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Namo'aporo Landowners Association Inc v Kua [2021] PGNC 557; N9267 (29 September 2021)

N9267

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 206 OF 2020

BETWEEN
NAMO’APORO LANDOWNERS ASSOCIATON INC
Plaintiff

AND
HONOURABLE KERENGA KUA, in his capacity as MINISTER FOR PETROLEUM
First Defendant

AND
INDEPENDENT STATE OF PNG
Second Defendant

AND
MARK SAKAI
Third Defendant

Waigani: Tamade AJ
2021: 29^th September

NATIONAL COURT RULES 1983 – Mode of Proceeding - Order 4 - Seeking an interpretation of Section 176 (3)(a) of the Oil & Gas Act 1998.

OIL & GAS ACT 1998 - s10 - National Court jurisdiction to deal with matters arising out of the Oil & Gas Act.

OIL & GAS ACT 1998 – s176(3)(a) – Appointment of corporate trustee - Minister appointment of individual landowner as a trustee to beneficiary benefits of landowners is contrary to s176 of Oil & Gas Act 1998.

Cases Cited:

Attorney General and The State & Ors v Dr Pirouz Hamidian-Rad [1999] PNGLR 444
Namo’aporo Landowners Association Inc v Mark Sakai and Ors [2020] N8178
Galatia v Tulo [2021] PGNC 11; N8760

Legislation

Oil & Gas Act 1998
National Court Rules

Counsel:

Mr. Edward Waifaf, for the Plaintiff
Mr. Eava Geita, for the First and Second Defendants
Mr George Lau, for the Third Defendant

29^th September, 2021

1. TAMADE AJ: This was a hearing on the substantive matter heard on 29^th September 2021. The Third Defendant raised preliminary issues as to standing by the Plaintiff’s and the correct mode of proceedings and I allowed those issues to be heard together in response to the substantive matter. This is my decision in this matter after due consideration.

2. The Plaintiff represents the Fasu tribe who are landowners from the Southern Highlands Province within the Kutubu PDL 2 licence area.

3. The Plaintiff’s claim that they represent 117 registered land groups of clans that own land under custom within the PDL2 of the Kutubu Project in Southern Highlands Province.

4. The Third Defendant Mark Sakai was joined to the proceedings after the commencement of these proceedings. The Plaintiff states that he is also from the Fasu tribe.

5. The Kutubu Oil Project was created under the repealed Petroleum Act and was preserved under the Oil & Gas Act 1998.

6. The complaints against the Third Defendant Mr Mark Sakai is that he was appointed by the First Defendant as a Trustee for PDL 2 landowners by the Minister Honourable Kerenge Kua and revoking all other trustees.

7. The trustee entity that handles the benefits of the PDL 2 landowners is the Petroleum Resources Kutubu Limited which came into existence on 7^th March 1991 and is managed by the Mineral Resources Development Company Ltd (MRDC).

8. The Plaintiff’s aggrieved by the decision of the Minister to appoint Mr Mark Sakai as their trustee as opposed to what the required legislation says as to the trustee to be a corporate trustee therefore filed these proceedings objecting to the decision of the Minister.

9. The Plaintiff’s after requesting the Minister to revoke his decision to appoint Mr Mark Sakai now approached this court on the appointment of Mr Mark Sakai.

10. The Third Defendant however states that the Plaintiff Company does not have the required authority to bring these proceedings and that this Originating Summons is the wrong mode of proceedings to challenge the decision of the Minister appointing Mr Mark Sakai.

Issues

(1) Whether section 176 (3) (a) of the Oil & Gas Act 1998 clearly provides for the appointment of a corporate trustee and not an individual landowner trustee?

(2) Whether the Plaintiffs have standing to institute these proceedings?

(3) Whether the Plaintiff should have proceeded by way of a judicial review to challenge the decision of the Minister appointing Mr Mark Sakai as the Trustee for the landowner benefits?

Issue 2- Standing

11. I will address issue number 2 and 3 before deciding on issue number 1.

12. The Third Defendant alleges that the Plaintiff does not have standing to institute these proceedings as they do not have the express authority of the 117 Incorporated Land Groups that make up the Plaintiff Association. The Third Defendant states that he is the Chairman of the ILG Makaruaporo ILG and that ILG did not consent to the Plaintiff instituting these proceedings.

13. The Affidavit of John Kapi Natto filed on 24^th February 2021 states that there was an urgent Management Committee meeting held on 14^th August 2021 to challenge the appointment of the Third Defendant by the Minister on 9 July 2020.

14. The Affidavit of John Kapi Natto annexes a copy of the Constitution of the Plaintiff Association. Clause 3 of the Constitution states that:

“The affairs of the Association shall be under the management of the Committee of Management (in this Constitution) called “The Management Committee”) which Committee shall be constituted as hereinafter provided.”

15. Clause 8 of the Constitution of the Association states that the Management Committee is comprised of the President/Chairman, Vice President, Secretary, Treasurer and three (3) Executive Committee Members.

16. Mr Waifaf of the Plaintiff in his submissions concedes that the Plaintiff represents 117 ILG’s which make up the Plaintiff entity which are from the Fasu Land Group as stipulated in the Plaintiff’s Constitution. These are landowners in the PDL2 area of the Kutubu Project. There are other tribes as well apart from the Fasu tribe in PDL2 who are also affected by the Minister’s decision to appoint the Third Defendant as stated in the Affidavit of John Kapi Natto filed on 24^th February 2021.

17. I find that an appointment of any trustee to Trust Funds owing to the people of PDL2 is a direct impact on the beneficiaries who are the Plaintiffs and therefore they do have interest in funds that will benefit them and or their children.

18. Justice David Cannings in the case of Galatia v Tulo [2021] PGNC 11; N8760 (17 February 2021) stated that in regard to issues amongst clan members, he said that:

“However, it does not deprive them of the opportunity to bring their grievances to Court. There are clearly conflicts within each of the primary associations. That is not a good reason to deprive those members with grievances, the opportunity to agitate their grievances through proceedings such as the present.”
19. I share a similar view to Justice Cannings in regard to this case. The Third Defendant is the chairman of an ILG as part of the Plaintiff Association, however regardless of whether it did not agree to the Association bringing these proceedings, members of the Fasu tribe through the Plaintiff have an interest to bring their grievance to Court through their Management Committee as stated in the Constitution of the Plaintiff.

20. The Third Defendant’s submissions on standing perhaps is strictly tied to standing in a judicial review proceeding where an applicant has to prove that it has sufficient interest and its’ interest is affected by the decision of the administrative body complained of. Even if that were to apply in a judicial review proceeding, I find that the Plaintiff does have standing to bring these proceedings under Order 4 and or under Order 16 of the National Court Rules.

21. If there are 117 ILG’s in the Plaintiff Association, the Third Defendant is raising a complaint on behalf of only one ILG in which he is the chairman. The Court does not have any objections by other aggrieved ILG’s if any. The decision to bring these proceedings is proper having been made by the Management Committee as stipulated in the Plaintiff’s Constitution.

Mode of Proceeding

22. The Third Defendant raised the objection that the Plaintiff should have commenced the proceedings by way of judicial review as it is challenging the decision of the First Defendant, the Minister in the appointment of the Third Defendant.

23. The Minister’s decision was published in the National Gazette on 14^th July 2020 on the National Gazette No. G442 and made on 9 July 2020.

24. The Third Defendant states that the Plaintiff should have sought for a revocation of the decision of the Minister however that is not the case here as the Plaintiff is seeking declaratory orders by way of an Originating Summons.

25. I accept that the decision complained in this matter is one of a public authority as that of the Minister and his decision is subject to public scrutiny. I am of the view that the relief sought by an applicant should determine the mode of proceeding it should take.

26. In the case of Attorney General and The State & Ors v Dr Pirouz Hamidian-Rad [1999] PNGLR 444, the Supreme Court held that where an applicant is seeking an order in the nature of certiorari, the proper process was under Order 16 of the National Court Rules by way of judicial review. The Court stated that Order 16 is an exclusive procedure where also a prerogative writ is sought.

27. Order 16 (1) is in express terms as:

"An application for an order in the nature of mandamus, prohibition, certiorari or quo warrant shall be made by way of an application for judicial review in accordance with this Order.”

28. The wording of Order 16 is therefore mandatory as stated by the Supreme Court in the Attorney General v Hamidian-Rad and provides for an exclusive route for reliefs as stipulated in Order 16.

29. The Plaintiff in this case is however seeking a declaration under Order 4 of the National Court Rules seeking an interpretation of Section 176 (3)(a) of the Oil & Gas Act 1998.

30. The Plaintiff is seeking a declaration to say that section 176(3)(a) of the Oil and Gas Act makes it lawful for the Minister to appoint a corporate trustee to manage landowner benefit funds and not an individual as is the situation in this case.

31. Section 10 of the Oil & Gas Act gives the National Court jurisdiction to deal with any matter arising out of the Oil & Gas Act.

32. I am of the view that the Plaintiff is properly before this Court in the mode it has chosen to come by. If the relief the Plaintiff was seeking was by way of certiorari and or those identified under Order 16, the Plaintiff would therefore have to strictly come by way of a judicial review as O16 is an exclusive route as to the reliefs identified therein.

33. The Plaintiff has chosen to go by way of Order 4 of the National Court Rules seeking declaratory orders as to interpretation of a provision of law and therefore I find that the mode of proceeding commenced by the Plaintiff is appropriate given the relief that it seeks.

Issue 1- Whether section 176 (3) (a) of the Oil & Gas Act 1998 clearly provides for the appointment of a corporate trustee and not an individual landowner trustee?

34. The Plaintiff therefore seeks an interpretation of section 176 (3) of the Oil & Gas Act 1998 in the appointment of the Third Defendant as a trustee to beneficiary benefits of landowners of PDL 2 in the Kutubu Project. The relevant parts of Section 176 of the Oil & Gas Act states that:

176. PROJECT BENEFITS TRUSTS.

(1) The equity benefit granted by the State in accordance with Section 167 and royalty benefit granted by the State in accordance with Section 168 to project area landowners, and any additional participating interest in a petroleum project acquired by project area landowners in accordance with Section 175, shall be received and held upon trust for those project area landowners by a corporate trustee which is wholly owned by MRDC.

(2) Where by an act or agreement the State grants to project area landowners or other customary land owners any other benefit in relation to the petroleum project, whether by way of a beneficial interest in a licence or assets attributable to a licence, or payments based on production or profits of the petroleum project, or otherwise, that benefit shall be received and held upon trust for those persons by a corporate trustee which is wholly owned by MRDC.

(3) Where a benefit referred to in Subsection (1) or (2) is held by a trustee upon trust pursuant to Subsection (1) or (2)–

(a) the terms of the trust shall be set out in a deed approved by the Minister;

35. The Plaintiff states that the First Defendant’s decision of 9^th July 2020 is contrary to section 176(3)(a) of the Oil & Gas Act. The decision of the Minister appointed the Third Defendant as a Trustee for PDL2 landowners in relation to landowner benefits commencing in 1996 up until 2001 and revoked all existing trustees.

36. The Minister’s Affidavit in these proceedings and as submitted by Mr Geita of the Solicitor General’s Office states that the Minister made the appointment of the Third Defendant on the basis that the Third Defendant was the sole signatory and the custodian to the relevant account since 1996 including any investments of proceeds from that reservation.

37. Mr Geita states that the 1996 Revised Kutubu Memorandum of Agreement provided for 10 percent reservation of total royalty benefits accruing to Fasu tribe in PDL2 in Kutubu.

38. The First Defendant in his Affidavit goes on to state that more leaders from Fasu will be appointed as Trustees in this regard.

39. I find that the position taken by the Minister to appoint an individual being the Third Defendant is contrary to the spirit and wording of section 176 of the Oil & Gas Act. The Oil & Gas Act clearly and expressly with no ambiguity provides for the appointment of a corporate Trustee as opposed to an individual and for good reasons in terms of accountability and transparency as these are funds belonging to landowners.

40. I do not accept that the Minister intends that the appointment of the Third Defendant was as a matter of convenience and that more landowners will be appointed in this very position is clearly contrary to law and in defiance of section 176 of the Oil & Gas Act.

41. The Third Defendant in his submissions and affidavits seems to assert himself has having a standing superior to all other landowners relying on his connection and relationship in various roles in the Kutubu project from the signing of the relevant MOA and his position regarding accounts of landowners to do with the project.

42. The reasons by the Third Defendant and the Minister premised on convenience as to the appointment of the Third Defendant is contrary to law and should not be allowed to remain as it is clearly a breach of the Oil & Gas Act.

43. I am drawn to matters of impropriety as submitted by the Plaintiff in the case of Namo’aporo Landowners Association Inc v Mark Sakai and Ors [2020] N8178. The proceedings by the Plaintiff have every reason to be in Court to challenge the appointment of the Third Defendant, they are beneficiaries of the Trust, they have standing, and they are not a busybody. Their concerns are genuine as these are trust funds that will benefit current and future landowners of the Fasu Tribe.

44. For good governance and accountability, section 176 provides for a corporate trustee as opposed to an individual trustee. I find the reasons by the Minister and the Third Defendant as poor and lacked legal and sound basis for the appointment of the Third Defendant.

45. I will grant the Orders sought by the Plaintiff in the Originating Summons filed.

46. The Orders of the Court are as follows:

(I) The purported Instrument styled Appointment of Trusteeship signed under the signature of the First Defendant on 9^th July 2020 declaring one Mark Sakai, Chairman of Makaruaporo Land Group Inc, a member of the Plaintiff, as the Trustee for PDL02 Kutubu Licence area Landowners pursuant to Section 176(3) of the Oil & Gas Act 1998 is declared null and void on the basis that the said Act does not confer on the First Defendant any powers to make such appointments, when there are existing trust companies representing the interest of customary landowners from PDL02 Kutubu Oil & LNG project area of Southern Highlands Province namely the Kutubu Petroleum Resources Limited and Kutubu Gas Resources Limited via Mineral Resources Development Company Limited.

(II) The revocation of all previous Trustee appointments made since 1996 is null and void as it directly or indirectly interferes with existing Trust Deeds and Trustee corporations such as Petroleum Resources Kutubu Limited and Gas Resources Limited for PDL02 Kutubu Oil and LNG Project area in the Southern Highlands Province.

(III) The Defendants and their agents and servants are restrained from enforcing the Ministerial Instrument dated 9^th July 2020.

(IV) The Defendants shall pay the costs of and incidental to these proceedings to the Plaintiff.

Orders accordingly.
________________________________________________________________
Edward M Waifaf Lawyers: Lawyer for the Plaintiff
Solicitor General’s Office: Lawyers for the First and Second Defendants
Niuage Lawyers: Lawyers for the Third Defendant