in his judgment, this definition has been approved on several occasions by the Privy Council. A shorter and even more concise definition of the term “compensation” may be found in the Canadian case of Re MacDonald and Toronto[dccxxxvi]29 which deals with the acquisition of, and compensation for lands in respect of street widening: “Due compensation simply means a full indemnity in respect of all pecuniary loss by reason of the exercise of the powers of the corporation.”

Perhaps however the clearest and most comprehensive definition of the term “compensation” is still to be found in the judgment of Dixon J. (as he then was) in Nelungaloo Proprietary Ltd. v. The Commonwealth and Ors.[dccxxxvii]30:

“... ‘compensation’ is a very well understood expression ... It is to place in the hands of the owner expropriated the full money equivalent of the thing of which he has been deprived.

Compensation prima facie means recompense for loss, and when an owner is to receive compensation for being deprived of real or personal property his pecuniary loss must be ascertained by determining the value to him of the property taken from him. As the object is to find the money equivalent for the loss or, in other words, the pecuniary value to the owner contained in the asset, it cannot be less than the money value into which he might have converted his property had the law not deprived him of it.”

The above then sets out what I take to be the common law courts’ attitude concerning an interpretation of the word “compensation” where it occurs in any Act. In the absence therefore of any section or definition contrary to that which has been outlined above, this is the meaning which must be given to the word wherever it appears in Papua New Guinean legislation.

In the present circumstances therefore, there being a formula set forth in the Act to arrive at a figure which has been termed compensation, then the use of such formula must arrive at a figure which expresses in monetary terms the equivalent of the value of the property acquired. If any of the figures used in the formula, be they a figure arising from an incorrect valuation or an incorrect figure for average annual net profit or if an incorrect prescribed factor leads to a result which places a person in a position other than receiving a financial equivalent of that for which he has been deprived, then in such circumstances compensation has not been paid. Certainly a figure has been determined and an amount has been paid over, but whatever that figure is, it does not represent compensation within the meaning of the law.

Such then is the ordinary accepted meaning of the word. Such also, I would think, would be the meaning to be given to such word where a person’s rights or interest in land are converted to a claim for compensation under s. 20 of the Land Act 1963 and would be the definition relied upon by the courts under s. 102 of that Act where it had a claim of compensation before it. However, there is one section in the Lands Acquisition Act which requires a second look at the term “compensation” used throughout the Act. I refer of course to s. 16, which I have set out earlier in this judgment, but for the purpose of convenience I shall repeat the section:

“Notwithstanding the provisions of Section 14 of the Human Rights Act 1972 and any other law, the succeeding provisions of this Part apply to all land acquired and to be acquired under this Act.”

The situation is not made easier by virtue of the fact that that section refers to an Act which has now been repealed. The Human Rights Act was of course repealed by the Statute Law Revision (Independence) Act 1975, Sch. 1. A number of basic rights covered in the Human Rights Act have been re-enacted and extended in the Constitution. In several instances including acquisition of property, certain guarantees have been restricted to citizens and to naturalized citizens following expiration of five years from Independence. The implications which follow from the reference in the Lands Acquisition Act to s. 14 of the Human Rights Act are quite considerable, especially in relation to the interpretation of the term “compensation” prior to Independence in September 1975.

Section 14 of the Human Rights Act read as follows:

“14.    (1)      No person shall be deprived compulsorily of his property except in accordance with law and on just terms.”

If one, therefore, were looking at the Lands Acquisition Act immediately after it came into operation and was then required to interpret the word “compensation”, it would seem to me that whatever else the word meant it did not convey recompense on "just terms”. It might mean reasonable terms, it might mean fair terms, but the word no longer possessed the interpretation given to it by a long line of judicial authority.

The fact that s. 16 refers to an Act which is now repealed does not necessarily mean that one is unable to refer to that Act after the repeal in order to gain assistance in deciding what meaning should be given to a particular section, phrase or word in a section. Both counsel did not contend otherwise and the authorities listed in B. G. Pearce’s Statutory Interpretation in Australia, p. 74, establish that such reference is permissible. I merely add to that list Johannessen v. Miller[dccxxxviii]31. All the cases rely heavily on the English authority, The Attorney General v. Lamplough[dccxxxix]32. I am content to quote part of the judgment of Irvine C.J. in Roberts v. The Collector of Imposts[dccxl]33:

“Those cases, especially the last, establish the principle that you may, and indeed must, look at the repealed sections as part of the original Act in order to determine the meaning of the unrepealed portions of that Act;”

In Chapman v. Kirke[dccxli]34 Denning J. (as he then was) says: “I do not wish it to be supposed that when a section of an Act has been repealed, it cannot afterwards be looked at in connection with other provisions in the Act.”

In the absence therefore of any persuasive reasons to the contrary, it would be reasonable to interpret the word “compensation” after the repeal of the Human Rights Act, the same way as before. As will appear subsequently however, I consider there are sound reasons why this course cannot be adopted in this particular instance.

Because of the special circumstances of this case, counsel for the respondent did not object to reference being made by counsel for the appellant to Parliamentary Debate on the introduction of the Lands Acquisition Bill. Some capital was sought to be made by counsel for the applicant from the fact that as the Constitution permits reference to the Constitutional Planning Committee Report when endeavouring to interpret matters in the Constitution and as there was a reference in the Constitutional Planning Committee Report to the Lands Acquisition Bill, therefore that Report could also be referred to, to assist in arriving at a meaning to the word “compensation”. I do not think that this point was pressed particularly strongly, and in any case I consider the submission to be without merit.

Reference was made by counsel to the following authorities: Black-Clawson International Ltd. v. Papierwerke Waldhof-Aschaffenburg AG[dccxlii]35; Warner v. Metropolitan Police Commissioner[dccxliii]36; Beswick v. Beswick[dccxliv]37 and Sagnata Investments Ltd. v. Norwich Corporation[dccxlv]38. Once again I do not propose to review the authorities, but draw attention to two only, starting with Lord Denning M.R. in Sagnata’s case (supra) of that report where his Lordship says: “We are, of course, entitled to look at the mischief which the Act was intended to remedy. I take it as described on second reading in the House of Commons by the Minister ...” And his Lordship then deals with a particular statement by the Minister in the Commons. The other reference I make is to the judgment of Lord Reid in Warner’s case (supra)[dccxlvi]39:

“... the layman may well wonder why we do not consult the Parliamentary Debates, for we are much more likely to find the intention of Parliament there than anywhere else. The rule is firmly established that we may not look at Hansard and in general I agree with it, for reasons which I gave last year in Beswick v. Beswick[dccxlvii]40. This is not a suitable case in which to reopen the matter but I am bound to say that this case seems to show that there is room for an exception where examining the proceedings in Parliament would almost certainly settle the matter immediately one way or the other.”

The theme of these authorities is that one may examine the Debates of Parliament in special circumstances, in order to ascertain what was the mischief sought to be removed by passing a particular Act, or amending a particular section to an existing Act, if the meaning of the word is shrouded in ambiguity. Certainly there are difficulties in the way of defining the term “compensation” in the Lands Acquisition Act. I also take the view that the Act was passed to remedy a particular mischief which Parliament considered to exist at the time of the passing of the Act. That mischief, of course, was the considerable area of alienated land in parts of Papua New Guinea where land shortage had become of major concern. A reference to the Debates does indeed confirm this belief, and in my view also, assists in determining what was the meaning of the word “compensation” prior to September 1975.

I have considerable sympathy for the views propounded by Pearce in his Statutory Interpretation at Ch. 2, where he expresses some justified criticism at the somewhat hide-bound approach which courts have taken to the matter of statutory interpretation. The more liberal approach which has developed over the past few years was taken by his Honour Mr. Justice Wilson in this Court, in a recent decision sub nom PLAR No. 1 of 1980[dccxlviii]41. I think the case presently before us is one that lends itself particularly to an adoption of the views expressed by his Honour in that case. He rejects the “literal” rule and states that “it is clear, therefore, that the Supreme Court has (and should accept) a special responsibility to assist in the development of our indigenous jurisprudence, adapted to the changing circumstances of Papua New Guinea”. There is a duty vested by the Constitution in the national judicial system to develop the underlying law. That is a duty which cannot, and must not be avoided. However, I do not consider that this requirement is an open invitation to judges to engage in personal idiosyncrasy or forensic experimentation. To date the judges of this Court have resisted such a temptation and I do not propose to start. The emphasis, of course, is to develop the law, not to destroy that which is already in existence, produced as it is over many years as a result of dealing with every conceivable human frailty and deception. The Constitutional direction given to the courts is not an invitation to reject the combined recorded wisdom of centuries of common law judges, thereby causing the judicial process in Papua New Guinea to embark upon uncertainty. In an area where the location of the main reefs have been chartered with some accuracy, albeit for Papua New Guinea there are many blank spaces, I think that any venture into “shoal water” should be handled only with knowledgeable daring lest any traveller who is fortunate enough to arrive back at his home port has little to show save a battered vessel, a dispirited crew and a confirmation that the reefs do indeed exist and the waters are dotted with many hazards. As I say, the emphasis is on development and not destruction, it is on steady logical and comprehensible evolution and not self-centred revolution.

Going then to the Debates, I think that the following passages are of assistance to the court in ascertaining what mischief was sought to be removed and what meaning should be given to the word “compensation”. First, I refer to vol. 3, p. 4347 of Hansard where the then Chief Minister, Mr. Somare, says:

“I do not think my Government will expropriate any property owned by an individual for this is not right. If we see that there is a national interest in a person’s property, we will discuss the matter with him. I can assure all members that people will get fair compensation for their property.”

A little earlier in Hansard at p. 4289, we find the second reading speech of the Honourable the Minister for Lands. He said, inter alia:

“The second reason for special compensation machinery is that the Lands Acquisition Bill is aimed at correcting an imbalance of economic opportunity. This aim is in line with the eight-point plan. In determining the value of property, the Government cannot simply look at what is fair for Papua New Guineans to pay. Otherwise the price of properties will be beyond the reach of many Papua New Guinean groups. A country on the verge of Independence is entitled to prefer the rights and interests of its citizens to those of expatriates which were acquired during the colonial period. It is for this reason that Section 14 of the ‘Human Rights Act’ has been excluded.”

As a clear indication of what mischief it was sought to remedy, the Minister said:

“It is perfectly clear that the Government is concerning itself with plantation land, and that land owned and controlled by expatriates. The Bill provides the Government with the power to acquire plantation land by compulsory process, where agreement with the owner cannot be reached.”

If “compensation” does not mean payment on just terms, then what does it mean? As I said earlier, no person prior to Independence was treated any differently from any other under the Lands Acquisition Act. All persons were deprived on “just terms”. All persons were subject to payment in accordance with a definition of the word “compensation” as it may then have been interpreted, if the call were made. Certainly the Act was for the benefit of non-overseas persons, but it did not specifically state that such benefit was to be at a financial sacrifice by any other group of persons.

Of course no amendment was made to the Lands Acquisition Act after the enactment of the Constitution and Organic Laws following Independence on 16th September, 1975. What the Constitution has introduced however, is a guaranteed right of freedom from unjust deprivation of property to all cititzens, but has refrained from guaranteeing such rights to non citizens and to naturalized citizens within five years of Independence (s. 53). Once it is appreciated that the Lands Acquisition Act applies to all people, whether they be citizen or non citizen, then it is clear the term “compensation” and indeed the amount of such compensation impliedly payable under the Act must be such as to comply with the requirements of the Constitution, irrespective of who is the recipient. There is no distinction made in the Act, there is no attempt at classification or division into various groups, depending on whether they be citizen or non citizen. The Act applies to all, and consequently whatever definition I arrive at for the term “compensation”, it must be a definition that applies to citizen and non citizen alike.

This approach, I think, gives the key to the solution of the problem faced by a court in endeavouring to re-define what was previously a well settled and clear interpretation of the term “compensation”, for in s. 53 of the Constitution there is already an existing definition. Such compensation must by sub-s. 2 be “just compensation” made on “just terms” but subject to certain important restrictions which clearly indicate that one can no longer interpret “just terms” merely as just from the point of view of the person dispossessed. At arriving at a figure which the courts would regard as “just compensation”, the following guidelines are imposed:

1.       Full weight must be given to the National Goals and Directive Principles.

2.       Due regard must be given to the national interest.

3.       Due regard must be given to the expression of the national interest by Parliament.

4.       Due regard must be had to the person affected.

5.       Terms shall not be deemed to be unjust merely because there is a “fair provision for deferred payment, payment by instalments or compensation otherwise than in cash” (sub-s. 3).

As regards point 1, the relevant part of the National Goals and Directive Principles, which would appear relevant for consideration by a court, are Goal Number 2(1) emphasizing equal opportunity; 2(3) an equitable distribution of incomes; and 2(6) the maximization of the number of cititzens participating in every aspect of development. I also note that Goal 3(4) directed to national sovereignty and self-reliance is cast in terms that “citizens and governmental bodies to have control of the bulk of economic enterprise and production”. Paragraph 7 of that third Goal states that economic development shall be “by the use of skills and resources available in the country, either from citizens or the State and not in dependence on imported skills and resources”. In none of these goals does it state that such goals will be achieved by means of expropriation or force.

What may be regarded as “the national interest and to the expression of that interest by the Parliament”, may well be a little more difficult to define, but certainly within those phrases, bearing in mind the terms used in the National Goals, it is in the national interest that all citizens participate in the economic development of the country, despite the inescapable fact that the per capita income of citizens in this country is not great. However, I do not take a direction to observe the national interest requires an investigation by the court into the financial resources of any particular group in order to arrive at a just recompense. The court is called upon to administer a National Act with a view to the overall interest of the Nation, and it is the state of the Nation’s resources and its commitments rather than one group of people in a small segment of the country which is the relevant area for examination. It is the country’s ability to purchase that is in question, not an individual’s, or a collection of individuals making up a clan or landholding group. It would also appear to be of equal importance to the national interest that in those areas where land shortage would be relieved by government acquisition of property which transferred to a number of citizens an area of land used and occupied by one non citizen, be he individual or company, then an alleviation of land shortage should be achieved. It is not my intention to engage the court in political or social debate. I merely observe these facts because it is obvious that where a land shortage exists, unhappiness and dissatisfaction must exist side by side, and such a state is not conducive to the national interest.

If the government of the day decided that it was in the national interest to expropriate certain properties of non citizens, there is undoubtedly a legal basis for such a result to be achieved. Not only however, is there nothing in the Lands Acquisition Act which distinguishes between a citizen and non citizen, but there is nothing in the Act which suggests that a power to expropriate is being sought although the factor chosen by the Governor-General in Council could theoretically lead to a result which was well nigh expropriation if the arguments of the appellant’s counsel were accepted by the court.

During the Parliamentary Debate, reference was made to such terms as “fair to both parties” or “reasonable to both parties”. Indeed, the term “reasonable” was one upon which Mr. Morling spent some time during his submissions and it seems to me that that term is both adequate and apt for employment in an attempt to arrive at a new definition for the word “compensation”. I think in the final analysis it is undesirable for me to complicate an already difficult area by superimposing further material and qualifications on the definition for compensation contained in the Constitution itself. In short, I consider the term “compensation” to mean just compensation, in point of view both of the country as a whole and the person deprived of his property. Under the common law definition of compensation, the emphasis is laid on just terms for the individual deprived. It seems to me that in Papua New Guinea one must balance what is just for the landholder with what is just for the acquiring authority. Putting it another way, the compensation must be reasonable from the point of view of both parties when a balance is struck between their competing interests.

In establishing what are just terms for the giver and the receiver, the courts will obviously have to examine the evidence put forward on behalf of the acquiring authority in the light of the National Goals and Directive Principles and the national interest. Where of course a non citizen or a corporation is involved, then such regard will not be necessary where the legislation makes it clear that “compensation” is not to be paid. In such circumstances, it would be advisable to avoid the use of the term “compensation”, and instead nominate some neutral term such as “payment” or “settlement”. It must be made quite clear in the legislation that such payment is being made in respect of acquisition from persons other than citizens, in order to avoid any breach of s. 53 of the Constitution.

Passing from these matters then to the particular case under appeal before the court. For some reason best known to himself, counsel for the appellant called no evidence at all before the judge of first instance. There is nothing on record to show what would be “just for the people” or "just for the country” or “just for the government”. He seems to have formed the view that rhetoric from the bar table was sufficient to establish that his Honour had perpetrated an injustice to the government. There was no substantial cross-examination of the witnesses called by the respondent at the hearing to establish that the figure being sought by the landowner was unjust or unfair for the government or the Nation. The learned trial judge found that the witnesses supported the respondent’s case in part, and I am not prepared to substitute for his Honour’s view on this matter one expressed by counsel from the bar table. As just one example, there was clear evidence before the court that future maintainable profits, before tax, came to the vicinity of K120,000 per year, and his Honour specifically considered that a factor closer to five achieved a much fairer result than the factor used by the Minister. Indeed, all the evidence showed that within two years of acquiring this plantation, the government or whoever enjoyed the fruits of the government’s acquisition, would obtain considerably more within that period in product returns than the sum originally stipulated as “compensation”. It seems to me that this is a highly pertinent matter to consider when endeavouring to determine whether the country has been well served or not by the acquisition.

In the end analysis, this Court is faced with a decision of the judge at first instance from which the State has appealed. The State has the onus of showing that the decision is wrong and that the judge has misdirected himself on some matter or other which underlies the exercise of his discretion. There was no evidence produced by the State at the trial to weigh in the balance and of course submissions on this appeal were based purely on the evidence called before the trial judge. In the light of those factors, I do not see how the court could interfere with the final decision arrived at by his Honour and I cannot see any basis for quarrelling with the figure which was eventually determined by his Honour. There is no evidence to show that the sum was such that it be unfair for the State to pay. There is nothing to substantiate that such figure was against the national interest, or that such figure fell outside the definition of compensation as I have defined it in this judgment. There was ample evidence to show that the exercise of multiplying the average annual net profit by a factor of four, led to a most unfair result for the landowner.

I would therefore dismiss the appeal and have no hesitation in certifying that the matter was sufficiently complex and important to warrant briefing senior counsel from overseas, especially in view of the fact that the legislation itself is difficult to understand, and that this case was the first of its kind. In the light of the complexities and the importance of the issues involved, it is a great pity, as the pressure of other commitments apparently prevented the State Solicitor appearing, the State did not see fit to do likewise.

Appeal dismissed and application for leave to appeal refused. Respondent to have his costs including costs of senior counsel from Australia.

Solicitor for the appellant: R. K. Woods, Acting State Solicitor.

Solicitor for the respondent: Craig Kirke & Wright.


[dccviii] [1908] UKLawRpKQB 128; [1909] 1 K.B. 16 at p. 29.

[dccix] [1914] A.C. at p. 569.

[dccx] [1914] UKLawRpAC 36; [1914] A.C. 1056 at p. 1062.

[dccxi] [1942] HCA 37; (1942) 66 C.L.R. 77 at pp. 98, 102.

[dccxii] (1948) 75 C.L.R. 495 at p. 571.

[dccxiii] [1920] UKHL 1; [1920] A.C. 508 at p. 542.

[dccxiv] [1918] A.C. 591 at p. 603.

[dccxv] [1903] UKLawRpAC 25; [1903] A.C. 355 at pp. 363, 364.

[dccxvi] [1918] HCA 75; (1918) 25 C.L.R. 552 at p. 563.

[dccxvii] (1934) 12 L.G.R. 41.

[dccxviii] [1947] HCA 10; (1947) 74 C.L.R. 358 at p. 374.

[dccxix] (1872) L.R. 7 Q.B. 728 at p. 736.

[dccxx] [1908] UKLawRpKQB 128; [1909] 1 K.B. 16 at pp. 29-30.

[dccxxi] [1941] 2 K.B. 26 at pp. 33-34.

[dccxxii] [1880] UKLawRpKQB 4; (1880) 5 Q.B.D. 217 at p. 240.

[dccxxiii] [1900] UKLawRpCh 65; [1900] 1 Ch. 718 at p. 725.

[dccxxiv] [1892] UKLawRpAC 25; [1892] A.C. 498 at p. 502.

[dccxxv] (1870) L.R. 5 Q.B. 196.

[dccxxvi] [1876] 1 A.C. 513.

[dccxxvii] (1878) 3 App. Cas. 58 at p. 68.

[dccxxviii] [1943] 2 All E.R. 560 at p. 564.

[dccxxix] [1968] A.C. 58.

[dccxxx] [1969] 2 A.C. 256 at p. 279.

[dccxxxi] [1900] UKLawRpAC 60; [1901] A.C. 102 at p. 107.

[dccxxxii] [1976] P.N.G.L.R. 491.

[dccxxxiii] [1976] P.N.G.L.R. 491 at p. 499.

[dccxxxiv] (1972) 66 C.L.R. 77.

[dccxxxv] [1908] UKLawRpKQB 128; [1909] 1 K.B. 16 at pp. 29, 30.

[dccxxxvi] (1912) 27 D.L.R. 179 at p. 182.

[dccxxxvii] (1947) 75 C.L.R. 495 at p. 571.

[dccxxxviii] (1977) 16 S.A.S.R. 546 at pp. 552-3.

[dccxxxix] [1878] UKLawRpExch 4; (1977) 3 Ex. D. 214 at pp. 222-3, 234.

[dccxl] [1919] ArgusLawRp 91; [1919] V.L.R. 638 at p. 643.

[dccxli] [1948] 2 K.B. 450 at p. 455.

[dccxlii] [1975] 1 All E.R. 810.

[dccxliii] [1969] 2 A.C. 256.

[dccxliv] [1967] UKHL 2; [1968] A.C. 58 at p. 105.

[dccxlv] [1971] 2 Q.B. 614 at p. 624.

[dccxlvi] [1969] 2 A.C. at p. 279.

[dccxlvii] [1967] UKHL 2; [1968] A.C. 58 at p. 74.

[dccxlviii] [1980] P.N.G.L.R. 326 at p. 334.

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