N5539

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 629 OF 2013

BETWEEN:

PATRICK SOKO in his capacity as Chairman of Board of Directors of
SEI DEVELOPMENT LIMITED
Plaintiff/Respondent

AND:

SUIKOL RESOURCES LIMITED
First Defendant/Respondent

AND:

TIAN SUYN LIMITED
Second Defendant/Respondent

AND:

SAGI HOLDINGS LIMITED
Applicant/Third Defendant

Kokopo: Oli, AJ
2013: 24th December
2014: 20th March

CIVIL - PRACTICE & PROCEDURE – Application by Third Defendant/Applicant to be joined as an interested party in the proceedings –Plaintiff/Respondent object to the application from the outset and denied that Applicant/Third defendant is not a party to the Forest Clearing Authority – Considered Forest Clearing Authority licence held by first defendant/respondent (Suikol Resources Limited) over 60,000 hectares comprise of 8 separate Blocks –Applicant/Third defendant has timber right interest in Block 4 & 5 Forest Clearing Authority licence area to be logged and harvested by second defendant/respondent through Forest Clearing Authority licence held by first defendant/respondent.

CIVIL - PRACTICE &PROCEDURE – Application by Third Defendant/Applicant to be joined as a party in the proceedings must show sufficient interest in the matter– Considered interest in the subject matter may be equitable interest or legal interest to sue and be sued in any originating process – Considered applicant/third defendant has sufficient legal interest to be joined as a party in the proceedings – Application by Applicant/Third defendantto be joined as a party is granted. Cost be in the cause.

Cases Cited:

AGC (Pacific) Ltd v Sir Albert Kipalan & 4 Ors N1944
CBS Inc. v Ramu Investments Pty Ltd [1978] PNGLR 66
Mondiai v Wawoi Guavi Timber Company Ltd [2006] PGNC 4; N3061 (4th July 2006)
PNG Printing Co Pty Ltd v Andrew Thompson [1993] PNGLR 81
Pinpar Development Corp v TL Timber Pty Ltd [1973] PNGLR 139
R v In Land Revenue Commissioners; Ex parte National Federation of Self-Employed and Small Business Ltd [1980] 2 All ER 378,
SCR No. 4 of 1980; Re Petition of MT Somare [1980] PNGLR 265

Counsels:

Mr Neserawa Motuwe, for the Plaintiff
Mr Robert Asa, for the First & Second Defendants
Miss Natasha Lisa-Marie Aisi, for the Third Defendant

RULING

20thMarch, 2014

1. OLI, AJ: The applicant/third defendant Sagi Holdings Limited filed a motion on 19th December 2013 to be joined as a party in the substantive case with the other parties on foot as the third defendant. The Applicant/third defendants moved this motion on 24th December 2013 where the other parties' legal representatives were represented to formally respond to the motion. The motion seeks leave of the court to move the Honourable Court for Orders that:-

(i)	Pursuant to Order 1 Rule 7 and Order 12 Rule 1 of the National Court Rules and order that the requirements of service of the Notice of Motion and Affidavit in support be dispensed with.
(ii)	Pursuant to Order 5 sub-Rule 8 (a) & (b) and Order 12 Rule 1 of the National Court Rules that Sagi Holdings Limited be added to this current proceeding and be joined as the Third defendant.
(iii)	Costs of this application be in the cause.
(iv)	Such further Orders as deemed fit by the Court.
(v)	Such further orders as deemed by the court.
(vi)	Time for entry of the orders as deemed by the court.

2. The motion by Applicant/Third Defendant is supported by the affidavit of Joe Kotangare, Chairman of Sagi Holdings Limited, who said that Sagi Holdings Limited is an interested party and should be joined in this proceeding. He deposed in his own affidavit sworn on 17th December 2013 and filed on 18th December 2013 that as the chairman of Sagi Holdings Limited, their interest is affected by the subject matter of these proceedings on foot and therefore filed this motion to be joined as a party. The Plaintiff/Respondent from the outset object to the motion and claim that the Applicant/Third Defendant has no legal interest in the subject matter in this proceeding supported by its sworn affidavit dated 22nd December 2013 and filed on the 23rd December 2013. The plaintiff/respondent strongly opposed the motion, however, failed to establish the legal basis for applicant/third defendant does not have interest, be it equitable and or legal interest in the subject matter. 

FACT

3. The brief facts surrounding the circumstances of this matter is that the Plaintiff/Respondent has filed a substantive action to seek restraining orders against the First and second Defendants/Respondents to stop logging at Block 4 and 5 and thereafter till Benefit Sharing Agreement (BSA) is signed between all parties to this project. The respective landowners in the Forest Clearing Area are fearful that they will miss out on their benefits legally owing to them; if Benefit Sharing Agreements legal framework is not signed before log harvesting is done. 

4. The Plaintiff/Respondent Company Sei Development Corporation Limited was registered as a landowner company for Block 4 and 5 of the Suikol Forest Clearing Authority (FCA) to receive benefits from Licence holder First Defendant/Respondent and distribute same to resource owners according to the terms and conditions stipulated in the Business Sharing Agreement. The Forest Clearing Authority (FCA) is held by First Defendant/Respondent in this proceeding and First Defendant/Respondent has logged or cleared and harvested logs from Blocks 1 – 3 respectively of the Suikol Forest Clearing Authority (FCA) licence area and have paid landowner company Rotomolo Ltd of their dues and benefit under the Benefit Sharing Agreement (BSA) legal framework as the resource landowner company. 

5. The Suikol Forest Clearing Authority (FCA) licence area covers approximately 60,000 hectares of forest area and is divided into 8 separate blocks from 1 to 8 blocks respectively. The developer of Suikol Forest Clearing Authority (FCA) timber resources project is second Defendant/Respondent who is ready to commence clearing logs at Block 4 & 5 towards the end of November 2013, however, the first and second Defendant/Respondent have not signed the Benefit Sharing Agreement (BSA) with the Plaintiff landowner company Sei Development Corporation Limited, hence the action by Plaintiff/Respondent to seek an order that the first and second defendants be restrained from developing Blocks 4 & 5 within the Suikol Forest Clearing Authority (FCA) licence area till both defendants have signed a Benefit Sharing Agreement (BSA) with Resource landowners via their land owner company, Sei Development Corporation Limited. 

ISSUE

7. The issue in this case is whether the Applicant/Third Defendant has sufficient interest to be joined as a party in this proceeding.

LAW

8. The Applicant/Third Defendant filed a motion Pursuant to Order 5 Rule 8 sub-rule 1 (a) & (b) and Order 12 Rule 1 of the National Court Rules that Sagi Holdings Limited be added to this current proceeding and be joined as a party as the Third Defendant. The Order 5 Rule 8 sub-rules 1 (a) & (b) of the National Court Rules reads:

Order 5 Rules 8 (1) a & b.      Addition of parties (8/8)
(1)     Where a person who is not a party—
(a)  Ought to have been joined as a party; or
(b) Is a person, whose joinder as a party is necessary to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated on,
The Court, on application by him or by any party or of its own motion, may, on terms, order that he be added as a party and make orders for the further conduct of the proceedings.
(2)    ...
(3)    ...

9. The Applicant/Third Defendant seeks general relief to be joined as a party at this stage of the proceeding under Order 12 Rule 1 of the National Court Rules and it reads:

Order 12 Rule 1.      General Relief. (40/1)

The Court may, at any stage of any proceedings, on the application of any party, direct the entry of such judgement or make such order as the nature of the case requires, notwithstanding that the applicant does not make a claim for relief extending to that judgement or order in any originating process.

10. Whilst the Court may, at any stage of any proceedings, on the application of any party, direct the entry of such judgement or make such order as the nature of the case requires, notwithstanding that the applicant does not make a claim for relief extending to that judgement or order in any originating process. In this case, the Court needs to be satisfied that the applicant/third defendant must show that it has sufficient equitable or legal interest in the proceedings, in order for Court to exercise and invoke its power under Order 12 Rule 1 to allow and add an additional party to the proceeding under Order 5 Rule 8 sub-rules (1) a & b of the National Court Rules. The Court having been satisfied that the applicant has established that it has sufficient interest in the matter in this proceedings, the Court has the discretional power under Order 12 Rule 1 of the National Court Rules to allow the party to be joined as a party in the proceeding to which this application relates. 

APPLICATION OF LAW TO THE FACTS

11. The brief historical background to this case is that, the first defendant/respondent namely, Suikol Resources Limited has been granted Forest Clearing Authority (FCA) licence comprise over 60,000 hectares of forest area that were divided into 8 separate Blocks owned by a number of different timber resource landowner customary land groups. These landowner groups through their respective landowner company have authorised the first defendant/respondent to engage a developer, who is the second defendant/respondent to log and harvest their timber resources under the terms and conditions stipulated in the Benefit Sharing Agreement (BSA). The Blocks 1- 3 out of the 8 Blocks is owned by a landowner group company known as Rotomolo Resources Ltd. 

12. These three blocks 1-3 were logged and harvested by first and second defendant/respondents already and they are now about to move onto Block 4 & 5 toward the end of November 2013 after normal and usual Benefit Sharing Agreement (BSA) legal framework are signed with the landowner company Sagi Holdings Limited, the applicant/third defendant. The Chairman, Mr Joe Kotangare of Sagi Holdings Limited, the applicant/third defendant stated in his affidavit that members of his landowner group gathered in their village and did prepare a draft Benefit Sharing Agreement (BSA) and were waiting for first and second defendants/respondents to sign so that the project will kick off as scheduled. The first defendant was delaying the Benefit Sharing Agreement to be signed, but second defendant/respondent was committed and was willing to sign Benefit Sharing Agreement (BSA) with Sagi Holdings limited. The first defendant/respondent Suikol Resources Limited, however, is the resource developer who's Chairman Mr Anton Katol said in his affidavit in response to the motion that applicant/third defendant, in fact has never formed part of the project development Forest Clearing Authority licence area and therefore is not a timber resources benefit sharing recipient. Therefore they should not be included in this proceeding as a party. 

13. However, Chairman Mr Joe Kotangare of Sagi Holdings Limited, in support of the motion deposed in his affidavit dated 17th December 2013 said that Sagi Holdings Limited, has assumed responsibility and taken over from the same landowner company formerly known as Unea Resources Limited. The new landowner company Sagi Holding Limited was formed and registered with Investment Promotion Authority (IPA) to manage the timber resources interest for the people of Suikol that own the eastern part of the forest area whilst the Suikol Resources Limited own the western part of the forest area generally known as Makokol, Koboku and Suikol integrated. The Chairman, Mr Joe Kotangare stated that in 2005 on 16th February, both landowner companies namely Suikol Resources Limited and Unea Resources Limited entered into an understanding that the timber forest areas be demarcated into two parts so that the western part of the forest areawill be under the superintendent and control of Suikol Resources Limited whilst the eastern part of the forest area will be under the superintendent and control of Unea Resources Limited. 

14. However, Unea Resources Limited was deregistered by Investment Promotion Authority (IPA) due to non lodgement of annual returns to IPA and its operations was taken over by a new company namely Sagi Holdings Limited,which is for the same landowners. The Sagi Holdings Limited was registered with IPA on the 14th August 2009 to replace Unea Resources Limited cooperate entity and to perform its legal duties under Benefit Sharing Agreement and achieve the interest of the resources landowners concern. The Chairman further stated that Sagi Holdings Limited has assisted with registration of seventeen (17) Incorporated Land Groups (ILG) for the people of the Suikol area. 

15. The members of the seventeen (17) ILG's are shareholders of Sagi Holdings Limited. On the 8th October 2012, Suikol Resources Limited and Sagi Resources Limited entered into an Agreement which gave Sagi Holdings Limited the right to harvest and sell logs in its respective areas to serve the landowners' interests, in particular in Blocks 4 & 5, are in the Forest Clearing Authority licence area. The Chairman Anton Katol of Suikol Resources Limited confirmed the Agreement between Sagi Holdings limited and Suikol Resources Limited but expressed grave concern that he was forced to sign the Agreement dated 8th October 2012 by Sagi Holdings Limited Chairman and his executive management team at Seaview Apartments here at Kokopo. On 17th April 2013 Sagi Holdings Limited wrote to Forestry Office at Kerevat seeking further clarifications on any possible way to accommodate the company in the Forest Working Plan of the operation. On the 23rd April 2013, Mr Ludwig Gunan – Area Manager – Islands from the Kerevat Forestry Office in his response replied in the said letter stating that:

"Your area is to be planned to be cleared and planted with agriculture crops this year according to this year Annual Logging Plan. You can negotiate with company that the next block to be released after satisfactory planting of other blocks will be your block. This will depend on the operational plan of the Company and further negotiation with Suikol Development Corporation and his Contractor." [my emphasis underlined]

16. The Applicant/Third Defendant filed this motion based on this professional advice by Forestry Office in Kerevat that their block will be next in line for logging after the other block landowners has complied with the required replanting of agriculture crops as planned, who provide overall superintendant and management of all timber resources logging in the said areas where the parties are currently harvesting logs and selling through the developer, the second defendant/respondent.

17. The Applicant/Third Defendant filed this motion to be joined as a party in this action because they have so much interest in the Forest Clearing Authority licenced area, that involved and managed the timber resources for the people of Suikol that own the eastern part of the timber resources area whilst the Suikol Resources Limited own the western part of the timber resources area, generally known as Makokol, Koboku and Suikol integrated areas. Therefore, it is safe to conclude that Sagi Holdings Limited has established sufficient legal interest in the said Forest Clearing Authority licence area where first defendant/respondent is the co-ordinating agent that facilitates the landowners company Business Sharing Agreement with the developer the second defendant/respondent in logging and harvesting their timber resources. 

18. The Business Sharing Agreement provides reciprocal obligation on the landowner company to plant agriculture crops in the harvested and cleared logging areas according to the overall operational plan for the respective landowner in 8 separate Blocks, out of which blocks 1, 2 & 3 have been harvested already and the logging developer will be moving into Blocks 4 & 5 as supported by the Kerevat Forest Office by Area Manager – Islands Mr Ludwig Gunan's letter of 23rd April 2013. Hence, the Applicant/Third Defendant has demonstrated that it has sufficient legal interest in the overall logging operation area in the said Forest Clearing Authority licence area to be joined as a party and Court having being satisfied will rule in favour of the motion accordingly.

CONCLUSION

19. The Court having heard the Applicant/Third Defendant's Counsel speak to her submission in support of the motion and verbal responses by both Counsels from Plaintiff/Respondent and First and Second Defendants/Respondent in defence to the motion. I also have the benefit to peruse the affidavits by parties and consider other relevant materials on file. It is very evident that all the parties in this proceeding have the same interest in logging and selling of timber resources through the second defendant the developer through Business Sharing Agreement (BSA). The landowner companies are also involved in planting agriculture crops to further benefit and yield from their own land once the land is cleared through logging from their blocks according to the overall annual operational business plan. 

20. The parties in this case on foot were not able to assist the Court with any relevant case authority on the issue. The issue is "whether the Applicant/Third Defendant has legal interest to be joined as a party in this proceeding". I have the benefit to draw some legal reasoning on this legal point in the case of Mondiai – v – Wawoi Guavi Timber Company Ltd [2006] PGNC 4; N3061 (4th July 2006). In this case the Applicant Ombudsman Commission of Papua New Guinea applied to be joined as a party to these judicial review proceedings. The Commission had prepared a report into matters raised by substantive proceedings and had made recommendations. There was an allegation that the recommendation of the report had not been followed by the Second Defendant. His Honour Lay J, held that: 

"The Applicant was created by the Constitution and Organic Law. Its' power must be found in those constitutional provisions. Its' powers were to investigate, report and recommend. The court could not extend those powers. It was a matter for the Parliament. There is no legislative authority for the Ombudsman to join in the action as a party with sufficient interest. The Ombudsman Commission's power of enforcing recommendations contained in its' reports is confined by Constitution s. 219 (6) to advertising, and recommendations to the Parliament and the relevant authorities. The Ombudsman Commission could not bring proceedings, nor did it have any legal right to enforce.It did not have a "sufficient interest" within its constitutional functions. It could not be made a party to the proceedings. It is matter to a trial judge as to whether the Ombudsman Commission should be heard on the substantive review pursuant to Order 16 Rule 9 (1) of the National Court Rules, although that Rule permits to be heard in opposition, not in favour of the Summons.

21. The above case can be seen as a clear contrast and can be distinguished with the present case. However, the principles demonstrated in the above case clearly show that the applicant did not have sufficient interest in the matter when it applied to be joined as a party. The Ombudsman Commission as a Public Institution assumed its judicial functions and powers from Constitution and Organic Law and has power to investigate, report and recommend, however, its' enforcing powers are confined to s. 219 (6) of the Constitution. His Honor Lay J, clearly found in no uncertain terms that Ombudsman Commission did not have sufficient interest in the matter to be joined as a party though it could have the right to be heard during substantive hearing of the judicial review subject to trial judge giving leave to be heard. This is largely due to its' specific functions. 

22. The case on foot can be distinguished from the above case authority in that the Applicant/Third Defendant is a landowner company who come from the same area, whose timber resources is in the same Forest Clearing Authority licensed area issued to the First Defendant/Respondent. The First Defendant/Respondent then contracted the Second Defendant/Respondent to log and harvest their timber resources and provide their timber royalties under the Business Sharing Agreement (BSA). The Business Sharing Agreement is the legal framework that facilitates landowners' interest. To be a party in this proceedingas a Defendant, the applicant ought to have sufficient interest to bring proceedings in their own right. 

23. In the following case authorities hereafter addresses the very issue on a party that express interest to be joined as a party, must establish that the party/applicant has sufficient interest in the proceeding that applicant relates. It is an undeniable fact that a joinder can be permitted to claim a legal right: see PNG Printing Co Pty Ltd – v - Andrew Thompson [1993] PNGLR 81. Another test is whether or not there could be a cause of action against the proposed party: see CBS Inc. – v – Ramu Investments Pty Ltd [1978] PNGLR 66 which was followed in Pinpar Development Corp – v – TL Timber Pty Ltd [1973] PNGLR 139. It is ordinarily desirable to join all parties who might have causes of action against each other arising out of the same facts to avoid a multiplicity of actions: see AGC (Pacific) Ltd – v – Sir Albert Kipalan & 4 Ors N1944. The Order 16 Rule 3 (5) of the National Rules provides that "the Court shall not grant leave unless it considers that the applicant has a sufficient interest in the matter to which the applicant relates. This position is echoed by Kapi J (as he then was) in the case of SCR No. 4 of 1980; Re Petition of MT Somare [1980] PNGLR 265, it was a five man Supreme Court bench and at page 295 of his judgment Kapi J, quote again from the judgment of Lord Denning in R – v – In Land Revenue Commissioners; Ex parte National Federation of Self-Employed and small Business Ltd [1980] 2 All ER 378, at page 391"...But a man who is genuinely concerned can point, objectively, to something that has gone wrong and should be put right. He should be heard." And also at page 295 of his judgment Kapi J, said:

"The new rule would be that the applicant must have sufficient interest in the matter...As to what is sufficient interest, I would adopt the objective test laid down by Lord Denning...I would leave it to the Courts to develop the application of the rule in individual cases".

24. Having alluded to the above case precedents on the subject matter on foot and observed overwhelming legal authorities that has been referred to and appears to confirm that the applicant must have sufficient interest in the matter that application relates, I am satisfied that the Applicant/Third Defendants has established that it has sufficient interest and its' intention is to put right the First Defendant/Respondent's action to deny them their legitimate right to participate and benefit from their timber resources through the Business Sharing Agreement (BSA) before the developer, the Second Defendant/Respondent goes into Blocks 4 & 5 under the Forest Clearing Authority licence to log their timber resources. The Court therefore having being satisfied grants the motion and issues ancillary orders as sought by the Applicant/Third Defendant. The Court Orders accordingly.

ORDER

1.	The motion by Applicant/Third defendant pursuant to Order 5 Rule 8 (a) & (b) and Order 12 Rule 1 of the National Court Rules is granted that Sagi Holdings Limited be added to this current proceeding and be joined as the Third Defendant before substantive hearing of the originating process.
2.	Costs of this application be in the cause.
3.	Parties to return on 31st March 2014 at 9.30 am to secure a trial date. 

_______________________________________________________________

Motuwe Lawyers: Lawyer for the Plaintiff
Warner Shand: Lawyer for the First & Second Defendants 
Donald Wesley Lawyers: Lawyer for the Third Defendant