Madang Timbers Limited v Valentine Kambori, Wari Iamo, Bonnie Ninai, Aquila Tubal, Philip Upeguto, Kanawi Pouru, Anda Kivi & Anthony Honey, Members of The National Forest Board and Belden Namah, Minister for Forest and Papua New Guinea Forest Authority and The Independent State of Papua New Guinea Timbers (Png) Limited and Patrick Pruaitch, Minister for Finance (2009) SC1000

• Jurisdiction: Papua New Guinea
• Judge: Cannings J, Kariko J and Ellis J
• Judgment Date: 27 November 2009
• Court: Supreme Court
• Citation: (2009) SC1000
• Docket Number: SCA 16 of 2008
• Year: 2009
• Judgement Number: SC1000

Full Title: SCA 16 of 2008; Madang Timbers Limited v Valentine Kambori, Wari Iamo, Bonnie Ninai, Aquila Tubal, Philip Upeguto, Kanawi Pouru, Anda Kivi & Anthony Honey, Members of The National Forest Board and Belden Namah, Minister for Forest and Papua New Guinea Forest Authority and The Independent State of Papua New Guinea Timbers (Png) Limited and Patrick Pruaitch, Minister for Finance (2009) SC1000

Supreme Court: Cannings J, Kariko J and Ellis J

Judgment Delivered: 27 November 2009

SC1000

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA 16 of 2008

MADANG TIMBERS LIMITED

Appellant

-v-

VALENTINE KAMBORI, WARI IAMO, BONNIE NINAI, AQUILA TUBAL,

PHILIP UPEGUTO, KANAWI POURU, ANDA KIVI & ANTHONY HONEY,

MEMBERS OF THE NATIONAL FOREST BOARD

First Respondent

BELDEN NAMAH, MINISTER FOR FOREST

Second Respondent

PAPUA NEW GUINEA FOREST AUTHORITY

Third Respondent

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

Fourth Respondent

TIMBERS (PNG) LIMITED

Fifth Respondent

PATRICK PRUAITCH, MINISTER FOR FINANCE

Sixth Respondent

Waigani: Cannings J, Kariko J and Ellis J

2009: 30 October, 27 November

JUDGMENT

Whether the National Forest Board has the power to enter into a project agreement that has not been submitted by a Provincial Forest Management Committee under section 71(b) of the Forestry Act 1991

Whether National Forest Board can validly consider more than one project agreement

Forestry Act 1991, sections 46, 61, 70, 71, 72

Held:

(1) That the use of the word “shall” in sections 71 and 72 of the Forestry Act is mandatory and not directory.

(2) The question of whether the word “shall” is mandatory or directory involves trying to ascertain the real intention of the statute by looking at the subject matter, considering the importance of what has been disregarded and the general object of the Act by reference not only to the words of the statute but also the legislative history.

(3) Whether it was the intention of the statute that an act done in breach of the provision should be invalid requires a consideration of not merely the language of the relevant provision but the scope and object of the whole statute.

(4) The provisions of the Forestry Act should be strictly construed as it involves permitting forestry activities which significantly impact on the rights of people in relation to their land

(5) Words in a statute in the singular will include the plural unless a contrary intention appears. Whether a contrary intention appears should not be confined to any one particular section of an Act: it is necessary to consider the section in its setting in the legislation and to consider the substance and tenor of the legislation as a whole.

Cases cited:

Papua New Guinea Cases

Safe Lavao v The State [1978] PNGLR 15

Overseas Cases

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355

Blue Metal Industries Limited v Dilley (1969) 117 CLR 651

Counsel:

Mr R Webb SC and Mr R Bradshaw, for the Appellant

Mr I Shepherd, for the 1st, 2nd and 3rd Respondents.

Mr I Molloy and Mr J Shepherd, for the 5th Respondent.

1. BY THE COURT: After the Madang Provincial Forest Management Committee (the Committee) selected the Appellant as the preferred applicant and submitted a final draft of the project agreement to the National Forest Board (the Board), the Board considered three project agreements and resolved to recommend that a timber permit be granted to the Fifth Respondent.

2 That raises two questions for determination in this appeal:

(1) Does the Board have the power to enter into an agreement that has not been submitted by a Committee under section 71(b) of the Forestry Act 1991?

(2) Can the Board validly consider more than one project agreement?

3 During the course of oral argument, it was noticed that the Board had been incorrectly named in these proceedings. For that reason an application to amend the name of the First Respondent by replacing the words “Papua New Guinea Forest Board” with the words “National Forest Board” was made, not opposed and granted.

Factual Background

4 The early part of the process leading to the Committee’s recommendation of the Appellant may be summarised as follows:

(1) A Development Options Study (DOS) was carried out in October 2004.

(2) After circulation of a draft DOS, the final DOS was presented to the Committee on 15 March 2005.

(3) Project Guidelines were prepared and the issued by the Board on 16 July 2005.

(4) By 29 September 2005, following an eight week tender period for the lodgment of expressions of interest, proposals were received from 16 proponents.

(5) With assistance from the National Forest Service (the Service) those proposals were evaluated by the Committee.

(6) Having short-listed four proponents, the Committee held meetings with each of those proponents in July 2006 and then evaluated their proposals.

(7) Following a meeting of the Committee held on 26 September 2006, on 17 October 2006 the Committee submitted its Final Report to the Board, listing those proponents in order of priority as:

Madang Timbers Limited (the Appellant)

Deegold (PNG) Limited

Timbers (PNG) Limited (the Fifth Respondent)

Stettin Bay Lumber Co Limited

(8) After the Stettin Bay Lumber Co Limited was eliminated, on 8 May 2007 the Board resolved to direct the Committee to conduct negotiations with each of the remaining three proponents and that was done.

(9) On 9 July 2007 the Committee delegated the task of negotiating a project agreement to the Service. That process resulted in a draft project agreement with each of the three remaining proponents. The form which the Committee issued when delegating that function to the Service was specific in that it referred to section 71(a) of the Act which provides for the negotiation of a project agreement.

5 On 3 August 2007 the Committee, also referred to as the PFMC, resolved:

“Basing on the analysis collected from the State Negotiation Team and PFMC’s own, and pursuant to section 71(b) of the Forestry Act 1991 (as amended), the Madang PFMC now recommends MADANG TIMBERS LIMITED as the most preferred developer to develop Middle Ramu Block One FMA Project.” (emphasis original)

6 In relation to that resolution, it is important to note that the understanding of the Chairman of the Committee, Mr Joseph Dorpar, as expressed in paragraph 50 of his affidavit sworn 29 May 2008, was that section 71(b) of the Forestry Act required the Committee to submit one draft project agreement to the Board. Paragraph 57 of that affidavit is worth quoting in full:

“Timbers (PNG) Limited and Deegold (PNG) Limited were eventually eliminated by the State Negotiating Team and were not included in the submission of the Form 103 together with the Final Draft Project Agreement.”

7 On 8 August 2007 the Committee completed the Form 103 document referred to by Mr Dorpar, the Chairman of that Committee. That Form 103 read:

“SUBMISSION OF FINAL DRAFT PROJECT AGREEMENT BY PROVINCIAL FOREST MANAGEMENT COMMITTEE TO THE BOARD

To the Board

The Madang Provincial Forest Management Committee under section 71 of the Forestry Act 1991 submits herewith the final draft of the Project Agreement.

(Attached final draft of Project Agreement for Madang Timbers Limited)” (emphasis original)

8 It is convenient to note here that Mr Kanawi Pouru, the Managing Director of the Papua New Guinea Forest Authority (the Authority) swore an affidavit in reply to that affidavit of Mr Dorpar. Mr Pouru responded to the paragraph quoted above by taking issue with whether the State Negotiating Team eliminated proponents and went on to say “three project agreements were submitted to the Board” but did not suggest that more than one Form 103 was submitted by the Committee to the Board. Mr Dorpar does not appear to have been cross-examined on paragraph 57 of his affidavit.

9 Accordingly, the evidence establishes that, while only one Form 103 was submitted by the Committee to the Board, there were three project agreements before the Board. To the extent that counsel for the Respondents sought to suggest that there may have been more than one Form 103 such submissions must be rejected. That there were three project agreements before the Board is evident from the minutes, considered below. It is clear that the Service went beyond what it was requested to do, namely negotiate a project agreement under section 71(a) of the Act. By submitting three draft final project agreements to the Board the Service went beyond what the Committee had requested it to do and did something which, under section 71(b), is for the Committee to do.

10 The minutes of the 23 August 2007 meeting of the Board relevantly record:

“That the Board having considered the three (3) draft final Project Agreements and based on a comparative analysis of all aspects of the proposal resolves:

(i) To eliminate Dee Gold (PNG) Limited from further consideration base on the outcome of the evaluation report which indicated lack of good track record, no audited financial statements, lowest landowner benefits etc; and

(ii) That Timbers (PNG) Limited is selected as the preferred developer for the Middle Ramu Block one (1) FMA Project in the Madang Province; and

(iii) To executed the Project Agreement on behalf of the Forest Authority after obtaining approval of the Minister for...