Musa Valley Management Company Limited and Musa Century Limited v Pepi Kimas, Secretary, Department Of Lands And Physical Planning and Hon Dr Puka Temu Cmg MP Minister for Lands and Physical Planning and Musida Holdings Limited (2010) N3827

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 22 January 2010
• Court: National Court
• Citation: (2010) N3827
• Docket Number: OS (JR) NO 10 OF 2009
• Year: 2010
• Judgement Number: N3827

Full Title: OS (JR) NO 10 OF 2009; Musa Valley Management Company Limited and Musa Century Limited v Pepi Kimas, Secretary, Department Of Lands And Physical Planning and Hon Dr Puka Temu Cmg MP Minister for Lands and Physical Planning and Musida Holdings Limited (2010) N3827

National Court: Cannings J

Judgment Delivered: 22 January 2010

N3827

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS (JR) NO 10 OF 2009

MUSA VALLEY MANAGEMENT COMPANY LIMITED

First Applicant

MUSA CENTURY LIMITED

Second Applicant

V

PEPI KIMAS, SECRETARY,

DEPARTMENT OF LANDS AND PHYSICAL PLANNING

First Respondent

HON DR PUKA TEMU CMG MP

MINISTER FOR LANDS AND PHYSICAL PLANNING

Second Respondent

MUSIDA HOLDINGS LIMITED

Third Respondent

Waigani: Cannings J

2009: 16, 17 June

2010: 22 January

JUDGMENT

LAND – customary land – acquisition of customary land by the State for lease-leaseback purposes – Land Act, Sections 10 and 11 – whether agreement of all customary landowners necessary – grant of leases for special agricultural and business purposes – agreement of customary landowners necessary – Land Act, Section 102.

JUDICIAL REVIEW – whether Secretary for Lands failed to act in accordance with statutory preconditions for acquisition of customary land by the State and for granting of lease for special agricultural and business purposes – whether decisions under Land Act, Sections 10, 11 and 102, subject to principles of natural justice.

A tract of customary land was acquired by the State by lease under Sections 10 and 11 of the Land Act 1996. The land was later leased back by the State to a company representing a group of customary landowners under Section 102 of the Land Act. A rival group of customary landowners who had formed a company applied for judicial review of the decisions of the Secretary for Lands regarding both leases on grounds that: (1) the preconditions under Sections 10 and 11 and under Section 102 had not been satisfied; (2) they were denied natural justice; and (3) the decisions were unreasonable.

Held:

(1) The procedures for acquisition of the land by the State under Sections 10 and 11 and for granting of the lease under Section 102 were not complied with as the customary landowners or at least a substantial majority of them did not agree to either process. The first ground of judicial review was upheld.

(2) There was no breach of the principles of natural justice. The second ground of judicial review was dismissed.

(3) The Secretary for Lands did not act unreasonably. The third ground of judicial review was dismissed.

(4) The errors of law were significant. The acquisition by the State of customary land, by lease, under Sections 10 and 11 of the Land Act and the subsequent granting of a lease by the State to a lessee can only proceed lawfully if a substantial majority of customary landowners agree. There was a lack of agreement in this case at both stages of the process.

(5) The Secretary’s decisions were seriously flawed and therefore his decisions were quashed and the leases declared null and void.

Cases cited

Papua New Guinea Cases

Dale Christopher Smith v Minister for Lands (2009) SC973

Isaac Lupari v Sir Michael Somare (2008) N3476

Paul Saboko v Commissioner of Police (2006) N2975

Overseas Cases

Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223

Counsel

C Raurela, for the applicants

S Sukwianomb, for the 1st & 2nd respondents

D D Kombagle & S Tohui, for the 3rd respondent

22 January, 2010

1. CANNINGS J: This case concerns a tract of customary land in the Ijivitari District of Oro Province called Musa-Baregi. It is 211,600 hectares in area and formally described as Portion 16C, Milinch Gona, Fourmil Tufi. It is located 200 km south-west of Popondetta. It has been earmarked as an agro-forestry area for development under the National Government’s Export Driven Economic Strategy.

2. In December 2008, the Secretary for Lands, the first respondent Mr Pepi Kimas, a delegate of the Minister for Lands, made various decisions regarding the land, which resulted in two leases being executed:

· first, on 19 December 2008, the land was acquired by the State, through a 99-year lease from the customary landowners to the State, executed under Sections 10 and 11 of the Land Act 1996.

· secondly, on 23 December 2008, the land was leased by the State to the third respondent, Musida Holdings Ltd, through a 99-year lease from the State to Musida Holdings Ltd, executed under Section 102 of the Land Act.

3. Musida Holdings Ltd is a company owned and controlled by some of the customary landowners of Portion 16C.

4. There is another company, the first applicant, Musa Valley Management Company Ltd, owned and controlled by another group of customary landowners of Portion 16C, which is aggrieved by the decisions made by the Secretary. It says that the preconditions under Sections 10 and 11 and under Section 102 had not been satisfied, that they were denied natural justice and that the decisions were unreasonable.

5. Musa Valley Management Company Ltd and the company which it is promoting as the preferred developer of the agro-forestry project – the second applicant, Musa Century Limited – have been granted leave to seek judicial review of the Secretary’s decisions. This is a trial of the substantive application for judicial review.

GROUNDS OF REVIEW AND RELIEF SOUGHT

6. The applicants’ statement under Order 16, Rule 3(2)(a) of the National Court Rules – the document which is supposed to concisely state the decisions to be reviewed, the grounds on which the plaintiff relies and the relief being sought – sets out seven grounds of judicial review. No 1 has been abandoned. It argued that the Secretary exercised powers that could only be exercised by the Minister; however, it has since been realised that the Secretary has been delegated all of the Minister’s powers under the Land Act that are relevant to this case. The other grounds are repetitious or overlap and can be reduced to three:

· that the Secretary failed to follow proper procedures under the Land Act, in particular by failing to secure the agreement of the customary landowners to the acquisition of the land by the State and to the lease-back to Musida Holdings Ltd (paragraph 5(4) of the Order 16, Rule 3(2)(a) statement);

· that the Secretary acted unfairly and contrary to the principles of natural justice.

· that the Secretary acted unreasonably.

7. The applicants want the court to quash the decisions of the Secretary and to make consequential orders that would prevent Musida Holdings Ltd from being regarded as the lessee of the land and that would compel the Minister to grant a lease to Musa Valley Management Company Ltd.

ISSUES

8. The issues necessary for determination boil down to these:

1 Did the Secretary breach the procedures in the Land Act?

2 Did the Secretary act unfairly and contrary to the principles of natural justice?

3 Did the Secretary act unreasonably?

4 What declarations or orders should the Court make?

1 DID THE SECRETARY BREACH THE PROCEDURES IN THE LAND ACT?

9. The applicants argue that the procedures in the Land Act were breached on two occasions. First, on 19 December 2008 when the land was acquired by the State under Sections 10 and 11 of the Land Act. Secondly, on 23 December 2008 when the land was leased by the State to Musida Holdings Ltd under Section 102 of the Land Act. The nature of the alleged breach of the Act – the error of law allegedly committed by the Secretary – was the same in each instance: the customary landowners did not agree to what happened.

The first alleged breach: Sections 10 and 11

10. These are the provisions under which the State acquires customary land, by lease, for the purpose of granting a special agricultural and business lease of the land.

11. Section 10 (acquisition of customary land by agreement) states:

(1) Subject to Section 11, customary land shall be acquired in accordance with this Section and shall be authenticated by such instruments and in such manner as are approved by the Minister.

(2) The Minister, on behalf of the State, may acquire customary land on such terms and conditions as are agreed on between him and the customary landowners.

(3) Subject to Subsection (4), the Minister shall not acquire customary land unless he is satisfied, after reasonable inquiry, that the land is not required or likely to be required by the customary landowners or by persons on whom the land will or may devolve by custom.

(4) Where the Minister is satisfied, after reasonable inquiry, that any customary land is not required or likely to be required for a certain period but is of the opinion that the land may be required after that period, he may lease that land from the customary landowners for the whole or a part of that period.

12. Section 11 (acquisition of customary land for the grant of special agricultural and business lease) states:

(1) The...