SC2334

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCM NO. 1 OF 2020

FRONTIER HOLDINGS LIMITED
Appellant

AND
JAMES HARIVA LOHORO & OTHERS
Respondents

Waigani: Hartshorn, Toliken and Berrigan JJ
2022: 13th and 16th December

APPEAL – OBJECTION TO COMPETENCY – An objection to competency raised at the substantive hearing of an appeal, in non-compliance with the Rules, without notice, and without leave is an abuse of process – Objection dismissed.

APPEAL – NATURAL JUSTICE – Procedural fairness requires that a party to a proceeding is given a reasonable opportunity to be heard – A reasonable opportunity to be heard means that a party is informed in advance of the issues to be determined and an opportunity to adduce evidence going to those issues – A failure to afford procedural fairness constitutes an error of law – Appeal upheld. 

Cases Cited

Sir Arnold Amet v Peter Charles Yama (2010) SC1064
Yama v Singirok (2020) SC1982
Ume More v University of PNG (1985) SC310
Sharp v Andrew (2016) SC1797
Kuso Maila Anda Ltd v United Pacific Corporation Ltd (2019) SC1894
Kumul Petroleum Holdings Ltd v Alina (2022) SC2253
Yakasa v Piso (2014) SC1330
Kuman v Digicel (PNG) Ltd (2013) SC1232
MVIT v John Etape [1994] PNGLR 596
Motor Vehicles Insurance (PNG) Trust v Pupane (1993) SC452
Covec (PNG) Ltd v Kama (2020) SC1912
Herman Sahale v Francis Karogo & Ors (2019) SC2129

References cited

Section 59 of the Constitution 
Order 7, Rules 15 to 19 of the Supreme Court Rules, 2012

Counsel

Mr I. Molloy and Mr W Frizzell, for the Appellants 
Mr A. Ona, for the First to Sixteenth Respondents
Mr. E Isaac, for the Nineteenth Respondent

DECISION ON APPEAL

16th December, 2022

1.	BY THE COURT: This is a decision on an appeal by Notice of Motion from a decision of the National Court given in judicial review proceedings.

BACKGROUND

2.	The Appellant was granted a Timber Permit No. 2-16 under the Forestry Act, Chapter 216, on or about 24 June 1992 for a period of ten years over an area described as Vailala TRP Block 2 and 3. The Plaintiffs, now the First to Eighteenth Respondents, sought leave to apply for judicial review of the recommendation of the Nineteenth Respondent, the PNG Forest Authority, to the Twentieth Respondent, the Minister, and the Minister’s consequent decision, to renew or extend TP2-16 on 25 July 2002.  The Plaintiffs claimed to be clan leaders or incorporated land groups within the Vailala TRP area and sought to have the decisions of the PNG Forest Authority and the Minister quashed.  They also claimed that the Appellant, so far as it continued operations after 24 June 2002, was acting unlawfully and that the proceeds of the sale of timber harvested after that date should be paid into Court. 

3.	The matter was referred to mediation some eleven years later on 12 February 2015, following which the matter returned to Court.  On 3 June 2015 the Court made orders giving leave to proceed to judicial hearing and determination on the following issues (the Issues):

i.	Whether the Plaintiffs are entitled to any premium payments made by the Third Defendant (the Appellant) to landowner companies pursuant to timber permit 2-16 up until 2008;
ii.	Whether the premium payments made by the Third Defendant (the Appellant) to landowner companies up until 2008 were in compliance with the agreements between the Third Defendant and those landowner companies;
iii.	Whether the Plaintiffs are to pursue the relief sought in these proceedings and whether they have standing to maintain the proceedings;
iv.	Whether other parties are to be joined in these proceedings. 

4.	The parties’ legal representatives (except for those then representing the 17th and 18th Plaintiffs) signed a Statement of Agreed and Disputed Facts and Legal Issues which was ultimately filed on 16 August 2017. The Agreed Facts were:

(a)	The Independent State of Papua New Guinea granted timber permit 2-16 to Frontier Holdings;
(b)	Agreements between landowner companies and Frontier Holdings were made in or about 1998.

5.	The Statement of Agreed Facts and Disputed Facts and Legal Issues under the sub-heading “Legal Issues” stated that pursuant to the orders made on 3 June 2015 granting leave the Court was to determine the “following issues”, namely the same issues contained in the order of that date, as set out in [3] above.

6.	Further, by order of 27 April 2019 the National Court relevantly ordered that:

“(2) For the avoidance of doubt the issues for hearing in the substantive judicial review are the legal issues set out in the statement of agreed and disputed facts and legal issues filed 16.08.17 by lawyers for the 1st to 16th plaintiffs, and the first, second and third defendants.”

7.	The National Court set out the Issues for determination in its decision.  

8.	It went on to order judgment in the sum of K4,751,553.90 to be paid to the principle plaintiff for distribution in equal parts to all incorporated land groups of Vailala Blocks 2 and 3 Forest Management Agreement under Timber Permit 2-16.   Costs were ordered to be in the cause.

ISSUES ON APPEAL 

9.	It is essentially the Appellant’s contention on the appeal that despite correctly setting out the issues for determination, the National Court erred by considering other issues which were not before it, and thereby denied the Appellant natural justice and the reasonable opportunity to be heard, contrary to s 59 of the Constitution. 

10.	The First to Sixteenth Respondents contend that the National Court made no error.  

11.	The Seventeenth, Eighteenth and Twentieth Respondents did not appear.

12.	The Nineteenth Respondent appeals only against the order of costs against it. It contends that the trial judge erred in awarding costs against it when the issues following mediation were concerned only with the Appellants and the First to Eighteenth Respondents.  It is willing to bear its own costs in the proceedings. 

OBJECTION TO COMPETENCY

13.	Before considering the substantive issues on the appeal it is necessary to deal with an objection to competency raised belatedly by the First to Sixteenth Respondents at the hearing. 

14.	The Respondents object to the competency of the appeal on the basis that the Appeal Book failed to include the written submissions of the parties in the Court below, in breach of Order 10 Rule 3(b)(i) of the Supreme Court Rules, 2012.  

15.	We refuse the objection for the following reasons.

16.	The same objection was raised by the First to Sixteenth Respondents by a Notice of Objection to Competency filed 28 April 2020. The objection was dismissed by the Supreme Court on 25 May 2020 on the basis that the notice of objection was itself incompetent for failing to set out the jurisdictional basis for the objection. An application for leave to make a slip rule application against the decision was refused on 1 August 2022. 

17.	The First to Sixteenth Respondents submit that the objection may nevertheless be raised again because the Supreme Court did not determine the objection on its merits and that an objection to competency may be raised at any time as it goes to the jurisdiction of the Court. It relies on Sir Arnold Amet v Peter Charles Yama (2010) SC1064 for this submission. 

18.	The submission is misconceived. 

19.	Division 5 of the Supreme Court Rules, 2012, consolidated to 1 May 2022, governs the procedure for challenging the competency of an appeal to the Supreme Court (emphasis ours):

Division 5—Objection to competency of appeal

15. A respondent who objects to the competency of an appeal or of an application for leave to appeal shall, within 14 days after service of the notice of appeal or application for leave to appeal—

(a) file an objection in accordance with Form 9; and 
(b) serve a copy of the objection on the appellant in any manner including by service on the appellant’s lawyers in the National Court proceedings. 

16. Any party may file affidavits. 

17. (1) An objection of which notice has been given shall be determined by: 

(a) in the case of an objection to a matter that is within the jurisdiction of a Judge, the Court or any Judge; and 
(b) in any other case, the Court. 

(2) An objection to competency shall be heard and determined before the substantive matter to which the objection relates is set down for hearing unless a Judge decides in a special case that it is in the interests of justice to set down the matters together. 

18. Upon the hearing of an objection to competency the burden of establishing the incompetency of the matter the subject of objection is on the party making the objection. 

19. If notice of objection is not given and the appeal or the application for leave to appeal is dismissed as incompetent, the respondent shall not receive any costs of the appeal or the application for leave to appeal unless the Court or Judge on special grounds orders otherwise.

20.	Order 7 Rule 15 provides in mandatory terms that a party who wishes to object to the competency of an appeal must file an objection in the appropriate form within 14 days of the service of the notice of appeal or application for leave to appeal.  

21.	Order 7 Rule 17(1)(b) provides that an objection of which notice has been given that is not within the jurisdiction of a Judge shall be determined by the Court.  

22.	It follows that “an objection of which notice has been given” referred to in Order 7 Rule 17(1)(b) means an objection of which notice has been given in accordance with Order 7 Rule 15(a) above. The import of this is twofold. First, at a minimum, notice of objection must be given, that is, it must be filed. Secondly, it must be filed within the requisite 14 days.

23.	Pursuant to Order 7 Rule 19, a party who fails to give notice within the 14 day period prescribed may be denied costs even if successful.

24.	Any suggestion to the contrary renders the Rules redundant. 

25.	Any submission that this interpretation is inconsistent with the principles established in Amet v Yama, supra is misconceived.  In that case the issue of competency was formally raised by way of an application for leave filed and served prior to hearing of the substantive application for judicial review: Yama v Singirok (2020) SC1982, per Batari J at [64]. 

26.	Furthermore, we agree with the Supreme Court in Yama v Singirok, supra that an objection to competency raised at the substantive hearing of an appeal, without notice, and without compliance with the Rules is an abuse of process: per Cannings J at [93] to [98], Salika DCJ at [56], Batari J at [65] and Mogish J concurring.  It is unfair to the parties and denies the Court the opportunity to know the matters for determination before it:  Batari J at [65].

27.	A party who fails to comply with the mandatory requirements of the Rules must seek leave of the Court or a Judge to file and argue the issue at the substantive hearing of the appeal: Batari J at [66]; see also Cannings J at [99], Salika DCJ and Mogish J agreeing.

28.	Any exception must be one that demonstrates unequivocally that the Court has no jurisdiction: Cannings J at [99], Salika DCJ, Batari J at [66], and Mogish J agreeing.  

29.	In this case the objection to competency has been dismissed once before.  The attempt to raise it again at the substantive hearing of the appeal, in non-compliance with the Rules, without notice, and without leave is an abuse of process. The objection is dismissed. 

NATURAL JUSTICE AND PROCEDURAL FAIRNESS

30.	It is well established that judicial proceedings must be conducted in accordance with the principles of natural justice.  The minimum requirement of natural justice is the duty to act fairly, and in principle, to be seen to act fairly: s 59 of the Constitution.  

31.	Fairness requires that a party to a proceeding is given a reasonable opportunity to be heard. A reasonable opportunity to be heard requires that a party is informed in advance of the issues to be determined and the opportunity to adduce evidence going to those issues.  This usually means that the Court must confine itself to the issues raised in the pleadings, or in this case, the Court orders and the Statement of Agreed Facts and Disputed Facts and Legal Issues: Ume More v University of PNG (1985) SC310.  

32.	A denial of the right to be heard constitutes an appellable error of law and vitiates any resulting decision:  Sharp v Andrew (2016) SC1797; Kuso Maila Anda Ltd v United Pacific Corporation Ltd (2019) SC1894 and the numerous cases cited therein. 

33.	As observed by Hartshorn J in Kumul Petroleum Holdings Ltd v Alina (2022) SC2253, at [16] et seq, Yagi and Bona JJ agreeing, the emphasis in recent years when considering natural justice in the context of legal proceedings is to speak of procedural fairness, recognising that the essential requirement is one of fairness:
“I have had recourse to judgments of the Australian High Court, the Federal Court and the New South Wales Supreme Court. These are persuasive in this jurisdiction.
As to natural justice, the principles of which are provided for in s.59 Constitution, in the High Court case of Attorney General (NSW) v. Quin (1990) 170 CLR 1. Dawson J at [11] said:

“It is now generally accepted that “(t)he rules of natural justice are ‘in a broad sense a procedural matter’”. In recent years the trend has been to speak of procedural fairness rather than natural justice in order to give greater flexibility to the extent of the duty than is possible merely by reference to a curial model. Indeed, in England judges now speak of a “duty to act fairly” and natural justice becomes “fair play in action”.” …

With reference to procedural fairness - it equating to natural justice, a failure to afford a party procedural fairness will constitute an error of law: Clements v. Independent Indigenous Advisory Committee [2003] FCAFC 143 per Gray ACJ and North J at [8] and Antonio Di Liristi v. NSW Public Trustee [2021] NSWSC 1347 at [88].”

34.	That is not to say that undue rigidity in the application of procedural requirements should be allowed to compromise the substantive goal of the Court, which is “to do justice between parties according to law”: Yakasa v Piso (2014) SC1330 (Lenalia, Murray and Logan JJ) at [61] adopting and applying Bomanite Pty Ltd v Slatex Corp Australia Pty Ltd (1991) 32 FCR 379 per French J (as he then was) at 391.  

35.	What is essential is that a party is put on notice as to the case it has to meet and that the issues for decision are defined: Kuman v Digicel (PNG) Ltd (2013) SC1232 at [14].  Where it is clear from the conduct of the parties that they have deliberately chosen some issue different from that disclosed in the pleading for the determination of their rights and liabilities, procedural fairness will have been achieved:  Yakasa v Piso (supra) at [66].  Where evidence is led without objection a Court is entitled to make findings on the basis of such evidence provided it is within the general ambit of the plaintiff’s claim:  MVIT v John Etape [1994] PNGLR 596 applying Motor Vehicles Insurance (PNG) Trust v Pupane (1993) SC452. See also Covec (PNG) Ltd v Kama (2020) SC1912 and Herman Sahale v Francis Karogo & Ors (2019) SC2129 at [17] to [22].

36.	The issues for determination in this case were clearly before the National Court. They were stated in identical terms on three occasions prior to hearing.  The learned trial judge correctly set them out at the beginning of his decision. Despite doing so, however, he gave judgment on an issue which was not before him.  

37.	The critical question for the purpose of Issue (i) was whether the Plaintiffs, or any of them, were entitled to any of the payments made by the Appellant to the landowner companies.  That was a matter between the Plaintiffs and the landowner companies.  Instead of determining that issue the learned trial judge ordered that K4.75m be paid by the Appellant to the Plaintiffs.  That matter was not before the Court. In awarding judgment the learned trial judge considered a range of other matters including the consent of customary landowners, purported breaches of the Forestry Act, and amendment or surrender of the timber permit. 

38.	This was not a case where the parties by their conduct consented to the matter being determined other than in accordance with the Issues identified. The Appellant made this clear in its written submissions filed 26 July 2018. It maintained that the raising of premium payments at mediation was an abuse of process, and it was an abuse of process for the Plaintiffs to assert that they were entitled to any premium payments as the Appellant never had any liability to pay incorporated land groups.  It should be borne in mind that the judicial review proceedings challenged the decision of the Minister to renew the timber permit. 

39.	In addition, the matters relied upon by the trial judge in awarding judgment for the Plaintiffs were raised for the first time by the Plaintiffs in their submissions filed on 18 October 2019, a few days before the hearing. The Appellant had no notice of those matters and was not in a position at that stage to put evidence on to meet them. Nor was it required to do so. The issues for determination had been clearly identified numerous times. First, in 2015, again in 2017, and for the avoidance of doubt, in 2019. 

40.	To our minds that is the end of the matter for the purpose of the appeal.  The Appellant seeks to have this Court determine the Issues now.  There appears to be some dispute between the parties as to whether his Honour dealt with the other Issues, or some of them, to what extent they are matters for judicial review, and how they should be resolved.  We are not in a position to determine those matters. The appropriate forum for the Issues to be heard and determined is at the National Court. 

41.	Costs should follow the event. 

42.	Counsel for the PNG Forest Authority quite properly informed the Court that whilst his client now supported the Appellant, it supported the Plaintiffs in the Court below. In the circumstances we agree that it should bear its own costs.

ORDERS

43.	We make the following orders.

(1)	The objection to the competency of the appeal is dismissed.
(2)	The appeal is upheld.
(3)	The matter is remitted to the National Court for rehearing by a different Judge.
(4)	The First to Sixteenth Respondents pay the Appellant’s costs of this appeal and the proceedings in the National Court on a party-party basis to be taxed if not agreed. 
(5)	No other order as to costs.  

________________________________________________________________
Warner Shand:	Lawyer for the Appellant
Ona Lawyers:   	Lawyer for the First to Sixteenth Respondents	
Emmanuel Lawyers:	Lawyer for the Nineteenth Respondent