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Lupia v Exxonmobil PNG Ltd [2016] PGNC 285; N6484 (22 September 2016)

N6484

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]


OS No. 752 OF 2014


BETWEEN:


LUKE LUPIA as Chief of Palitokola Clan of
Imenga Tribe
Plaintiff

AND:
EXXONMOBIL PNG LIMITED
First Defendant


AND:
NABOR DRILLING
Second Defendant


Kundiawa: Liosi, AJ.
2016: 17 July, 22nd September


CIVIL PRACTICE & PROCEDURE–Dismissal of proceedings – Order 12 Rule 40(1) and – Order 5 Rule 13 National Court Rules – No reasonable cause of action – principles discussed – Representative class action – principles discussed – Costs on Solicitor Client Basis – principles discussed – Proceedings dismissed – costs awarded on Solicitor/Client basis.


Held: (1) Proceedings dismissed as pleadings disclosed no reasonable cause
of action.

(2) Plaintiff’s failed to meet mandatory preconditions of Representative proceedings.

(3) Costs awarded on Solicitor/Client basis. It is incumbent on lawyers to advice clients properly on prospects of success of litigation and not to merely act on instructions.


PNG Cases Cited:
Andakelka Ltd -v- Petronas Ltd [2010] PGNC 4 N3976
Benny Balopa -v- Commissioner of Police N1374
Bishop Brothers Engineering Pty Ltd -v- Ross Bishop N705
Eliakim Laki -v- Maurice Alaluku, Secretary Department of Lands [2000] PNGLR 392
Gulf Provincial Government -v- Baimuru Trading Ltd (1988) PNGLR 311
Jacob Sarapel -v- Fred Kulumbu N2405
Kiee Toap -v- The State & Ors (2004) N2731
Lerro -v- The State (2006) PGNC 2 N3050
Louis Medaing -v- Ramu Nico Management (MCC) Ltd (2010) N4158
Mision Asiki -v- Manasupe Zurennouc SC797
Odetta Ltd -v- Ambusa Copra Oil Mill Ltd (2001) N2186
PNG Forest Products Pty Ltd & Ors -v- The State & Genia [1992] PNGLR 85
PNG Waterboard -v- Gabriel Kama SC821
POSF Board -v- Sailas Imanakuan SC677
Rex Paki -v- Motor Vehicle Insurance Limited SC1015
Ronny Wabia -v- BP Exploration Co. Ltd and others (1998) PNGLR 8
Simon Mali -v- Independent State of Papua New Guinea [2002] PNGLR 15
Tigam Malewo -v- Keith Faulkner (2009) SC 960
Wilfred Mamkuni -v- Ly Cuong-Long and Jant Ltd (2011) N4674
Willie Mel -v- Coleman Palialia SC790

Overseas Case.

Dyson -v- Attorney- General [1910] UKLawRpKQB 203; [1911] KB 410

Counsel:
Miss. V Yobone, for the Plaintiff
Mr. K Imako, for the first Defendant


22nd September, 2016;

  1. Liosi, AJ. This is a decision on an application made by the first defendant that this proceeding be dismissed. The application is made pursuant to Order 12 Rule 40(1) (a) (b) and (c) of the National Court Rules. Alternatively, the proceedings also be dismissed pursuant to Order 12 Rule 1 and Order 5 Rule 13 of the National Court Rules and pursuant to the inherent jurisdiction of the Court.

    Background
  2. The plaintiff’s proceeding was commenced by an originating summons and supporting affidavits filed on 3rd November 2014. The claim is brought by Luke Lupia as Chief of Palitokola clan of Imenga Tribe and relies on the following documents:
    1. Affidavit of Chief Luke Lupia sworn and filed on the 3rd of November 2014.
    2. Affidavit of Chief Luke Lupia sworn and filed on the 1st of December 2014.
    3. Affidavit of Chief Luke Lupia sworn and filed on the 9th of June 2015.
    4. Various other supporting affidavits filed all of which appear to be in similar wordings by various deponents filed on 6th November 2014 for and on behalf of various tribes in support of Luke Lupia’s evidence.

The plaintiff’s claim is based in the assertion that Edauwi road is a private road and that the first defendant has been illegally accessing the road to conduct its business relating to been a holder of a petroleum development licence number 8 (PDL8) pursuant to section 58 of the Oil and Gas Act 1998.

The First Defendant’s Motion

  1. The motion seeks to dismiss the proceedings pursuant to Order 12 Rule 40(1) (a)(b) and (c) on the basis that the plaintiff’s proceedings does not disclose a reasonable cause of action is frivolous and vexatious. It bases its view on the following:
    1. Exxon Mobil Papua New Guinea (EMPNG) is the holder of Petroleum Development Licence number 8 (PDL8) issued pursuant to Section 57 of the Oil and Gas Act 1998 (OGA), which covers the 10km private road from Edauwi junction to Undupi Village (Edauwi Road).
    2. As the holder of Petroleum Development Licence number 8 (PDL8), Exxon Mobil Papua New Guinea is legally entitled to use the road for the purpose of construction and recovery of petroleum in accordance with its obligations under the licence.
    1. In accordance with its obligations under Section 118 of the Oil and Gas Act and the Clan Land Compensation Agreements (CLCA), Exxon Mobil Papua New Guinea has already assessed and paid compensation payable under that section, including for the use of Edauwi Road, to the relevant customary landowners.
    1. This compensation was received by the plaintiff (among others), on behalf of the Imega Tribe, and his signature is on the compensation receipts.
    2. The plaintiff is not entitled to additional compensation or compensation for Exxon Mobil Papua New Guinea’s ongoing use of the road because:
      1. There is no evidence of environmental or other damage that could justify the payment of additional compensation; and
      2. Section 118 of the Oil and Gas Act does not allow for compensation for future loss or enjoyment.
    3. The plaintiff does not have a registered power of attorney for the Palitokola Clan of Imenga Tribe and has not complied with the Court’s mandatory requirements relating to representative actions.
  2. In support of its application the first defendant has filed the following affidavits:-

Applicable Law

  1. The rights confirmed by a petroleum development license are set out in Section 59 of the Oil and Gas Act (OGA) and they include the right to:
    1. explore for petroleum in the licence area;
    2. undertake operations for extraction of petroleum in the licence area;
    3. sell or otherwise dispose of petroleum that is recovered ; and
    4. carry on such operations and undertake such works that are necessary to explore, extract and sell or dispose of petroleum, including construction and operation of flow lines, gathering lines and water lines.
  2. Section 59 of the Oil and Gas Act (OGA) is supplemented by Section 110 of the Oil and Gas Act (OGA), which specifies activities that are permitted in order to exercise the rights conferred by Section 59. Section 110 grants Exxon Mobil Papua New Guinea (EMPNG) extensive rights to enter and occupy any land in the licence area.
  3. In addition to the rights granted by Sub Section 59 and 110 of the Oil and Gas Act, the licence itself grants Exxon Mobil Papua New Guinea certain rights in order to fulfil its obligations under the licence, including the right to construct new roads or upgrade existing roads.
  4. Consequently, pursuant to Order 12 Rule 40, the first defendant says the proceedings ought to be dismissed in its entirety.

Plaintiffs claim /Arguments

  1. The plaintiff’s claim arises from its assertion that Edauwi road is a private road. The plaintiff alleges that Exxon Mobil Papua New (EMPNG) illegally used his private road (the Edauwi Road) without paying the required compensation and continues to do so and seeks declaratory orders that;
    1. Edauwi road is a private road owned by the Angore people;
    2. The plaintiff has not received any compensation from Exxon Mobile Papua New Guinea for the use of the road; and
    3. Exxon Mobil Papua New Guinea is obligated to pay compensation for the use of the road pursuant to Section 118 of the Oil and Gas Act.
  2. In the upshot it is the Courts view that the declaratory orders if granted would be a launching pad for the plaintiff to lodge its claims.
  3. In response to the first defendant’s motion that there is no reasonable cause of action the plaintiff argues that the first defendant’s motion has no basis. The plaintiff argues it has a cause of action based on the issue of the private road. It argues that the Edauwi road has not been acquired by the State and is still a private road.
  4. It submits that under the Road Maintenance Act, such a private road needs to be gazetted to become a public road. I would only assume that if the road was gazetted and made a public road then there won’t be such a claim by the plaintiffs as the first defendant would be entitled to use the road.
  5. On the issue of compensation, it argues that there were improvements on the road for which payments were made for deprivation but not as compensation. In respect of payments made in 2015, it says her clients had not advised of such payments as they were recent payments and there was no instruction on them.

Representative Action

  1. The plaintiff agrees that yes there has to be proper authorisation. However, at the time of filing the proceedings the plaintiff Luke Lupia was only acting for and on behalf of his own clan members. Consequently, other tribes asked if he could represent them. That is how he ended up filing an affidavit annexing the list of names. She argues there were cases where affidavits were used to annex list of names of plaintiffs and she is aware of two such cases. She sought leave of the Court to provide citation of those two cases at a late stage. She says that further this problem has been rectified. The court was asked to exercise its discretion to accept the affidavit and the list of names. She further argues the affidavit annexing the list of names was filed before the defendant’s motion was filed and the first defendant had never raised this issue until now.

Costs

  1. The plaintiff’s counsel argued that lawyers act on instructions. In this instance after receiving correspondence from the first defendant’s lawyers they sought instructions but were advised to proceed with the matter. The plaintiff’s lawyers therefore should not be penalised for acting on instructions.

Dismissal of Proceedings

  1. Order 12 Rule 40(1) of the National Court Rules provides that where in any proceedings it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceedings:

the Court may order that the proceeding be stayed or dismissed generally or in relation to any claim for relief in the proceedings.

No Reasonable Cause of Action

  1. The Law is well settled in our Jurisdiction. In Kiee Toap -v- The State Cannings J, held that one of the circumstances under which a proceeding fails to disclose a reasonable cause of action is where the claim even if proved will not entitle the plaintiff to what he is asking for. In the case of Lerro -v- State (2006) PGNC 2; Kandakasi J, also discussed the issues. He said:

“The discretion must be exercised sparingly and only in a case where the statement of claim or the defence (as the case might be) is “obviously and almost incontestably bad.”

This discretion can be exercised only in cases that “are plain and obvious that the statement of claim [or defence] as it stands, is insufficient, even if proved, to entitle the plaintiff [defendant] to what he asks “for”.


  1. In the case of Andakelka Ltd v. Petronas Ltd [2010] PGNC 4; N3976, the Court said:

“The law and the test in relation to whether proceedings can be dismissed, is whether it is plain and obvious from the pleadings that the Court can say at once that the Statement of Claim as it stands, is insufficient even if proved, to entitle the plaintiff to the Orders or “no reasonable cause of action is disclosed if the purported cause of action pleaded is obvious and incontestably bad”


  1. The first defendant has filed a very detailed submission stating facts which it says have given rise to the basis of its application. Most if not all of this facts are either admitted or not properly responded to as the plaintiff has not filed written submission but has only responded with verbal submissions. In the process of responding to the first defendants application, it has tried to bring in fresh pleadings verbally from the bar table which was totally unacceptable.

Has the plaintiff got a reasonable cause of action?

  1. The plaintiff does not deny that the first defendant is the holder of Petroleum Development Licence 8 (PDL8) and that the Petroleum Development Licence area covers the 10 kilometre alleged private road from Edauwi junction to Undupi village. It however, disputes that the first defendant is legally entitled to use the road for purposes of construction and recovery of petroleum in accordance with its obligations under the licence. It also denies that as part of its obligations under section 118 of the Oil and Gas Act and the Clan Land Compensation Agreements (CLCA), the first defendant has already assessed and paid compensation inclusive of payment for use of Edauwi road to the relevant customary landowners. This denials are evident from the declaratory orders been sought.
  2. The plaintiff argues that the first defendant’s application to dismiss its proceedings is baseless and that it has a cause of action based on the issue of the private road. The processes and procedures to be followed by the State to declare and to acquire Edauwi road as a public road has not been done and so it still remains a private road. She argues that under the Road Maintenance Act such a private road needs to be gazetted to be made a public road.
  3. There are two things significantly wrong with the above submission. Firstly, there are no such pleadings in the originating summons. From the outset such a submission is therefore abusive, frivolous and vexatious as having no legal basis. Such pleading is untenable and cannot succeed and would render the entire proceedings to fail. Ronnie Wabia v. BP Exploration Co. Ltd & Ors [1998] PNGLR 8. This also amounts to harassment of the defendant as the defendant is been put through all the trouble and expense of defending a proceedings which is a sham and cannot possibly succeed. Secondly, such a submission if allowed would be trial by ambush as the plaintiffs have not pleaded such a cause of action and the defendants have not responded to any such pleadings.
  4. The plaintiff’s claim regarding the payment of compensation is unclear as a number of contradicting statements made in his affidavit filed on the 30th November 2014 deposes to this. In paragraph 6 the plaintiff states, “I can verily and God been my witness say that I have never at one time receive any compensation payment for the use of the private road”. This is also pleaded in the declaratory order he seeks.
  5. However, at paragraph 10 of the same affidavit he states, “My wife and children accepted the payment and signed on my behalf”, and then goes on to question the sufficiency of the amount of compensation. At paragraph 9 of the affidavit he alleges the payments mentioned in the affidavit of Lynette Baratai Pokas were for the environmental damage, while the implication of paragraph 12 (in which it is alleged that K23, 000.00 is not a large enough payment for use of a road that is more than 10km and is the only access to the well pads at Petroleum Development Licence 8 (PDL8 Angore) is that compensation was paid by Exxon Mobil Papua New Guinea (EMPNG) for use of the road.
  6. The above evidence contradicts evidence of actual payments as deposed to in the affidavit of Lynette Baratai Pokas sworn on 15th and filed on 19th April 2016. Payments made for 2014 and 2015 are clearly distinguished and specified as to what they are for. They include:
    1. compensation for the use and enjoyment of the surface of land;
    2. compensation for land surface damage;
    3. compensation for initial damage to naturally occurring bush, vegetation, birds, animals or fish; and
    4. compensation for damages to gardens, cultivated trees or plants.
  7. Exxon Mobil Papua New Guinea’s (EMPNG) evidence is that it in accordance with its statutory obligations has paid compensation to the Imenga Tribe for deprivation of use of the Edauwi Road for the period 2012 to 2015. Such is clearly evidenced and has not been rebutted.

Findings of Facts

  1. On the issue of the private road and compensation payments, I make the following findings:-
    1. The first defendant is the holder of Petroleum Development Licence number 8 (PDL8).The petroleum development licence covers the alleged 10km private road from Edauwi Junction to Undupi Village. It is therefore entitled to enter the land in question pursuant to section 57 of the Oil and Gas Act which covers the 10km Edauwi road.
    2. As the holder of Petroleum Development Licence number 8 (PDL8), it is legally entitled to use the road for the purpose of construction and recovery of petroleum in accordance with its obligations under the licence.
    1. Compensation has been received by the plaintiff on behalf of the Imega Tribe with the plaintiff’s or his representatives with their signatures appearing on the compensation receipts. This is clearly evidenced in the affidavit of Lynette Baratai Pokas filed 19th April 2016. I find that various compensation payments have been ongoing up to 2015.
    1. The plaintiff is not entitled to additional compensation or compensation of Exxon Mobil Papua New Guinea’s ongoing use of the road because:
      • (i) There is no evidence of environmental or other damage that could justify the payments of additional compensation; and
      • (ii) Section 118 of the Oil and Gas Act does not allow for compensation for future loss or enjoyment.
    2. Finally, the plaintiff has not given notice to the Warden under the Oil and Gas Act pursuant to section 118(8). This is the proper legal mechanism available to a person claiming compensation where there is a dispute as to the payable amount of compensation. This avenue has not been exhausted and is still open.
  2. Even if the first declaratory order is granted, it will serve no purpose or utility in view of the court’s ruling in respect of the compensation payments.
    On this first ground I find that there is no reasonable cause of action. Having made that ruling, I now address the issue of representative class actions.

Dismissal pursuant to Order 12 Rule 1 and Order 5 Rule 13

  1. The plaintiff herein commenced proceedings for himself and on behalf of members of Palitokola Clan. It is clearly a representative action which is subject to the rules of court for instituting a valid representative action.
  2. The first defendant contends that the proceedings should also be dismissed on this ground as:
    1. the mandatory preconditions that have to be met to bring a representative proceeding have not been met as:
      1. each and every intending plaintiff has not given instructions, in writing, to their lawyer to act for them; and
      2. the persons in whose name the proceeding is commenced, and who claim to represent the other intending plaintiffs have not produced an authority to show that they were authorised by the other intending plaintiffs to file this proceeding as a class representative;
  3. The plaintiffs contend that the proceedings should not be dismissed as the pleadings in the originating process do plead a reasonable cause of action in trespass and compensation payments on the issue of the private road.

Whether Representative Requirements complied with

  1. Order 5 Rule 13(1) National Court Rules provides for representative action and is as follows;

“Where numerous persons have the same interest in any proceedings the proceedings may be commenced, and, unless the Court otherwise orders, continued, by or against any one or more of them as representing all or as representing all except one or more of them”.

  1. In Simon Mali v. Independent State of Papua New Guinea [2002] PNGLR 15, the Supreme Court said amongst others, that in all actions or proceedings of a representative nature, all of the intended plaintiffs must be named and duly identified in the originating process and pursuant to Order 5 Rule 8 National Court Rules, each and every intending plaintiff must give specific instructions evidenced in writing to their lawyers to act for them. Tigam Malewo v. Keith Faulkner (2009) SC 960 confirmed the representative principles stated in Simon Mali v. State (supra).
  2. Further, any person in whose name proceedings are commenced and who claims to represent other intended plaintiffs must produce an authority to the Court to show that he was authorised by them to file proceedings as a class representative. Other authorities on point include: Eliakim Laki v. Maurice Alaluku, Secretary Department of Lands [2000] PNGLR 392; Louis Medaing v Ramu Nico Management (MCC) Ltd (2010) N4158 and Wilfred Mamkuni v. Ly Cuong-Long and Jant Ltd (2011) N4674.
  3. In this instance, the plaintiff filed its originating process by way of Originating Summons. The originating process was filed for himself and for members of Palitokola clan of Imenga Tribe. This is clearly a representative action. In its verbal submission in response, the plaintiff tries to explain that at the time of filing of the proceedings, the plaintiff was acting for and on behalf of his own clan members. He was consequently asked by the other tribes to also represent them. That explains the filing of his affidavit on June 2015, annexing the list of names. This annexed list of names purported to rectify the problem and counsel for the plaintiff submits the court should use its discretion to allow the list as been proper and in compliance with the law.

Application of Law to Facts:

    1. The plaintiff purports to be the “chief of the Palitokola Clan of Imenga Tribe”. In spite of this he has failed to file evidence of an authority for him to file this proceeding as a class representative. The plaintiff argues that the affidavit by Luke Lupia of 9th June 2015, has rectified the problem and the Court should use its discretion to allow it as been proper authorisation of a class action. I however, find a lot of glaring errors about this annexed list.
    2. The plaintiff’s affidavit filed on 9 June 2015, annexes a list of names entitled a “Consent and Authority List”, which purports to be a list of “people who have consented to the construction of the 10km road from Iduwi junction to Angore”. Nowhere is it indicative that this was a consent and authority for a representative class action.
    1. This list does not comply with the legal requirements referred to herein. Nowhere does it state that the named persons have authorized the plaintiff to act as a class representative or for the plaintiff’s lawyer to act for them. The listed names do not appear to authorize anything apart from the construction of a 10km road. The list itself is also completely irrelevant given it also appears to be a list created by “Angore Oil & Gas Limited”, an entity having no involvement in this proceeding.
    1. Of all the persons listed in the annexed list, 41 persons, including the plaintiff, are named as members of the “Imika” tribe. There is no indication as to who amongst these 41 people is a member of the Palitokola clan.
  2. The lack of compliance with the law is an abuse of process. The Court is entitled to form the view that the intending plaintiffs have not given their requisite authority, that those authorities purportedly given are not legitimate, and that the lawyers for the plaintiff’s do not have and have not obtained the requisite authority to bring this proceeding. I find that is the case herein.
  3. Consequently, this proceeding should be dismissed and I order that it be dismissed in its entirety. I now address the issue of costs.

Costs


  1. The first defendant submits that in the event the application is granted costs on an indemnity or Solicitor /Client basis should be awarded against Yobone and Company Lawyers. The first defendant argues that the plaintiff’s lawyer was put on Notice by a letter of 27th April regarding the deficiencies in the claim and was invited to withdraw the claim. Despite the forewarning the plaintiffs insisted on pursuing the claim. That there are glaring errors and deficiencies in the proceedings which the plaintiff’s lawyers should have been aware of from the outset. The unnecessary delay in the proceedings has been to the detriment and great prejudice to the first defendant.
  2. In response the plaintiff’s lawyer submits that lawyers act on instructions and should not be penalised for acting on instructions.
  3. The issue is therefore whether the Court should order costs on a solicitor/client basis and whether Yobone and Company Lawyers should pay those costs.
  4. The plaintiff sought certain declaratory orders. On the issue of the private road, the plaintiff tried to argue from the bar table the processes involved in declaration of a private road to a public road pursuant to a Road Maintenance Act. Such was never pleaded in the Originating Process and the plaintiff’s lawyer ought to have known this. Consequently, the first defendant has never responded to such pleadings hence this would be trial by ambush. Similarly declaratory orders relating to compensation payments ought to have been carefully analysed. This is more particularly so given the fact that the first defendant’s lawyers clearly advised on the deficiencies in the pleadings asking the plaintiff’s lawyer to withdraw the proceedings by its letter of 27th April 2016. This went unheeded. In Andelka Ltd v Petronas Ltd N3976, Davani J awarded costs on an indemnity basis. The plaintiff therein was forewarned to withdraw the proceedings which it never did. We have a similar situation herein.
  5. Order 22 of the National Court Rules spells out the court’s discretion to award appropriate costs. In this case Order 22 Rule 34 authorises the Court to award costs on a solicitor/client basis.
  6. The Supreme Court in Rex Paki v Motor Vehicle Insurance Limited SC1015 said:-

“The award of cost on an indemnity basis is discretionary. An order for costs on an indemnity basis may be made where the conduct of a lawyer or a party to the proceedings is so improper, unreasonable or blameworthy that he should be so punished by such an order. The question is whether the conduct of the appellant in this matter is such that it caused the respondent to incur unnecessary costs.”

  1. I adopt that statement by the Supreme Court as I am of the firm view that the court should consider those circumstances to ensure parties take out or defend proceedings on a proper legal basis.
  2. The Supreme Court in Paki’s case identified a list of circumstances where the court can award costs on a solicitor /client basis and is open to the court to follow when exercising its discretion as to whether or not to award solicitor/client costs. The following circumstances were identified:
  3. In this case the plaintiff ought to have been aware, that there were glaring deficiencies in the pleadings on the issue of the private road, the compensation payments and failure to meet mandatory preconditions in respect of representative proceedings. This was apparently clear from the first defendant’s letter to the plaintiff’s lawyers of 27th April 2016.
  4. It is clear that the first defendant has been put through this proceeding unnecessarily, as it had no reasonable cause of action. The plaintiff’s contention that they were acting on instructions hence they should not be penalised is baseless and flies in the face of lack of professionalism and due diligence in advising its client. The issue of whether there was reasonable cause of action was a technical issue. The plaintiff’s lawyer had the onus of discharging that appropriate advice to its client and not vice versa.
  5. In the circumstances, I am minded to award costs on a Solicitor/Client basis to be paid by Yobone and Company Lawyers and I so order.

Orders

  1. The formal orders of the Court are:

Orders Accordingly,

____________________________________________________________
Allens Linklaters Lawyers : Lawyers for the Applicant /First Defendant
Yobone & Company Lawyers : Lawyers for the Plaintiffs .

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