Dumal Dibiaso Incorporated Land Group No 1664 (First Appellant), Sapa Kumala Incorporated Land Group No 1729 (Second Appellant) and Kailamso Dibiyaso Incorporated Land Group No 1658 (Third Appellant) v Kola Kuma (First Respondent), National Forest Authority, (Second Respondent), Makapa Landowner Company Ltd, (Third Respondent), Rex Porae—Chairman of Spakamula ILG No 1729, (Fourth Respondent), Viako Biksi—Chairman of Kailamoso Dibiaso ILG No 1664, (Fifth Respondent), Yborn—Chairman of Dumall Dibitaso ILG No 1664, (Sixth Respondent), Dole Sowai—Chairman Of Segene Nadaso ILG No 1660, (Seventh Respondent), Wesley, Chairman of Dumall Digitaso, ILG No 1664, (Eight Respondent), Walum—Chairman Of Supa ILG No 1662, (Ninth Respondent) and Siwa Daguwe, Chairman of Dumali Dibigtaso, ILG No 1664 (Tenth Respondent) (2005) SC805

• Jurisdiction: Papua New Guinea
• Court: Supreme Court
• Judge: Injia DCJ, Sevua J, Kirriwom J
• Judgment Date: 03 November 2005
• Citation: (2005) SC805
• Judgment Number: SC805
• Year: 2005
• Docket Number: SCA No 50 of 2004

Full Title: SCA No 50 of 2004; Dumal Dibiaso Incorporated Land Group No 1664 (First Appellant), Sapa Kumala Incorporated Land Group No 1729 (Second Appellant) and Kailamso Dibiyaso Incorporated Land Group No 1658 (Third Appellant) v Kola Kuma (First Respondent), National Forest Authority, (Second Respondent), Makapa Landowner Company Ltd, (Third Respondent), Rex Porae—Chairman of Spakamula ILG No 1729, (Fourth Respondent), Viako Biksi—Chairman of Kailamoso Dibiaso ILG No 1664, (Fifth Respondent), Yborn—Chairman of Dumall Dibitaso ILG No 1664, (Sixth Respondent), Dole Sowai—Chairman Of Segene Nadaso ILG No 1660, (Seventh Respondent), Wesley, Chairman of Dumall Digitaso, ILG No 1664, (Eight Respondent), Walum—Chairman Of Supa ILG No 1662, (Ninth Respondent) and Siwa Daguwe, Chairman of Dumali Dibigtaso, ILG No 1664 (Tenth Respondent) (2005) SC805

Supreme Court: Injia DCJ, Sevua J, Kirriwom J

Judgment Delivered: 3 November 2005

SC805

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA. NO. 50 OF 2004

BETWEEN:

DUMAL DIBIASO INCORPORATED LAND GROUP NO.1664 (First Appellant), SAPA KUMALA INCORPORATED LAND GROUP NO.1729 (Second Appellant), KAILAMSO DIBIYASO INCORPORATED LAND GROUP NO. 1658(Third Appellant),

AND:

KOLA KUMA (First Respondent), NATIONAL FOREST AUTHORITY, (Second Respondent), MAKAPA LANDOWNER COMPANY LTD, (Third Respondent), REX PORAE – CHAIRMAN OF SPAKAMULA ILG NO. 1729, (Fourth Respondent), VIAKO BIKSI – CHAIRMAN OF KAILAMOSO DIBIASO ILG NO. 1664, (Fifth Respondent), YBORN – CHAIRMAN OF DUMALL DIBITASO ILG NO. 1664, (Sixth Respondent), DOLE SOWAI – CHAIRMAN OF SEGENE NADASO ILG NO. 1660, (Seventh Respondent), WESLEY, CHAIRMAN OF DUMALL DIGITASO, ILG NO. 1664, (Eight Respondent), WALUM – CHAIRMAN OF SUPA ILG NO. 1662, (Ninth Respondent) & SIWA DAGUWE, CHAIRMAN OF DUMALI DIBIGTASO, ILG NO. 1664 (Tenth Respondent)

WAIGANI: INJIA, DCJ,

SEVUA, J

KIRRIWOM,J.

2004: 30 NOVEMBER

2005: 3 November

CIVIL – Practice and Procedure – Judgments – Enforcement – Garnishee Proceedings – Trust Funds – Whether Trust Funds may be attached – Definition of trust funds and principles discussed.

Statutes – Forestry Act 1991 – Trust Funds in respect of royalty payments received from Project Developers and held for the benefit of land/resource owners – Creation of Trust – No express provision in the Act – Implied or constructive trust – Fiduciary duty of public trustee (National Forest Authority) to protect trust funds and to ensure they are used for purpose of trust discussed – Fiduciary duty of representatives of incorporated land/resource-owners groups receiving funds from National Forest Authority to be disbursed to resource/land owners, discussed.

Equity – Constructive trust – Funds received from project developers by government agency for benefit of land/resource owners – Paid to incorporated body representing land/resource owners – Two levels of trust created- Government agency and management or executive body of incorporated body -Fiduciary duty of office-holders or managers of incorporated groups discussed- Includes duty to minimize “administrative expenses” or not to incur personal expenses or debts on account of incorporated body to be satisfied from trust funds.

Counsel:

C.Raurela for 1st, 2nd and 3rd Appellants

S. Reid for the Cross-Appellant/2nd Respondent

B. Nii for the 1st Respondent

Hauna for the 3rd to 10th Respondents

3 November, 2005

BY THE COURT: This appeal and cross-appeal have come to this court from the decision of the National Court delivered on 10th May 2004. There was a debt recovery action in that Court by way of garnishee proceeding. The Judgment Creditor who was the Plaintiff in the action and the First Respondent in this appeal sought and was granted an order for garnishee nisi on 29th April 2004 by Los, J. On the 10th of May 2004 the order nisi went before the Court to be made absolute. This application was opposed by the 1st, 2nd and 3rd Appellants in this appeal.(hereafter “the Appellants”).

The Appellants were not parties in the original action but the Court so found on 10th May 2004 which is a primary reason for this appeal amongst other grounds which we shall come to shortly in the judgment. Because the Appellants were not parties in the original action, they sought to join this proceeding pursuant to Rule 63 Order 13 of the National Court Rules. This Rule allows third-parties who had no connection to the original action to appear and to be heard in an action for recovery of debts. Rule 63 provides:

“63. Claim by other person. (46/10)

Where it appears to the Court that any person other than the judgment debtor is, or claims to be, entitled to money paid into Court under Rule 59 or to the debt attached or to any charge or lien on, or other interest in that money or debt, the Court may make orders for giving to that person notice of the proceedings and may hear and determine his claim, and may direct the entry of such judgment, or make such order in respect of the claim, as the nature of the case requires.”

The National Court refused to entertain the Appellants’ application under this Rule while accepting the arguments presented on behalf of the Judgment Creditor in that the Appellants were none other than the Defendants, now Judgment Debtors, named in the original proceeding. In other words, they were not total strangers to the action. They were and are the same entities from the start of the proceeding.

We point out at this juncture that the recovery proceeding in this case stemmed from a default judgment that was obtained against the Defendants or Judgment Debtors on 17th May 2002. The application itself was filed on the 19th of October, 2001. The trial on assessment of damages was heard by Sakora, J on 8th August 2003. This was a trial ex parte and the court awarded a sum of K181,620.00 with interest and costs which was delivered on March 19, 2004.

The writ in the action was filed on 14th April 2001 and registered as W.S. No. 793 of 2001 by Kola Kuma as the Plaintiff who is the Judgment Creditor in this case against the following:

ª MAPAKA LANDOWNERS PTY LTD, 1st defendant

ª LEX POPAE, Chairman of Spakamula ILG #17299-2nd defendant

ª YIAKO BIKSI, Chairman of Kalambosos ILG #1664-3rd defendant

ª Y. BORN, Chairman of Dimal Dibitaso ILG # 1664-4th defendant

ª DOLE SOWAI, Chairman Segene Nadaso ILG #1660-5th defendant

ª WESLEY, Chairman of Dumall Dibitaso ILG #1664-6th defendant

ª WALUMI, Chairman of Supai ILG #1662-7th defendant

ª SIWA DAGUWE, Chairman of Dumali Dibitaso ILG #1664-8th defendant

From the descriptions given of each person or landowner representative, Dumal Dibitaso ILG #1664 has altogether three Chair Persons representing it in this group of individuals claiming to be acting for and in the interest of the landowners. They are Siwa Daguwe and two other persons known only as YBorn and Wesley. The first question that arises is the sincerity of the parties or entities if their full names are not given in the pleadings. Second, the sincerity of this proceeding is also questionable now that the Plaintiff/Judgment Creditor admitted that the entity named as the 1st Defendant namely Makapa Landowners Pty Ltd is not registered according to the IPA records. This was discovered by search subsequently carried out by the Appellants’ lawyers.

These eight Defendants are now the Judgment Debtors against whom the Judgment Creditor proceeded under Order 13 of the National Court Rules to enforce his judgment against them naming the National Forest Authority (NFA) as the Garnishee.

We come to the grounds of appeal shortly but essentially what the Appellants are saying here is that they are not parties to this action and have never been. The trial judge was therefore wrong in her finding that they were the same parties in the original action named therein as the Defendants.

The NFA, the Garnishee, is the 2nd Respondent in this appeal and is also the Cross-Appellant (hereafter “Cross-Appellant”). We will shortly address the grounds of appeal on behalf of the Cross-Appellant but essentially its contention here is that the trial judge ought not have granted garnishee order absolute in favour of the Judgment Creditor because the moneys that NFA holds do not belong to NFA to disburse as it pleases, they are Trust Funds and NFA is only Trustee to those funds which it can only distribute in accordance with specific guidelines. It is therefore only answerable to the landowners and not the Defendants.

BACKGROUND TO THE CASE

The First Respondent (the Judgment Creditor) filed proceedings against the Third, Fourth, Fifth, Sixth, Seventh, Eight, Ninth and Tenth Respondents (the Judgment Debtors) on the 14th June 2001 in the National Court in proceedings WS No. 793 of 2001 (see Pages 19 – 22 of the Appeal Book) claiming payment for services rendered in the form of –

(a) cash loans;

(b) 145 entertainment beer;

(c) accommodation in hotel;

(d) entertainment;

(e) loss of business;

(f) a total cost of K185,000.00

The facts are that on unspecified dates in 2000 or 2001 several persons claiming themselves as landowners or landowner representatives of Makapa Timber Permit Area were...