Papua New Guinea Forest Authority v Concord Pacific Limited, Paiso Company Limited and The Independent State of Papua New Guinea (No 2) (2003) N2465

• Jurisdiction: Papua New Guinea
• Judge: Kandakasi J
• Judgment Date: 12 September 2003
• Court: National Court
• Citation: (2003) N2465
• Year: 2003
• Judgement Number: N2465

Full Title: Papua New Guinea Forest Authority v Concord Pacific Limited, Paiso Company Limited and The Independent State of Papua New Guinea (No 2) (2003) N2465

National Court: Kandakasi J

Judgment Delivered: 12 September 2003

N2465

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS. NO. 411 OF 2003

PAPUA NEW GUINEA FOREST AUTHORITY

Plaintiff

AND:

CONCORD PACIFIC LIMITED

First Defendant

AND:

PAISO COMPANY LIMITED

Second Defendant

AND:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

Second Defendant

(N0. 2)

WAIGANI: KANDAKASI, J.

2003: 28th August

12th September

CONTRACTS – Settlement of Court proceedings by written deed of settlement – Timber Authority under the Forestry Act 1991 subject of Court proceedings and compromise - Whether entered into by mutual mistake that the Timber Authority was valid? – Both parties failed to give any proper consideration to the relevant and applying provisions of the Act – Effect of – Parties proceeded under a mutual mistaken belief that the Timber Authority was valid – Deed rendered null and void.

Construction of the terms of the Deed – Agreement by statutory authority not to exercise, regulatory, control and prosecutorial powers – Whether offending public policy and intention of legislation? – Agreement offending public policy and intention of legislation – Effect of – Agreement an illegal and unenforceable contract.

Capacity - Whether Solicitor General had ostensible authority to execute the Deed on behalf of the State? – At time of execution of deed, no argument that the Solicitor General did have the ostensible authority to execute the deed – No issue taken on his authority and terms of deed relied upon and performed to the detriment of the other parties to the deed – The State acquiesced the Solicitor General’s actions – State may not be at liberty to raise lack of authority.

LAW OF AGENCY – Authority of Solicitor General as an agent of the State - Usual and apparent or ostensible authority to represent and settle Court proceedings on behalf of the State - No issue raised prior to, at the time or immediately after the execution of the Deed – Generally, the Solicitor General has the usual and apparent authority to represent and bind the State – Issue raised based on subsequent decision of the Supreme Court requiring specific authorisation by the Attorney General – Other parties relied on the representations and conduct of the Solicitor General and acted upon it to their detriment – State may not be at liberty to raise lack of authority.

Papua New Guinean Cases Cited:

Panga Coffee Factory Pty Limited & Ors v. Coffee Industry Corporation Limited (06/10/99) SC619.

Fly River Provincial Government v. Pioneer Health Services Limited (24/03/03) SC705.

The State v. Zachary Gelu & Monoburn Earthmoving Limited (15/08/03) SC 715

The State v. Keboki Business Group [1985] PNGLR 369.

PNG Coffee Industry Board v. Panga Coffee Factory [1990] PNGLR 363.

Curtain Bros (Qld) Pty Ltd v. Kinhill Kramer Pty Ltd Curtain Brothers [1993] PNGLR 285.

SCR No 12 of 2001; Re Validity of National Capital District Commission Act 2001 (20/02/01) SC680.

Jack Livinai Patterson v. National Capital District Commission (05/10/01) N2145.

The State v. Barclay Bros (PNG) Ltd (delivered 06/06/02) N2090.

Tian Chen Limited v. The Tower Limited (delivered 20/01/03) N2319.

Odata Ltd v. Ambusa Copra Oil Mill Ltd (delivered 06/07/01) N2106.

Overseas Cases Cited:

Holsworthy UDC v. Holsworthy RDC [1907] 2 Ch. 62.

Moore v. Vestry of Fulham [1895] 1QB 399.

Callisher v. Bischoffsheim (1870) LR 5 QB 449.

Bennette v. Bennette [1952] 2 QB 118.

Magee v. Pennine Insurance [1969] 2 QB 507.

Stone v.Wythinpol (1855) Cro Eliz 126; 78 ER 383.

Miles v. New Zealand Alford Estate Co. (1886) 32CLD 266; [1886-90] All ER Rep 1726.

Brent v. Brent (1841) 10 L.J. Ch. 84.

Windhill Local Board of Health v. Vint (1890) 45 Ch. D. 351

Texts Cited:

Foskett, The Law and Practice of Compromise, 5th Edn., Butterworths, Sydney,2002.

Carter & Harland, Contract Law in Australia, 4th Edn., Butterworths, Sydney, 2002.

Seddon & Ellinghaus Law of Contract, 7th Edn., Butterworths, Sydney, 1997.

Counsel:

Mr. I. R. Shepherd for the Plaintiff.

Mr. I. Molly and J. Yagi for the First and Second Defendants.

Dr. Nonggorr for the Third Defendant.

12th September 2003

KANDAKASI, J: By an originating summons filed on the 31st of July 2003, the plaintiff (PNGFA) is seeking an order in the form of a declaration that a Deed of Settlement entered into between the parties in OS 739 of 1999 (the 1999 proceedings) on 12th December 2002 (Deed) null and void.

The Arguments of the Parties

The main ground relied upon by the PNGFA is a mutual mistake of fact and law as to the date of expiry of a Timber Authority, TA.024 (TA.024) the subject of these proceedings. It argues that TA.024 had already expired prior to the execution of the Deed. Further or in the alternative, the PNGFA argues that the terms of the Deed offend public policy and the intention of the Forestry Act 1991 (the Act). This it argues is the case because the Deed waives its statutory authority, duty and obligation to regulate, manage, control and prosecute offenders in the forestry industry. This argument is supported by a number of both local and overseas authorities including the Supreme Court decisions in Panga Coffee Pty Limited & Ors v. Coffee Industry Corporation

1 (Unreported judgement delivered on 06/10/99) SC619.

1 and Fly River Provincial Government v. Pioneer Health Services Limited.

2 (Unreported judgement delivered on 24/03/03) SC705.

2 On these bases, the PNGFA is asking amongst other for an order that the Deed be declared null and void.

The State though named as a defendant, it has taken a position supporting the PNGA’s arguments and the relief sought. Then on its own part and in furtherance of the PNGFA’s arguments, it argues with the support of the PNGFA that, the Solicitor General did not have the express or the usual or apparent authority to execute the Deed on behalf of the State. Reliance is placed on the recent judgement of the Supreme Court in The State v. Zachary Gelu & Monoburn Earthmoving Limited.

3 (Unreported judgement delivered 15/08/03) SC 715.

3

The first and second defendants (the Companies) argue that the expiry date and therefore the validity of the TA.024 was a live issue. It was thus addressed and resolved by the Deed. Hence, it was not a mutual mistake but a known fact. In relation to the argument that the terms of the Deed offend the public policy and the intention behind the Act, it concedes that no statutory authority can agree to something that is incompatible with the discharge of its powers and functions. Their submission is that, this is not the case here because the terms of the Deed are compatible with the PNGFA’s discharge of its powers and functions under the Act. With regard to the argument that the Solicitor General did not have the relevant power and or authority to execute the Deed, they submit that, this is an issue that must be resolved by the law of agency. They then argue that, at the time of the execution of the Deed, the Solicitor General did have the usual and or ostensible authority to execute the Deed. In support of these arguments, they rely on a number of both overseas and local case authorities and textbooks

4 Holsworthy UDC v. Holsworthy RDC [1907] 2 Ch. 62; Moore v. Vestry of Fulham [1895] 1QB 399; Foskett, The Law and Practice of Compromise, 5th Edn, para 4-23; Callisher v. Bischoffsheim (1870) LR 5 QB 449; Carter & Harland, Contract Law in Australia, 4th Edn, paraS 352 and 872; The State v. Keboki Business Group [1985] PNGLR 369 at p. 376; PNG Coffee Industry Board v. Panga Coffee Factory [1990] PNGLR 363 and Bennette v. Bennette [1952] 2 QB 118.

4, including those that are cited by the PNGFA.

The Relevant Issues

These arguments present a number of issues, which the Court needs to determine. The issues are:

1. Whether the Deed between the parties executed on the 12th of December 2002 was entered into under a mutual mistake as to the currency of the TA.024 and is therefore null and void?

2. Are the terms of the Deed incompatible with the statutory powers and functions of the PNGFA and is therefore null and void?

3. Did the Solicitor General have the usual or ostensible authority to execute the Deed on behalf of the State?

4. If the answer to the last question is in the negative, does the fact of lack of authority render the Deed null and void?

Facts

The facts giving rise to these issues are these. On the 24th of November...