The Yama Files Part IV: Finance CoI Slams Yama

The K38.6 million claim

This is Part IV in our five-part series on Madang Governor, Peter Yama. See Part I, Part II, and Part III


Baseless and patently flawed

These are the words used by the Commission of Inquiry (CoI) into the Department of Finance when describing the explanation offered by the then Solicitor General, Zachary Gelu for his decision to award K15.5 million to Peter Yama in 2002.

The K15.5m was an out of court settlement for a K38,690,000 claim lodged by Peter Yama. The claim was for alleged losses and damage suffered as a result of not being able to develop land acquired during 1989 in Madang.

The Commission of Inquiry was critical of almost everything about Peter Yama’s claim and the decision to award him K15.5 million.

It recommend that Peter Yama be referred to the police for making ‘an unlawful claim,’ and Zachary Gelu be referred for his role in settling the case.

The Commission also recommended Neville Devete and Laias P. Kandi from the Solicitor General’s office be investigated for clearing the ‘unlawful claim,’ along with several other officers within the Department of Finance.

Baseless and Patently Flawed

The basic facts reported by the Commission start in October 1987, when the State subdivided Section 68 Allotment 38 in Madang town into two pieces of land. The plots were numbered Allotment 39 and Allotment 40.

In June 1988 the State granted Peter Yama a 99-year lease over Allotment 39. A lease covenant required a minimum improvement to the land of K100,000 within a year.

Fourteen years later, in July 2002, Peter Yama’s legal team at Poro Lawyers wrote to the then Solicitor General, Zachary Gelu. The letter spelled out Yama’s intention to make a claim against the State. Landowners from Yabob village had allegedly prevented him from developing the land in 1990, 1992 and 1999.

A few days later Gelu replied. Gelu stated that he would seek instructions from the Department of Lands and Physical Planning.

According to the Commission of Inquiry, Gelu never sought those instructions.

In August 2002, Yama filed a legal claim against the State for damages to the tune of K38,690,000. This was for business income loss, and damages to Section 68 Allotment 38 [an allotment that had ceased to exist when it was subdivided in 1987].

A month later, according to the CoI, Zachary Gelu unilaterally formed the view that a settlement out of court was the most appropriate solution.

The Commissioners found that when Zachary Gelu signed the Deed of Settlement for K15.5 million, he did so without seeing any evidence to justify the amount of damages being claimed.

Even more galling,  the Commission claims that the State was not actually liable to pay any compensation.

The initial two causes of action were time barred under the Frauds and Limitations Act 1988, which imposes a 6-year limitation. According to the Commission of Inquiry, no evidence was adduced to support Yama’s assertion that in 1999 a tribe had obtained restraining orders against him.

This led the commissioners to conclude that ‘this third instance is designed to circumvent the 6-year time limitation’. Yama claimed the restraining order was issued by the Land Titles Commission, however according to the Commission of Inquiry, the Commission has no such jurisdiction.

Yama had also not been granted any leave to file his claims outside the time bars in the Claims Against the State Act.

Compounding these legal defences that Gelu chose to ignore, the Commission of Inquiry argued that there was no liability on the part of the State or the Secretary of the Department of Lands. If anyone was liable, it was suggested, Yama’s claim should have been ‘against the “customary landowners” whom he alleges prevented him from access to his land’.

In settling the case, Gelu was acting in breach of a National Executive Council decision made four months earlier (August 2002). It made clear that ‘“there be no more out-of-court settlements by any State body or authority, including the Attorney General and the Solicitor General, without the approval of the NEC, acting on advise from the CACC”. 

Making matters worse, the settlement agreement is also said to have contravened the Public Finances (Management) Act 1995. It did not have the stipulated approval of the Minister for Finance.

The Commission of Inquiry also uncovered that at the time of signing the settlement agreement, Peter Yama had outstanding rental arrears of K41,214.86 (for unpaid rent since 1990).

The Commission also found that the Secretary of the Department of Lands and Physical Planning was not even aware that Yama had lodged a claim in court against him (as one of the defendants). Allegedly, he was never served the writ of summons by Yama’s lawyers, and Gelu had never sought instructions from the DLPP before commiting the State by signing a Deed of Release.

A backdoor attempt to rush payment

Zachary Gelu’s alleged negligence in settling Peter Yama’s claim is far from the end of the controversial saga.

Following the Deed of Settlement, the state did not pay Peter Yama. Perhaps the political landscape had changed, we do not know, but it is only 6 years later, on the 5th of May 2008, that Yama’s lawyer wrote to the Secretary of Finance (with a copy to the Solicitor General) demanding payment under the deed.

The Acting Solicitor General, Neville Devete and Laias Kandi (Deputy Solicitor general) provided their clearance (for K15.5m) at the end of May for the Department of Finance to issue a cheque. They conceded to the Commission of Inquiry that such authorizations were given ‘in error’, as the liability should have been disputed (p134).

The commissioners also found several discrepancies in the payment clearance procedure:

  • The clearance letter from Devete did not have a batch number;
  • It was registered as having been delivered to the Secretary for Finance 3 days earlier than the actual hand delivery;
  • The cheque was raised without the mandatory signatures on financial forms of several officials (p136).

The Commissioners concluded: ‘Peter Yama’s claim was processed expeditiously with special interests by Department of Finance and possibly the Solicitor General’s office’ (p137).

At this stage – as documented in a Supreme Court appeal[1] – the Secretary for Finance, Gabriel Yer, became aware of the payment and was concerned over its propriety. He instructed his officers not to effect any payments before further clarification had been obtained from the Attorney General and the Solicitor General..

However, on 24 June, while Yer was away in Singapore on official duties, his Acting Secretary allowed the Department of Finance to issue a cheque for K7.75 million, as part payment. It was collected by Yama in person on the same day.

Three days later on 27 June, Yama’s attempt to cash the cheque was unsuccessful as a stop order against the payment had been issued by the caretaker Secretary for Finance, Henry Doria. This occurred after the Prime Minister’s Acting Chief of Staff, Leonard Louma, had sent written directions on behalf of the Minister for Finance to put a stop to the payment. Yer had also intervened from overseas.

Yama rushed to court on 2 July where he successfully obtained an order from Justice Paliau the following day, which was unopposed by Laias Kandi from the State Solicitor’s Office. The order confirmed the liability of the State under the deed of settlement, compelled the state to pay K15.5m and granted a permanent injunction restraining the defendants from interfering with the payment.

The State appealed the decision. Alongside Gabriel Yer as Secretary of Department of Financ, was Leonard Youma, the Acting Chief of Staff, and the Chief Commissioner of the Commission of Inquiry into the Finance Department.

The Appeal quashed the original court order. The Supreme Court found that Justice Paliau had erred in several regards, including:

  • Louma was not served at all with the notice of motion, and Gabriel Yer did not have sufficient time to respond , due to the ‘hasty manner’ the case was moved forward (point 33 and 35 of SC appeal). This echoes tactics used in the Telikom case featured in Part III.
  • The judge failed to ask Kandi (who said he appeared for the Secretary of Finance) whether he had instructions from the Secretary. Indeed the appeal court was of the view that Kandi ‘gave ample indication to the Court that in fact he did not have instructions from the Secretary for Finance,’ with the likely explanation – had the judge inquired – that Yer had not had sufficient notice of the hearing.
  • The permanent injunction granted by Justice Paliau was given without a clear legal basis and no reasoning, and was not even included in the relief sought.
  • The injunction was given despite no mandatory undertaking as to damages.
  • Justice Paliau was in breach of National Court Rules that state in an urgent ex parte application, the judge should not make any order in terms of the substantive relief sought.

The Supreme Court ordered that the case be sent back to the National Court so that ‘the parties will be at liberty to take whatever steps are considered appropriate by way of prosecuting, defending and perhaps settling those proceedings’.

[1] Yer, Secretary, Department of Finance v Yama [2009] PGSC 28; SC996 (30 October 2009), point 39

Yama Wins the Day

Given the saga thus far, and the rather obvious dichotomy between those in the State apparatus eager to please Peter Yama and those with rather more concern for justice and due process, it is perhaps not surprising the story continues in rather bizarre fashion, despite the detailed findings of the Commission of Inquiry and its view on the ‘excellent prospects’ of setting aside the Deed of Settlement in court.

On 15 April 2010, rather than challenging the validity of the original 2002 proceedings against the State and the Deed of Settlement, State actors, including the then Attorney General Allan Marat, agreed to a ‘consent order’ in the National Court. The consent order stated that the deed of settlement was valid and binding and that it should be executed.

Allan Marat resigned on 6 May 2010. He was replaced by Dr Kalinoe, who on the very next day signed a Constitution Challenge questioning the Deed of Settlement that was to go to the Supreme Court.

The State’s lawyers attempted to argue in front of the Supreme Court that the deed was ‘illegal, null and void’ .[2]

A five man bench dismissed the application. They did not mince their words, stating that these were questions of law that should have been argued in the National Court, and certainly not in a Supreme Court reference:

These are questions of law that could have been raised before the National Court. (…) The Attorney-General of the day [ Allan Marat] chose not to raise those issues. There is no evidence that the Attorney-General gave any instructions to the Solicitor-General or the lawyers he had engaged for the purposes of those proceedings to raise these issues before the National Court. Quite the contrary. It appears that the then Attorney-General, Dr Marat, made a considered decision to settle the matter by agreeing to a consent order, which was endorsed by the National Court on 15 April 2010.’ (…) How can it properly be, then, that a little over a month after the National Court resolved the matter (…) the Attorney-General can seek to challenge the constitutionality of that deed of settlement through a Section 19 reference?

The bench continued:

The only proper way to ‘undo’ what happened in the National Court was, perhaps, to go back to the National Court with a slip rule application or perhaps to appeal to the Supreme Court against the order or seek review of it under Section 155(2)(b) of the Constitution, perhaps on the ground that the lawyer acting for the State in the National Court had no instructions to settle the matter (though we note that that appears not to be the case).

Outside the courtroom, Justice Sakora who headed the Supreme Court bench slammed the competency of state lawyers declaring “I have no problem with ordinary people who don’t know the procedures of law. It’s the Secretary for Justice and (State) lawyers with degrees longer than that displayed on a thermometer that bother me.”[3]

Meanwhile Peter Yama rejoiced: “I have followed the due process of the court system, right up to the highest court of the land, to be granted the justice I have fought for with patience since being granted my land in Madang in 1988.”

PNGi has not been able to locate any court documents suggesting any appeal of the 2010 National Court consent order, but it is still unclear whether Peter Yama was paid the K15.5 million.

[2] In re Reference by the Attorney General and Principal Legal Adviser to the National Executive [2010] PGSC 48; SC1078 (26 October 2010).
[3] J. Arlo (2010), ‘Incompetent state lawyers worry judge,’ PNG Post Courier, 26 October 2010.