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Gold Aura (PNG) Ltd v Nekitel [2011] PGNC 269; N5279 (20 April 2011)

N5279

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS. NO. 178 OF 2011 (JR)

BETWEEN:

GOLD AURA (PNG) LIMITED
Plaintiff

AND:

STAN NEKITEL in his capacity as the Registrar of Tenements
First Defendant

AND:

KEPAS WALI in his capacity as the Chairman of the Mining Advisory Council
Second Defendant

AND:

KEPAS WALI in his capacity as the Managing Director of Mineral Resources Authority
Third Defendant

AND:

HON. JOHN PUNDARI in his capacity as the Minister for Mining
Fourth Defendant

AND:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fifth Defendant

Waigani: Yagi J
2011: 14th & 20th April

PRACTICE & PROCEDURE – Judicial Review – application for leave – National Court Rules, Order 16 Rule 3(1) – principles considered and applied – sufficient interest – exhaustion of administrative remedies – delay – arguable case – Mining Act 1992 (as amended), exercise of discretion under ss. 27(3) and 26(4) – leave granted.

Cases Cited
Papua New Guinea Cases

Ila Geno & Others v The Independent State of Papua New Guinea [1993] PNGLR
Paul Asakusa v Kumbakor, Minister for Housing (2008) N3303

Overseas Cases

Inland Revenue Commissioners v National Federation of Self-Employed and Small Businesses Ltd [1981] UKHL 2; [1982] AC 617

Counsel

A. Chillion, for the Plaintiff/Applicant
T. Tanuvasa, for the Defendants

DECISION

20th April, 2011

1. YAGI J: The application came before me as an urgent application for leave for judicial review in the afternoon on 14th April 2011. I heard the application and reserved for a ruling. Mr. Tanuvasa from the Solicitor Generals Office appeared for the defendants and opposed the application. This is the decision on that application.

2. The application is made under Order 16 Rule 3(1) of the National Court Rules. Review is being sought as a result of a decision by the fourth defendant not to renew or extend a mineral exploration license held by the plaintiff.

3. The brief facts are that the plaintiff is or was the holder of an exploration license EL 1070 issued under the Mining Act 1992 (as amended). The license is for 2 years and is renewable. It was initially granted in April 1994. It has been renewed consecutively 8 times. The last renewal was made on 26th April 2008. It expired on 25th April 2010.

4. The last renewal was made with condition. The plaintiff was required to complete a full bankable feasibility study by 25th April 2010. Prior to the deadline, the plaintiff wrote to the first defendant and provided an explanation as to why it was unable to comply with the condition. About 4 months after the expiration of the license, the plaintiff submitted a variation application to the first defendant together with a further request for a deferment of the condition. Since then the plaintiff received no response in respect to the request and the application.

5. On 17th March 2011, the fourth defendant made a decision refusing the extension of the exploration license 1070 to the plaintiff. This decision was communicated in a letter dated 7th April 2011.

6. The application for leave is made under paragraph 1 of the originating summons filed by the plaintiff on 13th April 2011. The plaintiff also seeks interim restraining orders but such orders are not sought at this stage until the determination of the leave application.

7. In the originating summons, the plaintiff claims the following relief:

"1. Leave to apply for judicial review pursuant to Order 16 Rule 3(1) of the National Court Rules reviewing the Second, Third and Fourth Defendants decision made on or about 17 March 2011 to:

(i) Refuse the Plaintiff's Application for Variation of Approved Programme dated 2 November 2009 as repeated by a further request dated 22 January 2010 (the Variation Application) in respect to relevant acreage described as Gameta Exploration Licence 1070 (EL 1070) as submitted pursuant to Section 27(1) of the Mining Act and;

(ii) Refuse the Plaintiff's Application for an Extension of EL 1070 dated 22 January 2010 (the Extension Application) as submitted pursuant to Section 24 of the Mining Act.

2. A Declaration that the Third Defendant's failure:

(i) to consider the Variation Application, or

(ii) to give any notification and reasons to refuse the Variation Applications prior to expiry of EL 1070 on 25 April 2010,

denied the Plaintiff its right to natural justice and the decision made on or about 17 March 2011 is therefore null and void.

3. Further or in the alternative, a Declaration that the Third Defendant incorrectly exercised its discretion to refuse the Plaintiff's Variation Application when it relied on a recommendation made by the Third Defendant which did not take into account the Plaintiff's submission that:

(i) The difficulties brought about by the Global Financial Crisis affecting the current market prices, utilizing proven technology or with financing on commercial financial terms which are reflective of the modern market conditions for other mining projects.

(ii) The difficulties in obtaining requisite approvals prevented mining or restrict it in a manner that is, or subject it to conditions that are, for the being impracticable,

(iii) Despite the difficulties, the Plaintiff has progressed the exploration by putting together financial and technical resources together through a Joint Venture Agreement to fulfill the conditions of the EL as far as is practicable at the time,

rendering the decision contrary to Section 26(4) of the Mining Act, and therefore null and void.

4. A Declaration that the Fourth Defendant's decision,

(i) refusing the Extension Application,

(ii) based on the Second Defendant's recommendation which did not take into account relevant considerations, in particular, the difficulties faced by the Plaintiff to complete a Bankable Feasibility Study (within the required time), as raised in the Plaintiff's letters dated 2 November 2009 and 22 January 2010,

is a decision made contrary to Section 26(4) of the Mining Act and is therefore null and void.

5. An order in the nature of certiorari to bring into this Court and quash:

(i) the decision by the Third Defendant to refuse the Variation Applications made on or about 17 March 2011, and

(ii) the decision by the Fourth Defendant to refuse the Extension Application, made on or about 17th March 2011.

6. The Plaintiff be granted an extension of EL1070 with effect from 26 April 2010 to 25 April 2012.

7. In the alternative to the order sought in paragraph 6 above, and order that the Plaintiff be given 28 days to resubmit its:

(i) Variation Application; and

(ii) Extension Application,

in respect to EL 1070 to the Mining Registrar to be re- considered.

7. Costs of the proceedings.

8. Any other orders the Court deems fit."

8. There are 6 grounds for the review. These grounds are set out in paragraph 6 of the Statement in Support filed in the proceedings. They are:

"(a) The Third Defendant erred in law when he refused or failed to give any decision or reasons for his decision on the Plaintiff's Variation Application even to date and breached Section 27(3) of the Mining Act.

(b) The Third Defendant incorrectly exercised his discretion when he based his decision to refuse the Plaintiff's Variation Application, on recommendation by the First Defendant which did not take into account the Plaintiff's submission that:

(i) The difficulties brought about by the Global Financial Crisis affecting the current market prices, utilizing proven technology or with financing on commercial terms which are reflective of the current market conditions for other mining projects,

(ii) The difficulties in obtaining requisite approvals prevent mining or restrict it in a manner that is, or subject it to conditions that are, for the being impracticable, and

(iii) Despite the difficulties, the Plaintiff has progressed the exploration by putting together its financial and technical resources together through a Joint Venture Agreement to fulfill the condition of the EL as far as practicable at the time.

and the recommendation was made contrary to Section 26(4) of the Mining Act.

(b) The Third Defendant's failure to give any decision or reasons for his decision to refuse the Plaintiff's Variation Application prior to EL 1070 expiring on 25 April 2010 denied the Plaintiff an opportunity to improve and re-submit its Application for Variation and therefore breached the Plaintiff's right to natural justice.

(c) The Third Defendant's failure to accord the Plaintiff any notification of the results of the Variation Application under Section 27 of the Mining Act or the reasons for his decision to refuse the Application prior to the expiry of the EL on 25 April 2010 is so unreasonable under the Wednesbury Principle.

(d) The Fourth Defendant incorrectly exercised his discretion when he based his decision to refuse the Extension Application on a recommendation of the First Defendant which did not take into account:

(i) The difficulties brought about by the Global Financial Crisis which hindered the Plaintiff from developing the deposits at the current market prices, utilizing proven technology or financing on commercial terms which are reflective of current market conditions for other mining projects,

(ii) The difficulties in obtaining requisite approvals prevent mining or restrict it in a manner that is, or subject to conditions that are, for the being impracticable,

(iii) The fact that the Plaintiff did apply for Variation of the Approved Program on 2 November 2009 and that no reasons were given to the Plaintiff regarding that Application prior to it expiring on 25 April 2010, and

a decision which is made contrary to Section 26(4) of the Mining Act."

9. The law pertaining to grant of leave for judicial review is settled. There is no dispute about the law. Both counsels agree on the applicable principles. The principles have been stated and restated in many judgments of this Court (See for example Paul Asakusa v Kumbakor, Minister for Housing (2008) N3303). Essentially the applicant for leave has to satisfy 4 requirements:

1. He or she has standing or sufficient interest in the matter,
2. He or she has an arguable case,
3. He or she has exhausted all administrative remedies, and

4. There is no delay in bringing the proceedings.

10. Mr. Tanuvasa who appeared on behalf of the defendants, did not take issue with 3 of the requirements of the law. The only issue that the defendants raise during the hearing is the question of whether the plaintiff has an arguable case. On this basis, I consider it unnecessary for the Court to deal with the other 3 issues, namely sufficient interest, exhaustion of administrative remedies and delay. In effect, the defendants have conceded that these considerations have merit and/or otherwise incontestable. I will therefore only consider and deal with the contested issue of arguable case.

11. The principles relating to whether there is an arguable case was discussed in the Ila Geno & Others v The Independent State of Papua New Guinea [1993] PNGLR 22 where the Supreme Court approved the common law principles enunciated in the leading case of Inland Revenue Commissioner v National Federation of Self-Employed and Small Businesses Ltd [1981] UKHL 2; [1982] AC 617 where the famous and often quoted passage by Lord Diplock was cited with approval. The following is what Lord Diplock said:

"If on a quick perusal of the materials available then available, the court (that is the judge who first considers the application for leave) thinks that it discloses what might on further consideration turn out to be an arguable case in favour of granting to the applicant the relief claimed, it ought, in the exercise of a judicial discretion, to give him leave to apply for the relief. The discretion that the court is exercising is not the same as that which it is called upon to exercise when all the evidence is in and the matter has been fully argued at the hearing of the application."

12. In my view, the principles are clear. The Court is not required to give an in-depth and thorough consideration into the merits of the case. All that is required is for the Court to merely look at the documents filed or "the materials" available to determine the issue.

13. However, because the nature of these proceedings is such that the remedy or relief is discretionary, the exercise of the discretion must necessarily be done on proper basis. So how does the Court exercise its discretion? In the Asakusa case (supra) Injia DCJ (as he then was) said that this can be done in two ways; firstly by considering the Statement filed under Order 16 Rule 3(2)(a) and secondly, any other materials filed including those presented by the State.

14. The Statement filed under Order 16 Rule 3(2)(a) is set out in paragraph 5 above. There are two decisions which the plaintiff seeks to have reviewed. The first is the decision or non decision by the Third Defendant. The second is the decision by the Fourth Defendant made on 17th March 2011. As regards the first decision, there is no evidence of a decision being actually made. The plaintiff merely assumed that a decision was made. In other words, because a decision was made by the fourth defendant, it was assumed that the decision was based on a decision and/or recommendation of the third defendant. In my view, this assumption cannot be sustained on the evidence and therefore the ground of review is misconceived. There cannot be a review on a non decision. The remedy for a non-decision by a statutory or public body lies in a claim for mandamus to compel that body to make a decision. No relief is sought by the plaintiff seeking orders in the nature of mandamus in these proceedings to compel the third defendant to make a decision. For this reason alone I consider that grounds (a) – (d) in the Statement appear less convincing as whether there is an arguable case.

15. However, the plaintiff's also raise arguments concerning breach of the Mining Act. Two provisions that are relied upon are ss. 27(3) and 26(4). Insofar as s. 27(3) is concern, the plaintiff claims that the third defendant's refusal or failure to give a decision on the Variation Application is a breach of the law in that it is unreasonable under the Wednesbury principle. With respect to s. 26(4), the plaintiff claims that because the third defendant refused to consider or take into account the plaintiff's submission, any recommendation made by the third defendant breached s. 26(4). I set out these provisions below:

Section 27(3) states:

"(3) The Managing Director may, on recommendation of the Council –

(a) require the applicant to provide further information or to amend the revised programme; or

(b) approve the variation requested which shall be on the prescribed form; and –

(i) shall be substituted for the previously approved progamme; and

(ii) may include such further conditions as the Director considers necessary; or

(c) refuse the variation."

And Section 26(4) states:

"(4) Where an applicant has located a mineral deposit and has demonstrated to the reasonable satisfaction of the Council that he cannot reasonably mine the deposit at that time for one of the following reasons -

(a) the deposit is not capable of being developed at current market prices, utilizing current technology or with financing on commercial terms which are reflective on current market conditions for other mining projects;

(b) that the deposit is required to sustain future operations of an existing or proposed mining operation at another location;

(c) that difficulties in obtaining requisite approvals prevent mining or restrict it in a manner that is, or subject it to conditions that are, for the time being impracticable,

and further demonstrate to the reasonable satisfaction of the Council that he has progressed exploration as far as is practicable at the time and therefore cannot comply with the requirements of subsection (1) the Council shall approve the programme."

16. Section 27(3) in my view does not impose a mandatory obligation on the third defendant. It vests in him a wide discretion. The plaintiff claims that the refusal or failure by the third defendant to give a decision in respect to its Variation Application constitutes a breach of s. 27(3). It is obvious from my reading of the provision that the plaintiff is not obliged to consider the Variation Application. However, the plaintiff says that; that is improper exercise of discretion. I consider that an arguable ground has been show.

17. Section 26(4) is also a discretionary provision. It gives discretion to the third defendant as to whether or not to approve a programme submitted by an applicant. The key operative words are "reasonable satisfaction". The plaintiff claims that the refusal of the third defendant to take into account the Variation Application in the light of the factors under (a), (b) and (c) in that provision constitute an error in the exercise of discretion and therefore is a breach of s. 26(4). This provision is not clear in its terms. It seems notwithstanding the discretion; once the factors (a), (b) and (c) are satisfied, there is no further discretion to be exercised. It seems to me that this ground appears as an arguable case because the plaintiff appeared to have satisfied factors (a), (b) and (c). As to whether the discretion was exercised in a proper manner is a question that needs to be decided at the substantive hearing after a consideration of all the evidence.

18. As to whether the grounds will succeed at trial is another matter. It is not for this court to decide at this stage. All that is required is for the court to be satisfied that an arguable case exists.

19. In the circumstances, I grant leave to the plaintiff pursuant to Order 16 Rule 3 of the National Court Rules. Costs in the cause.

________________________________________________
Arthurs Allen Robinson: Lawyers for the Plaintiff/Applicant
Solicitor General: Lawyers for the Defendants