N5943

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS NO 203 OF 2014

BETWEEN:

ELIAS KAMARA & THOMAS KALAS for themselves and on behalf of members of KAIRAK CLAN
First Plaintiff

AND:

KAIRAK LAND GROUP INCORPORATION
Second Plaintiff

AND:

PETER KARDUK&BEN TOPORONO for themselves and on behalf of members of BITAGUNAN CLAN of Napapar Village No. 5.
Third Plaintiff

AND:

KANAWI POURU
Managing Director, PNG Forest Authority
First Defendant

AND:

PNG FOREST AUTHORITY
Second Defendant

Kokopo: Oli, AJ
2014: July 16th,
2015: March 31st

PRACTICE & PROCEDURE – CIVIL JURISDICTION:- Customary Land - Dispute over receipt of royalty payment according to customary land ownership of land – forestry – timber harvested from customary land manage by second defendant with a developer - No Land Management Agreement between developer and landowners – second defendant facilitated the timber harvest by developer – Land Titles Commission decision favours the plaintiff’s clans as the rightful customary owners of the land – Local Land Court confirm the LTC findings except redefine new boundary perimeter lines between the plaintiff’s clans – The dispute over new redefine boundary perimeter lines has landed the matter on appeal before Supreme Court still pending – Plaintiff seek declaration on royalty payment at 100% - contrary to NEC Decision of 45/2008 - No independent formal royalty payment agreement made between Second Defendant and Plaintiff’s Landowners to supersede NEC Decision 45 of 2008. 

PRACTICE & PROCEDURE - CIVIL JURISDICTION:- Judgments and Orders – jurisdiction of National Court – inherent power of National Court under Constitution s. 155(4) to make orders necessary to do justice in the circumstances of this case is most inappropriate – Especially, in view of the existence of the NEC Decision No. 45/2008 royalty payment rate fix under Landowner and State Partnership category at 40% - No legal foundation for Plaintiff’s royalty payment claim at 100% is refused. 

PNG Cases Cited:

C.B.S Inc. and C.B.S Records Australia Limited and Bali Merchants Pty ltd –v- Ranu Investments Pty Ltd [1978] PNGLR 66, adopted and applied.
Koitaki Farms Limited v Kemoko Kenge & Ors (2001) N2143
Papua New Guinea Forest Authority v Concord Pacific Ltd [2003] N2423
Mavu v Moto [2005] PGNC 87
Dumal Dibiaso Incorporated Land Group No. 1664 v Kuma [2005] SC805
Pinpar Developer Pty Ltd v TL Timber Development Pty Ltd [2006] PGNC 66

Overseas Cases Cited:

Francis v Ibitoye [1936] NLR 11
Odata Ltd – v – Ambusa Copra Oil Mill Limited and National Provident Fund of Trustee NZ106; adopted and applied.
C.B.S Inc. and C.B.S Records Australia Limited and Bali Merchants Pty ltd –v- Ranu Investments Pty Ltd [1978] PNGLR 66; adopted & applied

Counsel

Mr. W Donald, for the 1st & 2nd Plaintiff
Mr. R Asa, for the 3rd Plaintiff
Mr. I Shepherd, for the 1st& 2nd Defendants

DECISION

31st March, 2015

1.	OLI, AJ: The Plaintiffs filed this proceedings which was amended on 20th May, 2014 seeking the following relief:

i)	 A declaration that the actions of the Defendants to withhold royalty monies legally belonging to the Plaintiffs for timber harvested between the years 1996 and 2005 on their customary land generally known as Trans-Kerevat Land are illegal and without any valid basis in law or otherwise;

ii)	A declaration that the Plaintiffs are the legal beneficiaries or recipients of the royalty monies in respect of timber harvested on Trans-Kerevat Land between the years 1996 and 2005 at the permission of the Defendants;

iii)	A declaration that the Plaintiffs are entitled to a 100% (one hundred percent) in value of such royalties pursuant to NEC decision No.45/2008 regarding proposed revenue sharing for matured forest plantations;

iv)	A declaration that the Plaintiffs are entitled to compound interest on the royalty monies owing to them;

v)	An order directing the Defendants to release all royalty monies held by the Second Defendant to the Plaintiffs forthwith and to pay them compound interest on the said royalty monies.

vi)	Costs of the proceedings; and

vii)	Any further orders as deemed fit by the Court.

2.	However, the brief history of the case reveals that the proceedings were commenced by way of Originating Summons which was filed on 16 April 2014 and amended on 20 May 2014 to include the additional party of a Third Plaintiff. There have been two appearances on 6th and 20th June 2014, during which the Court issued certain directions. The court issued directional orders to parties to file remaining affidavits and serve on parties before securing a trial date set on the 16th July 2014.

FACTS

3.	The First and Second Plaintiffs seek declaratory orders in respect to outstanding royalty payment by the defendants over harvesting their timber resources on their traditional land since 1996 and 2005, on customary land generally known as Trans-Kerevat Land. 

4.	The first and second Plaintiff’s counsel Mr Wesley Donald submit that primary evidence in support of their claim is provided by one THOMAS KALAS deposed in his affidavit of the following undisputed facts. They are:

(i)	On 9 September, 1994 the Trans-Kerevat land was awarded by the Local Land Court to the Kairak Clan and the Bitagunan clan as traditional landowners (refer to as Annexure “E”).

(ii)	Prior to that, the land had been the subject of Land Titles Commission proceedings which commenced in 1954 about the time the colonial administration starting planting teak; kamarere and balsa on the land (refer to as Annexure “F”).

(iii)	The Land Titles Commission in its Final Order held that the land had never been acquired by the colonial administration and restored full customary landowners, the Kairaks and the Taulils.

(iv)	In a further dispute over the boundaries and ownership between the customary landowners, a further group, the Bitagunan clan joined in. The Taulils were neglected and the land awarded to the Kairaks and the Bitagunans by the Local Land Court referred to earlier. In arriving at the decision the court drew on new common boundary between the parties.

(v)	The right to harvest the timber on the land was reserved in the State.

(vi)	Harvesting began in about 1996 and continued till 2005 wherein the Second Defendant issued Timber Authorities to various companies that harvested the timber.

(vii)	Timber Royalties were withheld from payment to the Kairak and Bitagunan clans because of a protracted dispute over the boundary.

(viii)	In early 2010 the parties agreed to receive the royalty monies on agreed terms and notified the Defendants (refer to as Annexure “K”).

(ix)	Despite assuring the parties PNG Forest Authority failed to pay the royalty monies. Having to wait for long procrastinated court proceedings were still ongoing.

(x)	However, it is important to note that the subject of payment of royalty had been discussed between the parties and PNG Forest Authority at various times since the year 2005 (refer to Annexure as “J” to “J27”).

(xi)	The discussions reached the stage where PNG Forest Authority, agreed to pay royalty monies on a 100% percent basis because of the NEC Decision No. 45/2008 (refer to as Annexure “J21” and “L”.

(xii)	However, the PNG Forest Authority has a change of heart and changes their original position and wants to retain part of the royalty monies.

(xiii)	Hence, this action to seek court to make amongst other orders the payment of 100% percent royalty to the plaintiffs as traditional land owners by the second defendant. 

5.	The Counsel for the 1st and 2nd Plaintiff Mr Wesley Donald also filed a written submission to assist the court on the issue before the court whether royalty payment should be 100% on behalf of his client.

6.	The third Plaintiff’s Counsel Mr Robert Asa in support of the action made verbal submission in addition, to an affidavit he filed by the leader of the Bitagunan Clan Mr PETER KARDUK, who echoed the same sentiments like the leader of the first Plaintiff Kairak Clan. The two Clan leaders claim on behalf of their Clan members that their royalty payment should be 100% paid to the Clan leaders and Clan leadership will share the royalty payment to their members. But PNGFA, the second defendant need to be instructed by the Clan leadership to agree on the disbursement percentage to each Plaintiffs on the basis of log stump harvested from their respective land, despite common boundary lines redefined by Local Land Court is still under dispute pending before the Supreme Court on appeal. 

7.	The defendant through their learned counsel Mr Ian Shepherd from the outset registered their strong objection to the action and contest that Plaintiff’s use the wrong mode through the Originating Summons where Writ of Summons is the appropriate mode to plead all the legal issues and remedies sought not just declaratory order on the royalty payment at 100%. The defendant through their counsel files an affidavit in defence by the first defendant and written submission in support of the defence highlighting a lot of unavoidable factual, legal and procedural issues that must be tried before the court of law. These issues are amongst others that I will come to address later in my discussion in the application of law to the facts segment in this judgment.

ISSUES

8.	The pertinent issues raise in this matter are:

1.	Whether the Plaintiffs should be paid 100% royalty by the defendants?
2.	Whether the second defendants can be able to retain part of those royalty monies that the plaintiffs are claiming?

LAW

9.	The law governing the powers of the PNG Forest Authority to deal with customary landowner’s natural resources are set out in the Forestry Act 1991.

10.	The section 46 of the Forestry Act sets out the rights of customary resource ownership over their natural resource and it reads:

“46.	Customary Resource Ownership.

The rights of the customary owners of a forest resource shall be fully recognized and respected in all transactions affecting the resource. “[Underlined my emphasis)”

More so, section 56 of the Forestry Act sets out the acquisition of timber rights, etc. by the Authority and it reads:

“56.	Acquisition of timber rights, etc., by the Authority.

(1)	Subject to this Division, the Authority may acquire timber rights from customary owners pursuant to a Forestry Management Agreement between the customary owners and the Authority.

(2)	An acquisition under Subsection (1) is not valid, and no forest Management Agreement is valid, unless it is approved by the Minister.

(3)	No acquisition under this section shall affect the customary rights of ownership of the land. [Underlined my emphasis].

APPLICATION OF LAW TO THE FACTS

11.	The second defendant is empowered under section 46 of the Forestry Act to provide total superintendent and control, but recognised the right of traditional land owners over the harvesting of their timber resources by a developer in the province. The section 46 reads:

46. Customary Resource Ownership.
The rights of the customary owners of a forest resource shall be fully recognized and respected in all transactions affecting the resource.

PLAINTIFF’S SUBMISSIONS

12.	The learned Counsels for 1st, 2nd and 3rd Plaintiffs made submissions based squarely on the premise that NEC Decision of 45/2008 does not apply to their client royalty payment entitlements, basically because there was no agreement as per the three category referred to under NEC Decision of 45/2008 respectively, therefore Plaintiffs are entitled to the 100% royalty payment from timber harvested from their land. I find this legal proposition sound very convincing but lack of any royalty payment agreement between State and landowners, as per the NEC Decision of 45/2008 nor is there any independent written agreement between Second defendant and Plaintiff’s to legitimise their total claim of 100% royalty payment. State through second defendant has a change of heart from its earlier indications that the Plaintiffs were entitled to 100% royalty payment, and progress equitable claim under NEC Decision of 45/2008 when it took over management of the tree plantation land from the Colonial Administration then. 

13.	I have the opportunity to hear and observed the 1st and 2nd Plaintiffs’Counsel Mr Donald’s reference to the definition of Fixture (n) means a chattel that has been annexed to land or building so as to become a part of it, in accordance with the maxim; (“quicquid plantatur solo, solo credit” – means whatever is annexed to the soil is given to the soil) [Oxford Dictionary of Law at page 233].

14.	The Counsel further adverted to legal materials on “Land Law in Papua New Guinea” by Amankwah, Mugambwa and Muroa at page 35 under Clause 2.14 on fixtures stated as follows:

“The common law definition of land, in its pristine and unsullied form, makes a landowner the owner of everything found on the land or attached to it. Thus summing up the view on the Latin maxim [supra] “quicquid plantatur solo, solo credit.”

15.	The authors basically confirm the Latin maxim that what is on the land is part of the land therefore the landowner is the owner of everything and anything attached to it. Whilst this issue is not in dispute, it does promote the landowners right to the land. The issue on landownership is not disputed, what is disputed, and is the subject of this proceedings is the quantum of royalty payments by second defendant to the Plaintiffs, who claim outside of the existence of a royalty payment regime provided under NEC Decision No. 45/2008. 

16.	The Counsel refers to an external Australian case authority on this point on landownership is the case of Brand v Chris Building Co Pty Ltd [1957] VR 625, the Supreme Court of Victoria similarly applied the principle. In that case the Defendant, Chris Building Company Pty Ltd, entered into a contract whereby it agreed to build a residential house for Mr and Mrs Pulis on the Pulis’ land. The house was erected thereon. When the mistake was discovered, the Defendant offered to Brand to remove the almost completed house and to put the land back into its previous state. Alternatively, the Defendant offered to accept 2145 pounds from the Plaintiff, being the cost without profit of the labour and materials. The Plaintiff declined both offers and brought these proceedings to restrain the Defendant from entering his land and demolishing the house. The main defence was acquiescence and unjust enrichment.

The Court held (Per Hudson J):

“The position therefore is this, that the Plaintiff as the owner is entitled to possession, the Defendant under an honest mistake which was not contributed to by the Plaintiff entered upon the land without any authority or licence of the Plaintiff, became a trespasser and proceeded to build a house on it; and when the Plaintiff found out, he took immediate steps to prevent the continuance of the trespass in determining whether the Defendants are entitled to retain part of the royalty payable to the Plaintiffs, the Court must be guided in its decision by principles of law. In this instance the Plaintiffs are entitled to insist on their strict legal rights. (Underline is mine)

17.	I find the above Australian case authority offers some persuasive value and it appears to shed some light in the circumstances of this case on two fronts:- Firstly, in this case the defendant entered the land after the exodus of colonial administration, may be seen as trespass by default and planted economic trees and harvested the trees after the trees reach mature growth level. But second defendant, however, before harvesting the trees fail to exercise its legal duty under section 120 of the Forestry Act to enter into royalty payment agreement with the traditional Landowners. The second defendant fails to advance any reason for failing to comply with section 120 of the Forestry Act. 

18.	Secondly, the Plaintiffs who are being identified as true traditional landowners have mounted a law suit claiming 100% royalty payment rather than exploring the option to settle under NEC Decision No. 45/2008, class of category of royalty payment schedules that were designed by the State for the landowners, and Plaintiff’s in this case are no exception. The State has purposely designed a Benefit Sharing Agreement (BSA) of revenue from mature forestry plantations harvest, a schedule of royalty payments is design to facilitate stakeholder’s partnership arrangement on benefit sharing of revenue from mature forestry plantation products. In this case, there is no evidence to show that the State through second defendant has any proper consultation with the landowners before entering and planted the trees on traditional land with landowner’s approval. 

19.	The traditional landowners having seen the State agents through second defendant enter onto their land and planted economic trees, also failed to alert Provincial Administration authorities and Local Level Government authorities, to confirm and appraise how State agent has gone onto their traditional land and carrying on business with tree planting without their formal endorsement and approval.

20.	It appears that both parties have demonstrated some degree of inability to perform their respective legal and normal administrative duties. In fact, the second defendant has the legal duty to find the traditional landowners in the area, and the landowners would exercise some degree of normal regular traditional navigational surveillance tracking initiative, to stop illegal trespassers going on to their land. These concerns are real with predictable dramatic legal consequences and they can only be adequately put to rest, if parties are given the opportunity to address them through substantive deliberations with supporting and relevant evidence to provide a conducive environment to enhance partnership relationship for a positive and win/win outcome for both parties. The court is put in a very awkward position of having being deprived of the opportunity to be addresed on the legal basis for the 100% royalty payment according to the law with the facts as presented with the current back drop of this case.

20.	There is no dispute over the said Trans-Kerevat Land between the principal plaintiffs over the ownership except their common disagreement over their new perimeter boundaries as a result of the Local Land Court decision of 9th September 1994, the subject of appeal before the Supreme Court to determine the common boundary between the parties. However, both plaintiffs have agreed, whilst awaiting the appeal before the Supreme Court, the Plaintiffs have seen fit to seek settlement out of court on 100% royalty payment should apply to them. The premise upon which the Plaintiffs are making their claim is based on the omission in the NEC Decision No. 45/2008 schedule of royalty payment, and it reads:

CONFIDENTIAL

Papua New Guinea

PAPUA NEW GUINEA GOVERNMENT
__________________
NATIONAL EXECUTIVE COUNCIL

Decision No: 45/2008	Meeting No: 3/2008	

Subject: RESCINDING OF NEC DECISION NO: NG 72/2002 AND APPROVAL OF THE PROPOSED REVENUE SHARING ARRANGEMENT FROM MATURED FOREST PLANTATION

On 27th March 2008, Council:

1.	noted the content of Policy Submission No. NG 25/2007;
2.	approved to rescind its Decision No. NG 72/2002 on sharing of revenue from mature forestry plantations;
3.	directed that the distribution or allocation of earnings from sale of matured plantation forests be based on net earnings, and to distributes any surplus in the manner prescribed in the table below;

Type of Land Title	Customary
Landowners	
PNGFA	National
Government	Provincial
Government	
State Land	5%	40%	50%	5%	
Customary Land on Lease	
20%	
30%	
45%	
5%	
Customary Land on Partnership	
40%	
15%	
40%	
5%	

4.	directed the National Forest Board to re-invest the retained earnings in redevelopment of plantation forests; and

5.	directed the Ministerial Committee on Economic Sector to establish a Task Force comprising Ministers for: Environment & Conservation, Health, Forestry and Public Enterprises to review the current policies, legislations on reforestation.

CONFIDENTIAL

-02-

CONFIDENTIAL

I, Certify the above to be a correct record of the
Decisions reached by the National Executive Council

(signed)__________________________
PUKA TEMU Acting Chairman

(signed)________________________
WINNIE A KIAP Secretary, NEC

Date: 28th March 2008

Distribution: MINISTER FOR FORESTS/ATTORNEY-GENERAL & MINISTER FOR JUSTICE/MINISTER FOR ENVIRONMENT & CONSERVATION/MINISTER FOR HEALTH&HIVAIDS/MINISTERFORPUBLIC ENTERPRISE/JUSTICE/PRIMEMINISTER & NEC/PNG FOREST AUTHORITY/ENVIRONMENT &CONSERVATION.

CONFIDENTIAL

21.	Whilst the Plaintiffs do not dispute the existence of NEC Decision No. 45 of 2008, they do not agree that the NEC Decision No. 45 of 2008 should be binding on them, in the three classes of headings of Royalty Payment schedules to Landowners, shown in the matrix table shown above. The Plaintiff’s merely claim that their case is outside of the framework of the existing sharing of revenue from mature forestry plantation as per the NEC Decision No. 45 of 2008. Therefore, the Plaintiffs maintain that they do not fall under any one of the metric first category under “State Land” and the second category under “Customary Land on Lease” and third category under “Customary Land on Partnership”. These categories attract different rates of percentage royalty payment entitlements in return. The respective rates, in particular are as follows:- The first category is under State Lease attracts 5% in royalty payment to the Customary Landowners. The second category is under Customary Land on Lease attracts 20% in royalty payment to the Customary Landowners. The third category is under Customary Land on Partnership, and it attracts 40% in royalty payment to the Customary Landowners. The State’s position is very clear on sharing of revenue from mature forest plantations. That is, to enter into legal agreement on royalty payment with the State is clearly stipulated in the NEC Decision No. 45/2008. 

22.	The royalty payment formula provided by State under NEC Decision No. 45/2008 provides no room for the Landowners to negotiate their own royalty payment percentage rate. This conclusion is very clear because royalty payment schedules set by the State are on fix terms. If there was a Land Management Agreement (LMA) entered into by the second defendant with the Plaintiffs to harvest the timber resources from the landowner’s land, the Plaintiff would have put their 100% royalty payment proposal to the second defendant before developer was allowed to enter the tree plantation land to harvest the mature trees. The second defendant did not observe and follow established protocols under the Forestry Act, in this case.

23.	In the case of Mavu v Moto [2005] PGNC 87; N2879 (25 August 2005) his honour Canning J, dealt with the matter:

“Where plaintiff claim to be the leader and agent of a clan whose interest in a piece of customary land was registered in 1994 under the Lands Disputes Settlement Act. Two other clans had a dispute with the plaintiff’s clan in 1994 about ownership of the land. The dispute was mediated by land mediators, and an agreement was reached and approved by the Local Land Court. The plaintiff claimed that the third defendant had been logging the subject land for ten years without paying royalties to the plaintiff. Furthermore, he and his clan were entitled to all royalties. The first and second defendants, representatives of neighbouring clans, disagreed, saying that the plaintiff had not been denied any royalties he was entitled to. They argued that royalties had only been paid for the last two years and that, in any event, the plaintiff was not an authorised clan agent, had no authority to receive royalties on behalf of his clan and that any royalties paid had to be shared amongst the three clans, in accordance with the 1994 agreement. The logging company, the third defendant, did not want to be involved in the dispute. The provincial forest officer, the fourth defendant, distributes royalties paid to the Forest Authority by the third defendant. The fourth defendant did not favour any side of the dispute. The plaintiff filed proceedings in the National Court seeking a declaration that he and his clan are entitled to all future royalties arising from the logging on the subject land.

24.	The Court held that:

(1) 	The agreement between the Evusovul, Nakise and Otho clans of 31 May 1994, regarding Gimomi-Lapo, as approved by the Local Land Court order of 14 October 1994, was made in accordance with the Land Disputes Settlement Act (Chapter No 45) and is valid, enforceable and legally binding.

(2) 	The agreement and order are evidence that customary ownership of Gimomi-Lapo and entitlement to timber royalties and all other resource payments in respect of Gimomi Lapo are equally divided and distributable amongst the Evusovul, Nakise and Otho Clans.

(3) The agreement and order do not purport to appoint clan agent for any of the three clans.

(4) Further orders of the Court will be necessary to clarify the individual members of each clan who will be authorised to manage timber royalties and other resource payments on behalf of each clan”.

24.	The above case dealt with clan’s royalty entitlements payments to be received and managed by an authorised person(s) registered with PNGFA on behalf of the clan. This is indeed the requisite legal requirement provided under section 235 of the Forestry Regulation 1998. Any other busy bodies claim to receive royalty payment on behalf of the Clan will not be allowed. This is the transparent and accountable mechanism put in place in the Forestry Regulation legislation to protect the interest of the real Traditional Landowners from potential abuse by busy bodies. 

25.	However, the above case can be distinguished with the present case in that the history of the case reveals that there was neither Royalty Payment Agreement nor Revenue Sharing Arrangement from Matured Forest Plantation agreement made between second defendant, consistent with NEC Decision No. 45 of 2008, on behalf of the State and the Landowners Clan Groups. In the case of Mavu v Moto basically demonstrate the importance of a real dialogue that must take place, between Landowners and the second defendant before any real progress into royalty payment entitlement agreement can be further progressed between second defendant and landowners. This process is healthy and secures accountability and transparent element consistent with NEC Decision No. 45/2008 to protect the interest of the Landowners. The PNGFA is duty bound to perform its legal mandated duty and in so doing is being accountable and transparent in discharging its legal duty under sections 46 and 56 of the Forestry Act 1991.

26.	But the reality check reveals that the second defendant allow this omission to take place when it has a clear legislative mandated duty to facilitate the landowners interest under sections 46 and 120 to engage the landowners with the royalty payment agreement as required under the Forestry Act 1991, but consistent with NEC Decision No. 45/2008. However, whether in the absence of such agreement on royalty payment or Revenue Sharing Arrangement from Matured Forest Plantation by second defendant amount to breach of the said legislative provisions under the Forestry Act 1991. My initial reaction to this legal proposition is in the affirmative, in that the issue before the court is not one of who is right and who is wrong, but one that amount to affecting both parties right to reasonable and appropriate royalty payment entitlements originate from forestry resource harvested from the Plaintiff’s traditional land. But there is no doubt that second defendant unconsciously contribute to this state of affairs that left the Plaintiff’s to no other option but to come to court because second defendant could not agree to 100% royalty payment entitlement to Plaintiff’s out of court settlement. I restate the both sections 46 and 120 of Forestry Act, to highlight the importance and legal obligation placed on the second defendant legislative duty and role clearly provided under both sections. The section 46 provides:

46. Customary Resource Ownership.
The rights of the customary owners of a forest resource shall be fully recognized and respected in all transactions affecting the resource.

27.	Whilst the second defendant is mandated under section 46 to facilitate the rights of the customary landowners of the forest resource, the customary landowners shall be fully recognized and respected in all transactions affecting the resource. But the Minister responsible for the second defendants Government Department is responsible for the periodical review of the landowner’s royalty payable on timber and forest products taken or deemed to be taken under a timber permit is set at a rate and fixed by the Minister in the timber permit, ought to commensurate with the volume of merchantable timber or forest product harvested. The percentage on royalty payment entitlements is calculated according to the timber stump harvested. The section 120 reads:

120. ROYALTIES.

(1) Subject to this section, the royalty payable on timber and forest produce taken or deemed to be taken under a timber permit is at a rate, fixed by the Minister in the timber permit, on the volume of merchantable timber or forest produce calculated at stump.

(2) In the case of a timber permit, the Minister may–

(a) at least once in each year during the currency of the timber permit; and

(b) where in his opinion there exists a special reason to do so, at any other time during the currency of the timber permit, review the royalty payable for timber or forest produce under the timber permit.

(3) Where the Minister has conducted a review under Subsection (2), he may vary the royalty payable in relation to the timber permit by written notice to the holder of the timber permit.

(4) Where royalty is varied under Subsection (3)–

(a) the varied royalty is, from the date specified in the notice, the royalty payable for timber or forest produce taken under the timber permit; and

(b) the timber permit, is, from the date specified in the notice, subject to the payment as so varied.

(5) Notwithstanding this section, where the Minister is of the opinion that it is desirable in the national interest to do so, he may enter into an agreement with the holder of a timber permit, or any applicant for a timber permit, that the royalty fixed or to be fixed in the timber permit shall not be varied within such period as is specified in the agreement.

(6) Royalty payable under this section shall be paid by monthly instalments at the time of lodgement of such monthly statements by the holder of a timber permit as may be prescribed.

(7) A person to whom royalties are paid under this Act shall furnish to the Commissioner General of Internal Revenue such information in relation to the royalties as the Commissioner General of Internal Revenue may require.

28.	In view of the lack of formal agreement on royalty payment rates between Landowners and the State upon issuing of the Timber Permit to the developer by the second defendant; it raises a cause for concern. That is, does the omission or lack thereof amount to unconscious fraud by the second defendant when it grants the Timber Permit to the developer? In the case of Pinpar Developer Pty Ltd (First Plaintiff/First Cross-Defendant)and Rimbuan Hijau(PNG) Ltd (Second Plaintiff/Second Cross-Defendant) – v - T. L.Timber Development Pty Ltd (Defendant/Cross-Claimant) [2006] PGNC 66; N3075 (9 August 2006), His Honour Gavara-Nanu, J dealt with the matter:

 “where the cross-claimant, a landowner company and the Permit Holder engaged the first cross-defendant as the Contractor to develop its timber project. The two officers of the first cross-defendant who signed the Logging and Marketing Agreement (‘the LMA’) with the landowners had difficulty understanding and speaking English. Those two officers only attended their first brief meeting with the landowners then had no further dealings with the landowners and the timber project. The LMA was signed between the first cross-defendant and the cross-claimant. The landowners signed the LMA because they were told by the two officers of the first cross-defendants to sign it. The landowners were still concerned with the LMA. 

29.	At the time the first cross-defendant signed the LMA, it was not yet registered. It was registered two days after signing the LMA.

30.	The first cross-defendant was a subsidiary of the second cross-defendant. All the subsequent meetings and negotiations between the first cross-defendant and the cross-claimant regarding the logging operations and a draft Sawmill Agreement were held between the officers of the second cross-defendant and the landowners at the head office of the second cross defendant. The first cross-defendant and the second cross-defendant had the same registered office and a company Secretary. Some of their Board members were same.

31.	The first cross-defendant had no office and staff of its own. All its affairs were run and managed by the second cross-defendant and its two other subsidiaries. They also carried out all the obligations for the first cross-defendant under the LMA.

32.	It was held that:

(i)	The first cross-defendant was agent of the second cross-defendant; and that it was purposely incorporated to give it a corporate status so that it could execute the LMA for the second cross-defendant to do logging business. The second cross-defendant was the undisclosed principal of the first cross-defendant.

(ii)	 The second cross-defendant was the parent and the controlling company which ran and managed all the affairs of the first cross-defendant.

(iii)	 There was element of fraud in the conduct of the cross-defendants and that their conduct in telling the landowners to sign the LMA which was formulated by the cross-defendants, with no or little involvement, if any, by the landowners was unconscionable. Odata Ltd –v- Ambusa Copra Oil Mill Limited and National Provident Fund Board of Trustee NZ106 – adopted and applied.

(iv)	 There was constant breach of the LMA by the cross-defendants. In that regard, the landowners had legitimate concerns, which they tried to raise, but were ignored by the cross-defendants.

(v)	 The legislative scheme and structure as reflected in s. 46 of Forestry Act, 1991 provides for all parties dealing with resource owners to respect the rights of the resource owners. These rights were embodied in the LMA, but were totally disregarded by the cross-defendants as "not important". In those circumstances, the second cross-defendant should not have the protection of its corporate veil; and it should be lifted, so that it does not avoid its legal obligations. C.B.S Inc. and C.B.S Records Australia Limited and Bali Merchants Pty ltd –v- Ranu Investments Pty Ltd [1978] PNGLR 66 – adopted and applied.

(vi)	 The PNG Forestry Authority has the duty to protect the rights and interests of the Permit Holders and or the resource owners; and to ensure that the requirements of theForestry Act, 1991, are fully complied with by the Contractors or the developers.

(vii)	The second cross-defendant is bound by the actions of the first cross-defendant and is vicariously liable to the cross-claimant

33.	In view of the above legal outcome, the question is whether the failure by first defendant to facilitate Royalty Payment Agreement with the Plaintiff's landowners, could amount to first defendant committing an unconscionable fraud? The conduct by first defendant that could have contributed to unconscionable fraud ought to be put through the reasonable man's test. That is whether the reasonable man placed in the same situation as the first defendant would behave in the way the first defendant did. In the absence of all relevant evidence and material facts, it is presumptuous to draw any positive outcome from this scenario in question on unconscionable fraud committed by the first defendant. But what is not in dispute is the fact that there was no royalty payment agreement made nor any payment of royalty entitlements was paid by the first defendant through the second defendant to the Plaintiff's. That being the case, it is unsafe to frame the first defendant with the allegation of unconscionable fraud. However, the first defendant cannot be excused from the Plaintiff's unfortunate dilemma that contributed to unprecedented delay in royalty payment due and payable to the Plaintiff's, if the first defendant had provided the avenue available through NEC Decision of 45/2008 and allow the Plaintiff's with the opportunity to enter into such royalty payment entitlements agreement at the first place and whether attempts were indeed made to enter into royalty payment agreement by the Plaintiff's with the second defendant. There is no evidence to suggest that this option was explored by parties in this case.

34.	The Land Title Commission decision of 30th March 1992 identifies the traditional landowner's right as well as State interest must be accorded, through the second defendant, in the disbursement of royalty payment entitlement to the traditional landowners is made. The collective disbursement notion was however, further confirmed by Local Land Court decision of 9th September 1994, where it did recognise and make statements that the State has legal or equitable share when Payment of Royalty entitlement is made to the Land Owners. The State's legal or equitable share of royalty payment entitlement is based on the disbursement formula as per the NEC Decision No. 45/2008 dated 27th March 2008.

35.	The Local Land Court deals with the landownership issue under the Land Dispute Settlement Act and delivered its decision on 22nd September 1994 and did pronounce that the true traditional landowners were Kairak Clan and Bitagunan Clan. But at the same time did make a profound finding by having to redefine the new common boundary lines that parties did not accept. This led to the matter going on appeal to the Supreme Court on the final determination of the redefine common boundary lines as between the disputing parties in this action.

36.	Since the exodus of Colonial Administration, the State entered the customary land without approval by the traditional landowners, therefore it placed itself in a very difficult state of affairs to know who the right and true traditional landowners to enter into lease agreement to use the land for forest tree plantation purposes. Since, the State entered the land by default, it has brought upon itself the surmountable challenge to apiece the landowners one way or another to maintain the status quo. There is revelation by first Plaintiff who claims that first defendant has indicated and agrees that Plaintiff's will be paid 100% royalty payment entitlement. It is during the hearing of this action the defendants had a change of heart and claim that the State does have interest in the royalty payment as per the NEC Decision No. 45/2008. Due to the 360 degree turn by the defendants in this action, the Plaintiffs have agreed to fight their case with clear identification of parties in this action and have made an agreement for payment pending the outcome of the matter now before the court. The Agreement for Payment as between the Parties in this case is reproduced hereunder for ease of reference.

Agreement For Payment Of Royalty Monies In Relation To Harvest Of Timber On The Trans-Kerevat Land

This Agreement is made this 11th day of January 2010.

Between:	ELIAS KAMARA and THOMAS KALAS in Their capacity as the spokespersons of Kairak clan, of Malabonga, Usuvit & Liaga Villages, Gazelle District, East New Britain Province, the aggrieved party, on one part.
	
And:	PETER KARDUK and BEN TOPORONO in their capacity as leaders of BITAGUNAN CLAN, NAPAPAR NO.5 Village, Gazelle District, East New Britain Province, the disputed party on the other part.
	
Whereas	(1)	the parties have had a long dispute
in relation to customary ownership of the Trans Kerevat land within Gazelle District.

(2)	The aggrieved party has disagreed with a new common boundary ruled in relation to the Trans Kerevat land by the
Rabaul Local Court dated 19th September1994 dividing the land between itself and the disputed party.

(3)	As a result of the disagreement over the new common boundary the parties have been and are party to a number of court Proceedings which have not reached final and full conclusion.

(4)	The parties having considered that it will take longer than anticipated for the
common boundary and land ownership
issue to be fully resolved or resolved at all.

(5)	Royalty monies in relation to timber harvested over the years on the disputed
Trans Kerevat land held in trust by PNG Forest Authority remains due for payment to either or both of the Disputing parties subject to the common Boundary and the land ownership issue been resolved accordingly.

(6)	The parties having reached agreement that despite previous,
current and future court proceedings in relation to the common boundary and ownership of the Trans Kerevat land royalty monies owing be paid to them in accordance with the common boundary demarcation of the 1994 Local Land Court decision and on terms as agreed herein.

(6)	The parties having reached agreement that despite previous,
current and future court proceedings in relation to the common boundary and ownership of the Trans Kerevat land royalty monies owing be paid to them in accordance with the common boundary demarcation of the 1994 Local Land Court decision and on terms as agreed herein.

IT IS HEREBY AGREED AND DECLARED AS FOLLOWS

1.	The parties agree that the dispute over the common boundary and ownership of Trans Kerevat land differs from the issue of royalty payments owing for the harvest of timber on the disputed land during the period of dispute to such extent that the harvest of timber does not significantly affect the ownership of land and nothing in particular that much of the timber harvested had been planted by the colonial administration whilst asserting ownership of the land and before customary ownership rights had been fully restored in accordance with law.

2.	The parties further agree that royalty and related payments owing be shared proportionately between themselves based on the volume of timber harvested on their sides of the land as declared in the common boundary by the Rabaul Local Land Court on 09th September 1994 and to receive such payments under the said court decision.

3.	In agreeing to receive royalty and related payments in the manner agreed herein the parties admit that certain outstanding issues over the common boundary and land ownership still remain which may not be sooner resolved or resolved at all to the satisfaction of the parties noting specifically the time it has taken to bring to finality the said matters, the parties agree not to hold the other liable but to indemnify and to hold indemnified the other pursuant to a written indemnity to be given upon receipt of royalty and related payments, that in the event of any outcome affecting the common boundary and the land ownership that differs from the Local Land Court decision of 09th September 1994 neither will claim for any portion of the royalty and related payments received by the other.

4.	The parties also agree to indemnity and to keep indemnified the PNG Forest Authority or any of its agents, servants or appointed representatives pursuant to a written indemnity to be given upon receipt of the royalty and related payments, against any future claim concerning any portion of the royalty and related payments paid out in the manner set out under this agreement nor for any other cause relating to such payment.

5.	The parties agree that they are at liberty to pursue further proceedings in court in relation to the common boundary and land ownership issues notwithstanding this agreement save only that no future claims will arise against the other and against PNG Forest Authority on account of royalty and related payments been received pursuant to the Local Land Court decision of 09th September 1994 and proportionate to the volume of timber harvested on the sides of land of the parties pursuant to the demarcated common boundary.

6.	This agreement is reached for the interests of the remaining elder members of the parties respective clans others of whom have passed onto the next life whilst awaiting the matters the subject of the dispute and the various court proceedings to be finalized or brought to conclusion.

The parties having agreed to be bound by the terms of this agreement set out herein before hereunder set their hands in witness whereof on the date set out hereinbefore.

(Signed, Sealed And Delivered by) : (ELIAS KAMARA & THOMAS KALAS, the duly appointed )

(Representatives of KAIRAK CLAN )

(signed)____________________________
ELIAS KAMARA & THOMAS KALAS

Witnessed by_____________________)
(signed) ______________________
PAUL TALAKAU
COUNCILLOR
BITAGUNAN

Signed, Sealed And)
Delivered By)
PETER KARDUK &)
BEN TOPORONO, the duty appointed)
Representatives of BITAGUNAN CLAN )
(Signed)_______________________
PETER KARDUK & BEN TOPORONO

Witnessed By______________________)
(Signed)_______________________
PAUL TALAKAU
COUNCILLOR
BITAGUNAN

The following documents attached hereto contain the ANNEXURE marked with letter "L" herein of the Affidavit of Thomas Kalas sworn on the 15 day of APRIL 2014 at Kokopo.

___________________________
________________________
COMMISSIONER FOR OATHS	DEPONENT	

37.	There are two pertinent issues that plaintiff's learned counsels are basically asking this court to determine is, in view of the Proposed Revenue Sharing Arrangement by NEC Decision of 45/2008. 

1.	Whether the Plaintiff's royalty payment falls within the ambit of the NEC Decision No. 45/2008 under Customary Land on lease and or partnership in absence of any lease or other arrangement.

2.	If, the NEC Decision No. 45/2008 does not apply, are the Defendants at liberty to retain part of the royalty monies owed to the Plaintiffs. 

38.	The Plaintiff's right to claim for 100% royalty payment emanates from two factual premise: 

•	Firstly, the claim by the Plaintiffs to be paid 100 percent of the royalty is based on the fact that Trans Kerevat Plantation Land from where the timber was harvested is wholly customary land and the timber was not planted under any lease or other arrangements with the landowners. 

•	Secondly, there is a statement by landowner Mr Thomas Kalas, who state in his affidavit that PNG Forest Authority has confirmed its position that royalty will be paid on a 100% percent basis outside of the NEC Decision No. 45/2008 regime regarding proposed revenue sharing from matured forest plantations, and in particular from Trans Kerevat Plantation Land, from which timber was harvested, does not fall into any category.

39.	Whilst the first issue on whether the Plaintiff's royalty payment falls within the ambit of the NEC Decision No. 45/2008 under Customary Land on lease and or partnership in absence of any lease or other arrangement. This issue is framed in such way that in the absence of any lease agreement within the ambit of NEC Decision of 45/2008, the outcome is very clear and there is no ambiguity about it. However, there is neither evidence nor legal authority to suggest that parties did make attempt but did not reach an outcome consistent with NEC Decision of 45/2008, therefore did that trigger the parties to enter into a different independent agreement outside of the current NEC Decision of 45/2008 and the legal basis for so doing. The parties did not go down that path as an option despite the existence of NEC Decision of 45/2008.

40.	Whilst Plaintiffs are demonstrating good will to have access to their accrued royalty payments through above agreements due to older members are passing on due to ill health or other life style diseases and through natural aging effect. Whilst this is a genuine gesture with positive response but the fact of the matter is that dispute between competing Clan Grouping are never ending, hence the procrastination of the matter to this date. On top of this is the parties' unwillingness to accept the schedule of royalty payment as per the NEC Decision No. 45/2008.

SUBMISSIONS BY DEFENDANT.

41.	The Defendant learned counsel Mr Ian Shepherd submits in rebuttal and contest strongly that the action by Plaintiff's should be progressed through proper mode and obvious legal issues that defence will point out should be addressed properly in the interest of justice. But at the same time submit that, in view of the existence of NEC Decision of 45/2008 on "Revenue sharing from matured forest plantations" the 100% royalty payment entitlement is out of ordinary and has no legal basis. The learned counsel raise the following legal, procedural and factual issues that require noting are as follows:

1.	The defendants strongly oppose the proceedings were commenced by way of Originating Summons which was filed on 16 April 2014 and amended on 20 May 2014 to include the addition of a Third Plaintiff and highlighted certain noncompliance with National Court Rules. For example, there have been two appearances on 6 June 2014 and 20 June 2014 which the Presiding Judge appears to have treated as a Directions Hearings where certain orders were made with respect to the filing of Affidavits. The defence counsel also raised some concern over slight oversight by court of prudent case management issues, however, this was done in order to expedite hearing and disposition of the matter to finality, given the history of the case. But court in this case was mindful of the fact that no party in the proceedings were disadvantaged, but have equal opportunity to have their day in court. 

2.	The defendants did submit that the Plaintiff should bring the action under Writ of Summons and not Originating Summons. In the case of Koitaki Farms Limited v Kemoko Kenge & Ors (2001) N2143 His Honour Justice Kandakasi said:

"Under our Rules, there are two modes of commencing most civil proceedings. The exceptions to that are limited. They are miscellaneous proceedings for other miscellaneous proceedings such as company wind ups and matrimonial or such other causes where the Rules or an Act of Parliament allows for other modes of commencing proceedings."

"The relevant provisions are Order 4 Rules 2(2) and 3(2). These provisions respectively state that:

'2. Where writ of summons required. (4/2)

(1) Proceedings shall be commenced by writ of summons –

(a)	 where a claim is made by the plaintiff for any relief or remedy for any tort; and

(b)	 Where a claim made by the plaintiff is based on an allegation of fraud; and

(c)	Where a claim is made by the plaintiff for damages for breach of duty (whether the duty exits by virtue of a contract or of a provision made by or under an Act or independently of any contract or any such provision), and the damages claimed consist of or include damages in respect of the death or in respect of personal injuries to any person in respect of damage to any property; and

(d)	Where a claim is made by the plaintiff for damages for a breach of promise of marriage.'

3. Where Plaintiff may choose (4/3)

Proceedings –

(a)	in which the sole or principal question at issue is, or is likely to be, one of the construction of an Act or of any deed, will, contract or other documents, or some other question of law; or

(b)	in which there is unlikely to be a substantial dispute of fact; or

(c)	in which a person is authorised by an Act, regulation or by these Rules to make an application to the Court or a Judge with respect to a matter that is not already the subject matter of a pending cause or matter, and no other mode of making the application is prescribed by that Act, or regulation or by these Rules, are amongst those which are appropriate to be commenced by originating summons unless the plaintiff considers the proceedings more appropriate to be commenced by writ of summons.'"

42.	Whilst the choice of mode of proceeding to come to court is the right available to the Plaintiff to make, in view of the nature of its case, it is the Plaintiff's prerogative to make that choice. However, in this case the Plaintiff is asking the Court to determine and make declaration that 100% royalty payment should be granted in favour of the Plaintiffs outside of the regime under NEC Decision No. 45/2008 and therefore should apply to them in this case. Whilst the first legal proposition is factual, the second part to the question is legal. That is, what is the legal basis that 100% royalty payment should be made to the Plaintiff's, in view of the current NEC Decision of 45/2008? The latter legal proposition require substantive legal arguments and appropriate mode of proceedings would be Writ of Summons where proper pleadings would provide and address the relevant legal issues where 100% royalty payment has a legal basis and that should apply in this case as exceptional case. Whilst it is not disputed that landowners own the land including what is on the land as well, the real unavoidable legal issue is one of royalty payment that denied defendants share from total royalty payment according to relief sought by Plaintiffs. Why defendants should be denied of any benefit from royalty payments in the absence of any independent agreement that disallowed the application of the NEC Decision of 45/2008 and or by expresses provision of any other law or through other arrangements that is not before the court.

43.	In the case of Papua New Guinea Forest Authority v Concord Pacific Ltd [2003] N2423 the same Judge observed that the rules gave the plaintiff an option to choose a number of modes to commence proceedings. If those proceedings involved a construction of a deed contract or other document, he could elect to use the originating summons process, i.e. in circumstances where there is unlikely to be a substantial dispute of the relevant facts.

44.	In the case of Koitaki Farms case, the Trial Judge found that the facts were not substantially in dispute. In circumstances where the facts are substantially in dispute or likely to be substantially in dispute, it is appropriate for the Court to order that the matter proceed by way of pleadings.

45.	In this case, the Defendants have filed an Affidavit by first defendant which discloses that there are substantial issues in dispute and those issues are legal and factual, for example:

(a)	Whether in view of the fact that the First and Second Plaintiffs have an appeal to the Supreme Court outstanding, i.e. SCM 2 of 2009 which they propose to continue (at paragraph 40 of Affidavit of Thomas Kalas), is it possible for this Court to make, in particular, order number 5 per the Amended Originating Summons as the appeal, apparently, concerns the boundaries of the Plaintiffs' land and, accordingly, the manner and amount of distribution of royalties.

(b)	Whether the Plaintiffs can "agree" on the manner in which customary landowner's royalties are distributed bearing in mind section 235 of the Forestry Regulation 1998.

(c)	Whether the NEC Decision No. 45 of 2008 applies to the distribution of royalties from the Trans-Kerevat Land.

(d)	Whether PNG Forestry Authority or the State is liable to "repay" alleges royalties, i.e. what is the status of these funds?

46.	The Plaintiff's Affidavit also raises issues, for an example where the Second Plaintiff appears to be an incorporated land group, it was not incorporated at the time that the benefits accrued, i.e. from 1996 to 2005, and it is arguable whether it could truly represent the beneficiaries, who were entitled at that time, to receive the royalties. The Kairak Incorporated Land Group was incorporated on 1st September 2010. The issue on royalty payment entitlements may be an in-house challenge to the first Plaintiff and its clan ILG members to be resolved.

47.	Further, even if the mode of commencement is approved, the Originating Summons seeks, inter alia, a declaration that the Defendants actions in holding royalty money is illegal and without any valid basis in law or otherwise. However, the Supreme Court in Dumal Dibiaso Incorporated Land Group No. 1664 v Kuma [2005] SC805 held that funds held by the second defendant i.e. royalties earmarked for the customary resource owners were funds held on trust and the Supreme Court emphasised that the Court would insist on strict administration of trust funds for the benefit of beneficiaries. There was an onus on the National Forest Authority to ensure that those funds were properly protected and were only paid out on the proper legal authority issued by the relevant ILG, otherwise no person had the right to disburse those funds. That is, this Declaration cannot be granted as it would be contrary to the established law.

48.	In the case of SC805 the Court also held that in cases of ILGs proper authority under seal must be given to the trustees to disburse funds from the trust fund. There is no evidence of such authority here. However, other manageable issues to be confirmed are whether the funds were deposited to a trust account as they were "State" monies under Public Finance (Management) Act.

49.	However, pursuant to section 235 of the Forestry Regulation 1998 nominees of customary owners must be approved and recognised by the Managing Director of PNGFA. That is a discretion exercised in consultation with the Provincial Forest Management Committee. However, there is no evidence of such approval here, except party's initiative as per agreement for payment of royalty monies in relation to harvest of timber on the Trans Kerevat Land dated 11th January 2010. The onus is on the Plaintiffs to nominate an ILG or some other representative to receive funds on behalf of the landowners, then the Court cannot interfere with the statutory powers of the Managing Director to exercise his discretion pursuant to section 235 of the Forestry Regulation 1998.

50.	Conversely, if what the Plaintiff is really seeking is a direction that certain funds be paid to the ILG or other "leaders" or that the Managing Director exercises his discretion in a particular way, then that is an application for mandamus which can only be sought and obtained through the process of judicial review (Order 16). Particularly as the funds went to consolidated revenue governed and control under Public Finance (Management) Act.

51.	There is a further and more profound objection to the proceedings generally. That is, if PNGFA is the Trustee of the funds the proceedings ought to be brought under the Trustees and Executors Act (s52). 

52.	The above legal issues highlighted through defendants submissions cannot be brushed aside, but must be adequately addressed in the interest of justice and the interest of justice in this case requires that parties be allowed to provide proper pleadings through proper mode of commencement of proceedings before the court through Writ of Summons. The proceedings as it is in its present form are defective and therefore Plaintiffs are not entitled to the relief sought, in any event. Therefore Plaintiff's claim to secure declaratory orders on 100% royalty payment entitlement with interest in this action must fail. I do find accordingly without prejudice.

CONCLUSION

53.	In view of the above foregoing deliberations, the court makes the following conclusive findings as a way forward for the Plaintiff to further progress this matter as follows:

I.	That PNGFA holds the funds legally on trust for the customary landowners is consistent with the Supreme Court decision in SC805.

II.	That the Court cannot decide whether these Plaintiffs are the recognised representatives of the landowners who are entitled to receive the royalties under section 235 of the Forestry Regulation. (i) It is the Managing Director on advice from the Provincial Forest Management Committee (PFMC) that makes this decision. If no decision has been made, or the decision is not to the Plaintiffs' liking, then they can apply for judicial review. (Pinpar Developer Pty Ltd (First Plaintiff/First Cross-Defendant) and Rimbuan Hijau (PNG) Ltd (Second Plaintiff/Second Cross-Defendant) –v- T.L. Timber Development Pty Ltd (Defendant/Cross-Claimant) [2006] PGNC 66) applied). (ii) Further, the funds have been paid into consolidated revenue, State and the Finance Department should be a party.

III.	That this conclusion is dependent on a resolution of the first two issues referred to in item 2, i.e. the entitlement of the Plaintiffs to the royalties. If so, then this will involve an interpretation of an NEC decision which, it is conceded, may be progressed by way of an originating summons. 

IV.	That in relation to interest, this will involve a determination by the Court as to whether interest is payable on trust funds held by PNGFA. Presumably, this could also be dealt by way of an originating summons but only after resolution of the first two issues referred to in item (2). 

V.	That relief sought in this action cannot be granted as issues raised in item (2) cannot be determined by this Court and the issue of distribution of royalty payment is dependent upon the Plaintiff's final boundary lines are still to be determined before the Supreme Court.

ORDER

54.	The Court accordingly makes the following orders:

(1)	That PNGFA holding the funds legally on trust for the customary landowners is consistent with the Supreme Court decision in SC805.

(2)	That the Court cannot decide whether these Plaintiffs are the recognised representatives of the landowners who are entitled to receive the royalties under section 235 of the Forestry Regulation. (i) It is the Managing Director on advice from the Provincial Forest Management Committee (PFMC) that makes this decision. If no decision has been made, or the decision is not to the Plaintiffs' liking, then they can apply for judicial review. Pinpar Developer Pty Ltd (First Plaintiff/First Cross-Defendant) and Rimbunan Hijau (PNG) Ltd (Second Plaintiff/Second Cross-Defendant) –v- T.L. Timber Development Pty Ltd (Defendant/Cross-Claimant) [2006] PGNC 66 applied). (ii) Further, the funds have been paid into consolidated revenue, State and the Finance Department should be a party.

(3)	That this conclusion is dependent on a resolution of the first two issues refer to in order (2), i.e. the entitlement of the Plaintiffs to the royalties. If so, then this will involve an interpretation of an NEC decision which, it is conceded, may be progressed by way of an originating summons.

(4)	That in relation to interest, this will involve a determination by the Court as to whether interest is payable on trust funds held by PNGFA. Presumably, this could also be dealt with by way of an originating summons but only after resolution of the first two issues referred to in order (2).

(5)	That relief sought in this action cannot be granted as issues raised in order (2) cannot be determined by this Court and the issue of distribution royalty payment is dependent upon the Plaintiff's final boundary lines are still to be determined before the Supreme Court.

(6)	That the parties to meet their own costs.

55.	The Court Orders accordingly,

______________________________________________________________
Donald & Company Lawyers: Lawyer for the 1st& 2nd Plaintiffs
Warner Shand Lawyers: Lawyer for the 3rd Plaintiffs
Asher Lawyers: Lawyer for the 1st& 2nd Defendants