Spirit Haus Ltd v Marshall [2004] PGNC 166; N2630 (2 September 2004)

N2630

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS. NO. 1581 OF 2000

SPIRIT HAUS LIMITED

Plaintiff

AND:

ROBERT MARSHALL
First Defendant

AND:

MAUREEN AISHA KUSANAN
Second Defendant

AUSTRALIA & NEW ZEALAND BANKING GROUP (PNG) LTD
Third Defendant

AND:
ROBERT MARSHALL

First Cross Claimant

AND:

MAUREEN AISHA KUSANAN
Second Cross Claimant

AND:

SPIRIT HAUS LIMITED

First Cross Defendant

AND:

HIMONY TOM LAPISO
Second Cross Defendant

AND:

GOROKA COFFEE EXCHANGE LIMITED
Third Cross Defendant

GOROKA: KANDAKASI, J.
2004: 17th - 20th May
10th – 12th, 16th August
2nd September

PRACTICE & PROCEDURE – Order of trial – Propriety of trial first on cross-claim – Preferable to try all related issues together to minimize costs and better utilization of judicial time – Inappropriate to try cross-claim first except in exceptional circumstances - Plaintiff has burden to establish his claim – Defence cannot establish plaintiff’s case – Defence can only be required to answer a case established against him or her.

LAWYERS – Professional conduct – Lawyers duty – Lawyers duty bound to ensure avoidance of wastage of Court’s time – Duty entails identifying real meritorious issues for trial and eliminate unnecessary issues – Provide a near accurate estimate of length of witnesses testimonies and length of trial - Inform Court of all developments including earlier decisions if any on matters in issue – Breach of duty – Referral to Lawyers Statutory Committee - Section 15 Professional Conduct Rules.

FOREIGN INVESTMENT – Whether foreigners can own majority shares in a company through a trust deed – Legality of trust deed – Trust deed in breach of relevant legislation – Deed illegal and therefore unenforceable - Running of business without certification by relevant statutory authority – Amounts to criminal offence – Liable for prosecution - Sections 3, 25, 41 and 41A Investment Promotion Authority Act.

COMPANIES - Execution of contract with or for a company – Document not signed under company seal – Effect of – Contract not for and by company - Duties of directors – Onerous duty under the Companies Act - Contract in apparent conflict of interest by company director – Effect of – Breach of fiduciary duty and breach of provisions of the Companies Act – Contract avoidable by company – Director liable to criminal prosecution – Capacity of shelf–company to enter into contract – Lack of factual capacity to enter into - Gives no valuable consideration – No legally binding and enforceable contract - Sections 112, 115 and 118 of Companies Act.

STAMP DUTY – Document and instrument subject to stamp duties - Lack of stamp duty - Document or instrument inadmissible in evidence before the Court unless correct stamp duty and penalty is paid – Sections of the Stamp Duties Act.

LAND LAW - Leases – Not in usual form – Uncertainty in party – Purported witness to the purported lease agreement unfamiliar with terms of lease – Alterations not endorsed – Original not produced – Evidence called in support of existence of lease inconsistent and incredible – No legally binding agreement found.

EVIDENCE – Calling of - Extrinsic evidence against written record – Unless coming within a known exception inadmissible and unreliable - Admissibility of copies of purported agreements with no stamp duty – Whether purported agreements exist in fact and entered into between the parties – Evidence called in support contain illogical, inconsistent and incredible accounts – Evidence rejected – Finding against authenticity of documents.

CONTRACTS – Parties – Uncertainty of parties – Fundamental element missing – Contract in breach of statutory provisions or requirement – Illegal and therefore unenforceable unless relevant legislation provides otherwise – Contracting with self company – Ability of – Lack of capacity to pass valuable consideration – No binding contract.

EMPLOYMENT – Employment of non-citizens – Work permit required – Only a factually existing employer with capacity prove work and pay agreed salary can apply for – Shelf-company lacks capacity – Where it purports to employ and applies for work permit amounts to fraud against legislation, department and the State – Section of the Employment of Non-Citizens Act.

MIGRATION – Work visa or entries - Application for – Application by person on basis of purported employment with Shelf-company – Effect of – Fraud on legislation, department and the State – Grant of such application a nullity – Section of the Migration Act.

Papua New Guinean Cases Cited:
Igiseng Investments Limited v. Starwest Constructions Limited and Igiseng–Okmanip Business Group Inc (17/12/03) N2498.
Rimbink Pato v. Ruben Kaiulo, Electoral Commissioner of Papua New Guinea and Miki Kaeko & Ors (29/08/03) N2455.
Jack Livinai Patterson trading as Pattersons Lawyers v.Teachers Savings and Loans Limited (19/02/04) N2516.
Wyatt Gallagher Bassett (PNG) Limited v Benny Diau& Anor. (16/08/02) N2277.
Graham Mappa v. PNG Electricity Commission [1995] PNGLR 170
Motor Vehicles Insurance (PNG) Trust v. James Pupune [1993] PNGLR 370.
Tian Chen Limited v. The Tower Limited (08/11/02) N2313.
Wal Wine v. Bill Giglmai [1990] PNGLR 462.
Fly River Provincial Government v. Pioneer Health Services Limited (24/03/03) SC705.
Investment Promotion Authority v. Niugini Scrap Corporation Pty Ltd; Investment Promotion Authority v. James Sinton Spence (03/06/01) N2104.
Odata Limited v. Ambusa Copra Oil Mill Limited and National Provident Fund Board of Trustees (06/07/01) N2106.
Mathew Petrus Himsa & Anor. v. Richard Sikani & Anor (08/11/02) N2307.
Jack Livinai Patterson v. National Capital District Commission (05/10/01) N2145
Curtain Brothers (QLD) Pty Ltd & Kinhill Kramer Pty Ltd v. The Independent State of Papua New Guinea [1993] PNGLR 285.
Papua New Guinea Forest Authority v. Concord Pacific Limited, Paiso Company Limited and The Independent State of Papua New Guinea (No 2) (2003) N2465.

Overseas Cases Cited:
Brown v. Dunn (1879) R (HL.
Bank of New Zealand v. Simpson [1900] UKLawRpAC 6; [1900] AC 182.
Horsfall v. Braye [1908] HCA 85; (1908) 7 CLR 629).
Re Smith and Fawcett Ltd [1942] AC Ch. 304; 1All E.R. 542.

Counsel:
M. Wilson for the Cross Claimants.
J. Bray for the Cross Defendants.

02nd September 2004

KANDAKASI, J.: This case has quite a history with the writ of summons filed on 15th November 2000. Since then, the file saw the filings of many motions and counter motions, with some interlocutory rulings. This resulted in an increase in the physical size of the file (exceeding more than 13 arch liver folders), adding confusion and misunderstanding as to the matters in issue. I will elaborate on this a little later. For now, I continue with the background or the history of this case.

The plaintiff/First Cross Defendant ("SHL") through Mr. Himony Lapiso, the Second Cross Defendant ("Mr. Lapiso") in its original statement of claim, sought inter alia, a return of certain sums of money from the First Defendant/First Cross Claimant ("Mr. Marshall") allegedly received and had by and for him to account for others. In addition, SHL claimed, Mr. Marshall breached a fiduciary duty owed to it as its manager. In addition, the company claimed a number of interim orders, particular discovery and provision of banking transactions with the third defendant. The Cross Defendants applied for and obtained several orders. Some of these orders determined some of the issues before me over which the Cross Claimant’s filed no appeal.

Before these proceedings, Mr. Lapiso issued O.S. 267 of 1999 against Mrs. Beverly Marshall, Robert Marshall’s mother. In those proceedings, Mr. Lapiso sought to take complete ownership and control of SHL. Mr. Marshall supported Mr. Lapiso in those proceedings and filed affidavits in support of Mr. Lapiso’s claim. Mr. Lapiso managed to obtain certain interim restraining orders against Mrs Beverly Marshall.

On the Cross Claimant’s part, they filed their defence and cross-claim which was the subject of a number of interlocutory applications and rulings also. In the cross-claim, Mr. and Mrs. Marshall claimed breach of their respective contracts of employment as Managing Director and Office Manageress respectively, a video contract between Mrs. Marshall and a management agreement between Mr. Lapiso, SHL and Goroka Coffee Exchange ("GCE") and Mr. Marshall. They therefore sought damages for breach of contract and return of the value of certain personal properties of theirs including a Musso motor vehicle taken or kept by SHL.

The parties agreed to a trial of the cross-claim first. This was rather strange at least in my experience particularly when the main claim per the writ of summons remains alive and not yet determined. Whilst I appreciate that O. 8 r. 44 of the National Court Rules, allows for a cross-claim to be treated as a writ of summons, the establish practice has been to deal with both the writ of summons and the cross-claim to it together. This practice is preferable because, a cross-claim usually refers to the claim in the writ of summons. Hence, it would not be possible to deal with the cross-claim without some reference to the statement of claim. This became evident and attracted a number of arguments and eventual concessions in the course of the trial in this matter. More importantly however, the need to deal with all related issues at the same time dictates and warrants the practice of dealing with a cross-claim together with the main claim. This ensures completeness and thereby avoids duplication of proceedings and hence the risk of conflicting decisions. It also helps the Courts to save their scarce judicial time and the parties’ substantial costs.

Given these reasons, the Court should not encourage a separate trial on a cross-claim unless there is a very good or exceptional reason to do so. Such reasons, in my view, would include for example, the issues raised in the cross-claim are determinative of all the possible issues between the parties, or conducting a joint trial of the cross-claim and the claim in the writ of summons will result in prejudice or injustice to one of the parties to the proceedings.

In this case, it was not clear from the outset what was the reason for the parties agreeing to deal with the cross-claim first. Both counsels not clearly understanding and agreeing on the issues for trial when the trial commenced complicated that. Hence, the Court spent most of that day trying to get the relevant Court documents identified and put together for the purposes of the trial and to get an agreement on the issues for trial. The parties agreed on the relevant pleadings and the issues for trial, well after the commencement and into the course of the trial.

Relevant Issues

The agreed issue then was, whether a purported trust deed, purported contracts of employment, a purported management agreement, a purported lease agreement and a purported video library agreement were authentic. The purported trust deed and the purported lease agreements were not in the pleadings. After some argument on that, counsel for the Cross Defendants agreed to their admission only for the limited purposes of the agreed issues. Further, none of these documents had stamp duty. As such, they were inadmissible. Nevertheless, the cross defendants agreed to their admission again only for the purpose of the agreed issue. I will elaborate on this later.

After the trial, it became obvious that, the validity and enforceability of the above documents appeared to be a closely related issue. The Court therefore, suggested and the parties agreed to the Court considering that issue as well, when considering the issue of the authenticity of the documents.

The Trial

A one-week trial, commencing 17th May 2004, was allocated for this matter. As noted, one day was lost trying to sort out the issues for trial. As the trial progressed, it became apparent that the time allocated was insufficient. It also became clear that, both counsels did not fully appreciate the issues in contest between the parties and the length of time each of their witnesses were likely to take both in chief and in cross-examination before listing the matter for trial. Hence, they were not able to assist the Court in terms of settling the issues for trial and estimating as accurately as possible the length of trial. Consequently, the Court appears to have listed the matter without any proper and meaningful assistance of counsel on the issues for trial, the complexity of the case and the fact that it would take more than a week to complete the hearing. During the course of the trial, it became even apparent that the parties did not assist the Court to settle the number of witnesses, the length of each witness’ evidence and mode of trial. In short, the pre-trial management of the case was poor due to counsel failing to properly, assist the Court, resulting in the wastage of judicial time and public funds requiring another circuit to complete the trial. Having completed the trial, I can say, the case is quite simple. However, the way counsel conducted the case, from filing to interrogatories to the trial made it complicated. They raised all sorts of unnecessary issues, as will become apparent in the course of this judgment, and failing to agree on matters they could have easily agreed on but they did not for reasons only known to them.

In future cases, the Court should take serious charge over the pre-trial management of cases to avoid wastage of judicial time and public expenses. The parties and the Court by reference to the pleadings should identify the relevant issues for trial well before listing a matter. Without that, no matter should get a listing for trial, as it would not be clear what issue(s) the Court is to deal with. A settlement of the issues for trial would dictate the kind of evidence and number of witnesses required to give that evidence. It would also help the parties and the Court to estimate as accurately as is possible the length of trial. This would ensure certainty in trial dates, avoid wastage of judicial time and public funds.

During the trial, Mr. Marshall claimed that, Mr. Bray of Pryke & Bray, acted for both him and Spirit Haus. An acquisition of a property at 6 Mile just outside Goroka town was through Mr. Bray. Other evidence such as exhibit "P" suggest that, at one stage, Pryke & Co, which later changed to Pryke & Bray, did act for Mr. Lapiso, Mr. Marshall and Spirit Haus. When these evidences surfaced, I raised with both counsel as to the likelihood of a conflict of interest for Mr. Bray and adjourned for about 5 minutes to enable the parties to consider that issue and agree on a position. Eventually, they agreed to there being no conflict of interest and agreed to continue with Mr. Bray continuing to be counsel for SHL and Mr. Lapiso.

Subsequently some other factual issues also arouse in which Mr. Bray’s involvement was raised. One such instance was in relation to the Cross Defendants getting hold of a copy of a letter from Mr. Marshall to the Police. Mr. Bray called his secretary to rebut the evidence or suggestions against him.

Section 15 (15) of the Professional Conduct Rules require a lawyer to avoid acting for a party where there is likelihood of him becoming a witness. If a lawyer does not know of such a possibility but it becomes apparent in the course of a trial, the requirement is for the lawyer to withdraw acting for the party concerned without jeopardizing the client’s interest.

In the present case, Mr. Wilson did not take any serious issue. He instead agreed to there being no issue and there being no need for Mr. Bray to withdraw acting for the Cross Defendants. On that note, the trial continued to its conclusion. For the guidance of lawyers and the Court in future, I consider it good practice for all possible cases of conflict of interest or a lawyer becoming a witness be carefully considered well before listing a matter for trial and confirming counsels for the parties. Where there is a likelihood of such a situation arising, the lawyer or counsel concerned should withdraw from acting for his client and arrange for another competent counsel to conduct the trail. This would help avoid unnecessary interruptions and delays in the trial process and enable the trial to proceed without uninterrupted.

At the end of the trial, the parties made submissions on the eventually agreed issues for trial. In brief, the argument for the Cross Claimants is that the documents in question are authentic and that they are legally valid and enforceable. On the other hand, the Cross Defendants argue that, those documents are not authentic. They further argue that, even if they are authentic, they are legally invalid and unenforceable. Both parties agree that, which of the submissions the Court should accept is dependant on, which of the witnesses and their evidence the Court finds credible and accepts. This therefore requires a consideration of the credibility of the witnesses called and their evidence, which I wish to turn to consider now.

However, before getting into the credibility and the other aspects of this case, I remind myself that in our system of justice, a plaintiff always has the burden to establish on the balance of probabilities of his claim. This is in line with the principle that, he who alleges must prove it. A failure in that duty should inevitably result in a judgment for the defendant: Igiseng Investments Limited v. Starwest Constructions Limited and Igiseng–Okmanip Business Group Inc (17/12/03) N2498; Rimbink Parto v. Ruben Kaiulo, Electoral Commissioner of Papua New Guinea and Miki Kaeko & Ors (29/08/03) N2455. These principles and the relevant authorities on it make it clear that, where both parties go into evidence, it is necessary to consider the plaintiff’s case first. Then only if the Court finds that the plaintiff has established a prima facie case, it should proceed to consider the opposing evidence to see if the defendant rebutted the case against him or her before final judgment: Rimbink Parto v. Ruben Kaiulo, Electoral Commissioner of Papua New Guinea and Miki Kaeko & Ors. (supra). This is in line with the well-accepted principle that there is no requirement for the defendant to prove the case against him or her and as such. Hence the defence is under no obligation to answer to a case that has not been established against him or her. With these principles in mind, I now turn to issues before me in this case.

Both of the Cross Claimants took the stand and called six other witnesses, while the Cross Defendants called Mr. Lapiso and one other witness. Given the agreed issues for trial, it was not necessary to call all of these witnesses. The Court allowed the calling of all these witnesses on Mr. Wilson’s insistence that his clients required all of these witnesses as they touched on the credibility of his client, Mr. Robert Marshall. I therefore, turn to other parts of the Cross Claimants evidence though not relevant for the agreed issues for trial but reflect on the credibility of the Cross Claimants claims before I get into the issues for trial.

Matters Affecting Credibility

(a) Musso Motor Vehicle

The first thing I turn to is a claim in relation to a Musso motor vehicle. The claim is that, this motor vehicle belonged to the Second Cross Claimant after having it bought at a price of K18,000.00. Mr. Marshall went into evidence and said K16,000.00 in cash came from his wife’s family members in March of 2000. The balance of K2,000.00 came from his wife without indicating the source of that money.

The K16,000.00 in cash was put in SHL’s safe as they were handed to Mr. Marshall on a weekend. Mr. Marshall gave a receipt for that amount to Mr. John Kusanan, Mrs. Marshall’s father (exhibit "TT") in SHL’s letterhead. Mr. Marshall testified that Mr. Lapiso used the whole of the K16,000.00 to buy coffee that weekend. On the immediate Monday, Mr. Marshall wrote out a K18,000.00 SHL cheque payable to the previous owner of the vehicle for the purchase of the vehicle.

Mrs. Marshall gave evidence in support of her husband’s evidence. Mr. John Kusanan gave evidence corroborating the Cross Claimant’s evidence. He testified that, he raised the money through growing and selling chickens for about fours years. He said he kept the money raised from that in K50.00 notes totalling K12, 000.00 in his house for a number of years. This was despite him being a well-educated man having rose up to the level of a primary school inspector and having operated a bank account. Under cross-examination, he described himself as a very generous man who was prepared to buy his daughter, then married to a Whiteman and a businessman, such an expensive item at the expense of the other family members.

I observed the demeanour of Mr. Kusanan and all the other witnesses called by the parties given the issue of credibility. I got the clear impression that, Mr. Kusanan was very protective of his evidence in chief and was prepared to say or do anything in support of his son-in-law and his daughter. That is why he became argumentative with counsel when cross-examined. Besides, I noticed that he was in Court at the time of Mr. Marshall giving his evidence on this aspect. As such, not much weight can be placed on his evidence. I do not find him and Mrs. Marshall credible witnesses, but witness prepared to say anything to support Mr. Marshall.

I find the story incredible for a number of reasons. Firstly, the K16,000.00 was given to Mr. Marshall and not SHL. Mr. Marshall did not provide any explanation as to why it was necessary to give his father-in-law a SHL receipt. Secondly, if Mr. Marshall saw it necessary to issue a receipt to his father in law, he did not explain why he could not get Mr. Lapiso to acknowledge receipt and use of the money to buy coffee for SHL and that SHL would repay the money. Thirdly, I find it extremely difficult to accept that Mr. Kusanan educated and experience as he is and operating a bank account, could keep such a large sum of money in cash in his house for a number of years. This is particularly so, when law and order has become a serious concern with armed holdups, break and enters on the increase around the time the money was allegedly kept and eventually handed over to Mr. Marshall.

Another factor is that, I find this story to be a most unusual within the PNG cultural context. A Papua New Guinean father got himself and his family members to buy a motor vehicle at a substantial amount of monetary loss for a daughter married to a Whiteman and a businessman. This is the first ever case, I have come across in my lifetime where this has happened. I also cannot understand how, Mr. Marshall allowed this to happen, when in his evidence he said SHL was making about K100, 000.00 to K120, 000.00 a day, which translates to about K3 million to K3.6 million per month or K36 to K43.2 million per year. Given that, he could have easily bought his wife a motor vehicle but he did not.

A careful consideration of these factors and the whole of the evidence on this issue, suggest a finding that, SHL money bought that vehicle and is therefore SHL’s property. My brother Kirriwom J., in his judgment delivered on 21st March 2001 in these proceedings which is on file, found at p.23 in these terms. Hence, he ordered the Cross Defendants to return the vehicle to SHL to the custody of Mr. Lapiso. That appears to have resulted from a full hearing of witness and making findings of fact.

Both counsels did not draw the Court’s attention to the existence of that judgment until after the trial during the parties’ submissions. Counsels informed that, there has been no appeal against that judgment. The Cross Claimants did not make any submission nor have they provided any basis for this Court to arrive at a different conclusion. Hence, the judgment remains conclusive on the question of ownership of the Musso vehicle and is therefore res judicata: see Jack Livinai Patterson trading as Pattersons Lawyers v. Teachers Savings and Loans Limited (19/02/04) N2516 and Wyatt Gallagher Bassett (PNG) Limited v Benny Diau & Anor. (16/08/02) N2277.

This certainly affects the credibility of both of the Cross Claimants. A Court of competent jurisdiction made findings of fact and determined the issue of ownership of the vehicle against them. They were parties to the process leading to that decision, they testified before this Court per Kirriwom J. These were facts clearly within their knowledge and yet they said nothing about that. Warner Shand Lawyers, of which Mr. Wilson is a principle, represented the Cross Claimants. They had the right to appeal if they wished but have failed to challenge that decision in the usual way of an appeal. This can only mean that they were content with the decision.

Despite that, they decided to revive an issue that was already decided against them through the assistance of their counsel. Counsel had their client’s defence and cross-claim amended on 9th May 2002, which was more than a year after the decision of 21st March 2001. At that time, the issue of ownership of the vehicle was no longer an issue but they included it as an issue. In the absence of any evidence, to the contrary from the Cross Claimants and their counsel as to why and how they could do that, I find that this was a deliberate attempt at misleading the Court into arriving at a decision favourable to them. This has resulted in unnecessary wastage of judicial time and public funds, with the calling of three witnesses on the issue.

On these facts, I find that Mr. Wilson of counsel for the Cross Claimants seriously failed in his duties amongst others under s. 15 (2) (4) (b) and (5) of the Professional Conduct Rules. I therefore order and refer Mr. Wilson to the Lawyers Statutory Committee for appropriate action against him. In making that order, I note that this is not the first time, Mr. Wilson has misled the Court in a number of occasions before. One instance that quickly comes to mind is in the matter of Mainland Holdings and Mr. Stobbs, in relation to an interlocutory decision again by my brother Kirriwom J. As such, I consider this kind of behaviour and conduct of counsel should immediately cease, hence the referral.

(b) Events Shortly Before and After Marshall’s Termination

(i) Lapiso’s Request for Money

Much of the other irrelevant evidence but called on counsels insistence for the Cross Claimants was in relation to events shortly before and after their termination. I find a number of Mr. Marshall’s evidence not sounding well in logic and commonsense. One of the obvious ones is his claim that, he met with Mr. Lapiso at the Nori Kori cup, held at the golf club on 23rd October 2000, just prior to him departing for Australia.

Mr. Marshall said, in that meeting, Mr. Lapiso said to him, he (Mr. Lapiso) was short of money and was very worried that he could not pay his children’s Australian school fees. He therefore arranged to meet Mr. Lapiso at the Spirit Haus in his (Mr. Marshall’s) office at 8:00am the next day, Monday. However, Mr. Lapiso did not turn up the next day as agreed. Therefore, Mr. Marshall became concerned for Mr. Lapiso. Thus, he and Mr. Marshall, drove to Mr. Lapiso’s house and met Mr. Lapiso there. Mr. Lapiso told the two of them that, everything was okay and that he would be in late in the afternoon. Mr. Lapiso eventually, turned up at about 4:00pm and retold his story of being short of money for his children’s school fees. Thereupon, Mr. Marshall said he gave Mr. Lapiso K10, 000.00. He then spoke of having a meeting with Mr. Lapiso at which he told Mr. Lapiso that, if he was going to continue to take huge directors drawings from the company, he had to do more work for the company. Mr. Lapiso agreed to do more.

Firstly, I notice that, Mrs. Marshall called, as a witness did not corroborate this story. Secondly, Mr. Lapiso says he is not able to confirm or deny meeting Mr. Marshall as suggested but denies speaking about his financial difficulties. Thirdly, if indeed Mr. Lapiso was facing such a problem and desperately needed some money, he could have promptly turned up on the Monday as agreed but he did not. Fourthly, if it was Mr. Lapiso who was desperate for some money I cannot see why Mr. Marshall and his wife saw the need to drive to Mr. Lapiso’s house, rather than Mr. Lapiso quickly turning up on the date, time and venue agreed. Mr. Marshall did not give any evidence for example of, Mr. Lapiso being a sick man or looking extremely worried and appearing say suicidal, which might have given him good reason to go looking for Mr. Lapiso. Fifthly, Mr. Lapiso told Mr. and Mrs. Marshall that everything was okay and that he would be at the SHL premises in the afternoon. Again if Mr. Lapiso was in need of some money badly, I cannot see why or how Mr. Lapiso could have delayed getting to the SHL premises where there was the opportunity to have his need met. Further, I cannot see why was it necessary for Mr. Lapiso to say everything was okay when Mr. and Mrs. Marshall visited him at his house, only to retell his problem at the office when he finally got there. This is more so when, Mr. Lapiso had already told Mr. and Mrs. Marshall asked him to get to the SHL office to address that issue. Given these factors, I find this part of the evidence incredible also a negative reflection on the credibility of the Cross Claimants and their claims.

(ii) Change of Signature, Banking Transaction and Catching Flight

Another part of Mr. Marshall’s evidence that casts some doubt on his credibility is the events just before his departure and reasons for going to Australia in October 2000. He said before leaving for Australia, he took Mr. Lapiso through the computer records and showed Mr. Lapiso how to maintain the business while he was away. They also agreed to a change in the signature to the company accounts from anyone of them to sign to both signing. This was because he wanted to do other projects and he wanted Mr. Lapiso at the Spirit Haus assisting Mrs. Marshall, to run the business.

Based on that, Mr. Lapiso obtained the necessary forms from the bank the next day, Tuesday 24th October 2000. They filled the forms and he asked Mr. Lapiso to lodge them on 6th November when he would return from Australia with a view to seeing the changes taking effected by 7th November 2000. However, when he turned up at the bank with his wife to pick up some bank statements and a new cheque book, the bank refused to give those to him. The teller told them that, Mr. Lapiso had been to the bank and had lodged the change of signatories and that meant that both Mr. Lapiso and his signatures were required to obtain the statements and the new cheque book.

He then left the bank and on doing so, he noticed Mr. Lapiso’s vehicle parked at the offices of Lawrence Acanufa. So, he went into that office and met Mr. Lapiso and asked him as to what he had done and Mr. Lapiso told him everything. On him questioning Mr. Lapiso as to how did he do that, Mr. Lapiso told him there was some confusion. On that note, he told Mr. Lapiso to go to his office to sort out the confusion.

From there, he went back to the bank and met with Mr. Sam Wagon. Mr. Wagon told him that, since there was confusion over the signatories to the company account, the bank required a letter from Mr. Lapiso and him deferring the effect of changes to the signatories until 7th November 2000. He then went back to his office and wrote out a letter for him and Mr. Lapiso to sign. Mr. Lapiso turned up very late at the office around 6:30pm and he signed the letter after he (Marshall) explained the situation to Mr. Lapiso. As it was late and that the bank had closed for the day, the letter did not go to the bank until the next day.

Further, he said; he was due to fly out of Goroka very early the next day for his eye surgery and some medical things, for which he needed some money. He also said he needed some money for stamp duties for a purchase of a property, 2202 Sun City in Australia. He therefore, asked Mr. Lapiso that night to counter sign a SHL cheque for K15, 000.00 to pay into his (Marshall) Visa card.

Later under examination in chief, the witness said, the main purpose of his going to Australia was to sign contracts for the purchase of the above-mentioned property and to compete for PNG in a pistol shooting competition at the weekend. For the later purpose, he took his gun with him to the airport the next day, being the day of his flight. He had his gun checked in for carriage in the security box on the aircraft. He had appropriate licenses for it in PNG and in Australia (exhibit "X"). After that, he went to the ANZ Bank with the third and last telegraphic transfer for an amount of K50, 000.00 to Ocean Blue in Australia being the remaining deposit on the property, 2202 Sun City, purchase.

The next day, he spoke to Mr. Wagon at the bank who said he did not receive the letter deferring the change in the signatures. Therefore, the bank wanted to speak to Mr. Lapiso personally to find out and to rectify the concerns the bank had. Hence, he drove to SHL office. There, he met Mr. Lapiso and then rang Mr. Wagon and told him that he had Mr. Lapiso with him and handed the telephone to Mr. Lapiso. He also passed on the transfer documents to Mr. Lapiso who approved the payment. Mr. Lapiso then faxed to the bank the letter they had both signed.

Mr. Wagon, the bank Manager said he received the letter and confirmed that everything was okay subject to a tax clearance. He told Mr. Wagon that the original of the tax clearance was with Messrs Richard Hill & Associates in Port Moresby. The bank agreed to him (Mr. Marshall) obtaining the required tax clearance when he got to Port Moresby and have it forwarded to the bank. On getting to Port Moresby, he got the original of the tax clearance and took it to the bank (not clear which bank and branch) and the teller (not specified) there had it faxed to Lae and a Mr. Belchur attended to it. On Mr. Belchur’s advice, the teller spoke to Mr. Wagon and Mr. Wagon said everything was okay and approved the transaction.

I observe firstly, the bank manager, Mr. Wagon who was called to give evidence for the Cross Claimants, corroborated Mr. Marshall’s evidence in relation to the approval of the telegraphic transfers by Mr. Lapiso. He did not say, nor did Mr. Wilson of counsel for the Cross Claimants; ask the witness anything about the change in signatures, Mr. Marshall trying to pick up the account statement and new chequebooks and the letter deferring the effect of change in the signatures. Similarly, the witness did not say nor did counsel ask him about the arrangement for Mr. Marshall to go to Port Moresby and forward the tax clearance and the conversation between, Port Moresby, Lae and Mr. Wagon.

Secondly, I observe that the Cross Claimants did not cross-examine Mr. Lapiso on these aspects except for the approval of the telegraphic transfer. In respect of that part of the evidence, Mr. Lapiso says he gave the approval for the telegraphic transfer under an apprehended threat as Mr. Marshall had his bag in which he always carried his gun.

Thirdly, I observe that, Mr. Marshall was giving inconsistent evidence, particularly in relation to the purpose of his travelling to Australia. In his evidence in chief, he said, the purpose of his travelling to Australia was for his eye surgery and other medicals and the purchase of a property. Later he changed that to purchasing of a property and participating in a pistol shooting competition.

Another area of inconsistency in his evidence is in relation to the exact timing of his travel. He testified that, his flight schedule was "very early next morning." Yet he attended to many things on that day. He checked in his pistol, got to the bank, which would have been around 9:00am, went to the SHL office, talked to Mr. Lapiso there, ensured that the letter from him and Mr. Lapiso got faxed to the bank manager, confirmed its receipt and then catch his flight. If he was able to do all of that in the morning before catching his "very early morning flight" it was incumbent on him to demonstrate that by giving the specific times at which all of these happened, including the departure time. In the absence of any such evidence, I find that, he could not have attended to all of this at the same time or within a very short time.

Finally, I observe that, if it was possible to fax the letter deferring the effect of the change in signature on the day of his flight, he does not provide any explanation as to why he could not do that the day before. This is particularly vital, when Mr. Marshall was intent on ensuring that the change in signatures taking effect on 7th November 2000 and before that, on the eve of his departure he was going to conduct some substantial transactions.

(iii) Threats of Rape and Confessional Letter

A further aspect of Mr. Marshall’s evidence I find it hard to accept is his claims of Mr. Lapiso issuing threats of rape against his wife, unless he (Marshall) left the country and forced him (Marshall) into writing a letter (exhibit "BB"). In that letter Mr. Marshall admits to him misusing SHL funds, transfer of title in Australian property to Mr. Lapiso and asking for a second chance to redeem himself (Mr. Marshall) stating that SHL was everything to him.

The reasons for this difficulty firstly are that Mrs. Marshall did not give any evidence of such a threat by Mr. Lapiso or any of his relatives. Mr. Wilson of counsel for the Cross Claimants tried his best to lead Mrs. Marshall into giving this kind of corroborating evidence without success. The highest he could reach was evidence of some boys being around. If indeed, Mr. Lapiso wanted to get such a confessional statement and get Mr. Marshall out of PNG, he could have directly threatened Mrs. Marshall to give more impact. There is no evidence of what, if any, prevented Mr. Lapiso from doing that.

The uncontested evidence is that, Mr. Lapiso or anybody on his behalf chased Mrs. Marshall out of the SHL provided house. The house was within a compound area where there was security provided. In addition, Mr. Marshall told his wife to leave the house without any force or threat directed by Mr. Lapiso or any of his servants or agents.

Secondly, there is no corroboration of this claim, which is serious and criminal in nature. Additionally, there is no evidence of any complaint laid with the police over these threats. Mr. Marshall said he informed unspecified people at Fairdeal Liquors about these threats and they helped him to the Australian High Commission. Mr. Marshall said Mr. Lapiso repeated these threats on the telephone while he was at the Australian High Commission. At the same time, Mr. Lapiso he said dictated the confessional letter. There is no corroborative evidence from any of these organizations. Of the two, Australian High Commission with its facilities could have easily listened in and or recorded the conversation between Mr. Lapiso and Mr. Marshall to verify and confirm the threat and the confessional letter. This would have been the easiest thing to do for the Australian High Commission because they went out their way in the most costly exercise of paying for Mr. Marshall and his wife’s airfares and getting them out of the country. This would have been the most critical evidence for the Australian High Commission to record and keep for their record and their accountability purpose but they seem to have ignored it.

Thirdly, after having heard Mr. Lapsio testify in Court and having observed his demeanor in Court, I cannot easily say the contents of the confessional letter sound like Mr. Lapiso. Instead, again based on my observation of Mr. Marshall’s demeanor in Court and other documents written by him that are in evidence, I find that the contents of the letter sound more like him rather than Mr. Lapiso. This is the only conclusion I find open to the Court in the absence of any evidence from the Australian High Commission confirming Mr. Marshall’s claims of the dictation of the letter by Mr. Lapiso.

Finally, I note that my brother, Kirriwom J., positively found against the Cross Claimant. The relevant part of His Honour’ finding is at p. 24 of his judgment of 21st March 2001. The observations I earlier made in relation to the Musso motor vehicle applies here.

(iv) Lack of Receipts etc.

Another aspect I turn to is the lack of receipts and other necessary supporting documents. Mr. Marshall said he was educated in Melbourne Australia, with the highest achievement being a masters’ degree in banking and finance. He said also that, he holds a senior commercial and airline transport pilot license. Further, he said he worked with merchant banks and worked as a pilot in Australia. He did not produce any copies of these qualifications and evidence of his work history, let alone his curriculum vitae.

Mr. Marshall, testified further that, before coming to PNG, he bought using his own money for Spirit Haus, desks chairs, trolleys, a gearbox for motor vehicle registration number AGC 323, two computers, two cash registers, MYOB computer programs, other computer programs an assortment of tools and several other items. He also said in his evidence in chief that, the computer equipment was for Apex Textiles. These goods were loaded onto one of Apex Textiles containers and when they eventually reached PNG, they were off loaded at Apex Textiles premises at West Goroka on or about 29th June 1998. He put the total estimated value for these items at K8,000.00 but later he changed it to A$25,000.00. The company reimbursed a total of about K39, 000.00 that totally offset what he had incurred on behalf of the company. Then from the funds he received in reimbursement, he bought a T 35 truck from PNG Motors and two forklifts and the motor vehicle registration number AGC 323 at a cost of K40,000.00 from his mother, Beverly Marshall’s company, Apex Textiles West Gorok.

Further, Mr. Marshall testified of having brought some personal items, such as a golf clubs valued around A$800 to $1000, a computer set for his mother valued at K6000 in exchange for her buying him a motorbike. He said he brought these things with him.

Furthermore, he said upon arrival in Goroka, he renovated a warehouse rented from Lapony Carriers Ltd, Mr. Lapiso’s company. He bought paints and had the building painted and set up his business. That cost him between K20, 000 to K25, 000.00. Admitted into evidence were two photographs showing the building after the painting work as exhibits B1 and B2.

These expenditures from part of the Cross Claimants claim. No evidence showing ownership or purchase by Mr. Marshall is in evidence. These expenses, according to Mr. Marshall’s evidence were his personal expenses. He received reimbursement for some of these items or expenses. It follows therefore that, the relevant receipts and prove of ownership would have been part of his personal records. There is no contest that, Mrs. Marshall took her husband’s personal file away from the SHL’s records. Accordingly, Mr. Marshall was in a position to produce the relevant receipts and or records of ownership and transactions. Unfortunately, there is a complete lack of any documentary or other evidence supporting these claims.

The law is quiet clear now, particularly in the context of a simple PMV or trade store business owned and run by simple Papua New Guineans. They are required to keep records of their business including appropriate tax returns and produce them in evidence to support a claim for loss of income or profit from such operations. The Supreme Court in Graham Mappa v. PNG Electricity Commission [1995] PNGLR 170, made that clear in the context of a claim for damages for loss of income from a PMV bus business. Following an award of K7,800.00 in damages, the defendant appealed to the Supreme Court against such assessment. In allowing the appeal, the Supreme Court found that the appellant did not establish his damages because he did not produce any documentary evidence to support his claims. All he was able to adduce were his oral testimony in terms of earning an income of K1,200.00 per week. Woods J. summed up the position in these terms at p. 171:

"...[I]f you wish to establish matters like loss of profits from the operation of a modern business then it is necessary to comply with the modern law, for example, producing such records as are required by law. If you wish to have the advantages of a modern world of business, then you must comply with the modern matters like tax laws. This would require appropriate business records to show whether any profit over and above business running costs are earned. And then, if a profit was earned, there are the requirements to pay taxes. The courts have been referring to these requirements in recent years, especially in the operation of shop or trade store businesses. And the Supreme Court, by its ruling, is implying that the same must apply to the operation of a PMV or suchlike public transport business."

In this case, Mr. Marshall is not a simple Papua New Guinean. He is an Australian, educated and experienced in the area of commercial operations. He was able to issue and later produce in this Court a receipt in respect of the Musso vehicle, which did not concern him anymore than safe keeping of his father-in-law’s money. He was however, not able to produce evidence of matters that affected him directly. If his wife got hold of his personal file from the SHL immediately after his and his wife’s dismissal as they said, then he could have easily produced them but he did not.

Further, even though this was not an issue in the pleadings and the issues before this Court, there was certainly a dispute as to Mr. Marshall’s qualifications and experience. It was therefore incumbent on Mr. Marshall to establish by appropriate evidence his qualifications, work experience and means of financial position both prior to coming to PNG, during the times of his business operations in PNG and what has become of that after his termination. This was necessary because it would enable the parties and the Court to appreciate Mr. Marshall’s position in view of the disputes over those aspects. I make these observations, notwithstanding Mr. Wilson of counsel for the Cross Claimants’ submissions that, the Cross Defendants did not cross-examine Mr. Marshall on these aspects. Strictly, speaking, the Court would in accordance with the rule in Brown v. Dunn (1879) R (HL) ignore this part of the Cross Defendants’ evidence, but how does that improve the Cross Claimants case in view of the matters in dispute between the parties? It does not assist the Cross Claimants in any way because it does not supply that which is missing.

It would not have been a difficult thing for the Cross Claimants to secure and adduce the relevant evidence. The evidence of his financial means prior to, during his time with SHL and after his termination would have come from his bank. A simple request to his bank to provide his relevant bank account details or statement would have sufficed. As for his, professional qualifications, they would be on his personal file. Failing that, he could have secured the relevant copies from the relevant organizations. Given the history of the case, he has had more than ample time to secured and produce in Court such evidence. He failed on all of these fronts and he did not provide any explanation for that failure.

Issues For Trial

I now turn to a consideration of the issues before this Court. This chronology starts with Mr. Marshall’s mother; Beverly Marshall first coming to PNG in 1980. She set up, and carried on business under the name, Apex Textiles out of Port Moresby. She moved into Goroka in 1991, set up a branch of her company and carried on business under the name, Apex Textiles West Goroka.

Mr. Marshall visited his mother on several occasions. The notable one was around February and March of 1998. Notable because a Brilee Davies then a manager of Fair Deal Liquors, and a very good friend of his mother offered a business opportunity to him to own his own business in PNG as a Fair Deal Liquor outlet in Goroka. He considered the offer seriously and spoke at length with Brilee Davies who suggested that, he should go and contact the owner of a West Goroka property.

The West Goroka property was Mr. Lapiso’s warehouse. He did not know Mr. Lapiso then but he said he did go into the warehouse and the then tenants gave him Mr. Lapiso’s telephone number in Lae. He then contacted Mr. Lapiso in Lae and Mr. Lapiso drove up to Goroka on the same afternoon or early the next morning and he had a meeting with him. In the meeting, he introduced himself to Mr. Lapiso and explained to him that Fair Deal Liquors wanted a distribution outlet at West Goroka out of his warehouse. At the same time, he offered K2,500.00 in monthly rentals. Mr. Lapiso told him that his then tenants were not paying their rents and were in arrears. He therefore appeared delighted and he made an agreement with him that day.

Thereafter, he said he contacted his mother, who assisted him in obtaining a self-company, called Patu No.94 Limited. That later changed to Spirit Haus Limited. He then returned to Australia and waited to obtain his work permit and PNG entry visa. Eventually, he was granted a work visa and he returned to PNG on 14th June 1998.

As will eventually become apparent, Mr. Marshall tried to give the Court the impression in the context of the purported management agreement that, he notes important events in his life in his daily dairies. It was therefore, reasonable to expect him to produce the relevant diary entries particularly when his claims were in issue. Unfortunately, he did not produce any such evidence. Against that background, he was not specific on the dates and times when he spoke to Brilee Davies, Mr. Lapiso, his mother, the date when Patu No. 94 Limited changed to SHL and the date of the meeting and resolution for the change of name. The same applies in relation to telephone numbers at which he called and spoke to Mr. Lapiso. Further, there is no evidence say from Brilee Davies, Mrs. Beverly Marshall or anybody else independently confirming the business proposition and support provided to Mr. Marshall by Brilee Davies. In these circumstances, I do not find this part of Mr. Marshall’s evidence credible.

(a) Commercial Lease Agreement

Mr. Marshall’s story continues. He said prior to his return to PNG, he entered into a Commercial Lease Agreement with Mr. Lapiso’s company, Lapony Carriers Ltd. A copy of that document is in evidence as exhibit "II". It was purportedly executed on 28th April 1998, between, Mr. Marshall and Lapony Carriers Ltd. It was for a term of ten years commencing 1st July 1998 and terminating on 30th June 2008, at a rental of K2, 500.00 per month. The Cross Defendants agreed to an admission into evidence of this document notwithstanding a lack of foundation in the pleadings and a lack of stamp duty, purposely to enable the Court to determine its authenticity.

There are a number of problems with this document. Firstly, there is no foundation in the pleadings for allowing this document to be a part of the issues properly raised in the pleadings. However, the concession made for its admission for the stated purpose overcomes that problem. The law on pleadings does allow for a matter not pleaded be part of matters in issue by agreement of the parties, which could be done either expressly as in this case or by the conduct of the parties: Motor Vehicles Insurance (PNG) Trust v. James Pupune [1993] PNGLR 370.

From a case management perspective with a view to avoiding wastage of judicial time and therefore public funds, I consider it important that the Court should be slow to allowing parties to depart from their pleadings. The exceptions to this should be limited to situations in which the departure does not stretch the trial time and therefore public funds, or would not result in complications of issues on which, the matter was originally listed for trial and or will not result in injustice or prejudice to one of the parties.

Secondly, s. 19 of the Stamp Duties Act (Chp. 117) prohibits in clear and mandatory language the pleading, reliance by a party and admission into evidence an instrument or a document liable to stamp duty but it has not met that requirement. At the same time, the Act provides that, on the payment of the appropriate amount of stamp duty and penalty assessments, the Court may accept the document into evidence.

The only way in which a person may sue upon or rely on an instrument or document without stamp duty is in equity. This can happen without necessarily relying on the instrument or document in question. That is possible particularly, in a case where there has been part performance and one of the parties to the instrument or document as benefited. That proceeds on the principle of restitution to avoid unjust enrichment. I alluded to that in Tian Chen Limited v. The Tower Limited (08/11/02) N2313, citing authorities like that of Wal Wine v. Bill Giglmai [1990] PNGLR 462.

In the present case, there is no argument that the lease is liable to stamp duty. There is also no argument that the document has no stamp duty affixed. The Cross Claimants did not plead the lease but have adduced a copy of it into evidence and is before me. There is no discretion given to this Court under the Stamp Duties Act, to admit into evidence and consider it in any form or manner until the appropriate stamp duty with the appropriate penalty is paid and evidence of that is before me. Accordingly, I find that the lease is not available as a legal document at this stage for the Cross Claimants to rely upon and seek to enforce it or rely upon it in any manner or form, until they meet the requirements of the Act.

Apart from the stamp duty problem, there are several other problems with the lease. The first problem is with identifying the lessee. In the first page, of the lease it appears Mr. Marshall of care of SHL is the lessee. It therefore seems the lease was between Mr. Marshall and Lapony Carriers Ltd and not SHL. However, the signature page shows, Mr. Marshall signing as a director of SHL. Later, there is a cross out by hand of that part on the left hand side of the page, which describes SHL and indicates an execution of the document under the seal of SHL, to give the impression that it is not the company signing. This indicates another problem, in that there is no evidence of an endorsement of this change. Additionally, there is no corresponding change to the capacity in which Mr. Marshall purports to sign.

If it was for SHL, there is no explanation as to why the lease was not in the company’s own name and style and under its common seal. If however, this was a lease between, Mr. Marshall and Lapony Carriers Ltd, he provides no explanation for these mistakes. There is also a lack of evidence as to the date of the change. Similarly, there is no explanation for the lack of any endorsement of the changes by the parties.

The second problem is with the form in which the document is. It does not have the usual features of a lease. First, there is no front page, identifying the document itself and disclosing in the bottom of the document of that page the name of the lawyer who prepared it. Secondly, the schedule to the lease does not have a list of items setting out in summary form the essential terms of the lease such as the names of the parties, amount of rentals, the term of the lease and so on. This lack also points to a lack in the main clause of the lease a reference to the relevant item in the schedule. Thirdly, two entries in the document are in original blue ink. The first is the date of its execution and the second is an indication of an office in the schedule to the sketch plan. This contrasts with the signatures on the signature page, which are all copies. Again, there is no evidence of an endorsement of the entries of the date and the indication on the sketch plan. There is no explanation for all of these. Further, it seems Pryke & Co Lawyers have prepared the document as their name appears in the signature page. This is an unusual place for it, as usually, that would appear in a front cover page as already noted and or in a separate page. Indeed the contract of sale (exhibit "H") does show some of the missing features in this purported agreement.

The Cross Defendants dispute the authenticity of this document. Mr. Lapiso testified that the signature purporting to be his on behalf of Lapony Carriers Ltd is not his or he did not place it there. The Cross Claimants tried to overcome that by calling Mr. Frank Loh, who claims to be a signature and writings expert with the Police Force. The witness had a look at the document in the course of the trial and his evidence. That was the first time he has seen it. He quickly spoke of a strong indication that the signature belonged to Mr. Lapiso based on other signatures purporting to be that of Mr. Lapiso he had examined on the request of the Cross Claimants.

I have difficulty accepting this witness both as an expert and as a credible witness for a number of reasons. Firstly, the witness was quick to say the signature showed a strong indication toward his conclusion that it came from the same source as Himony Lapiso based on his examination of documents he was previous given to him by the Cross Claimants. If he was really an expert and more importantly, impartial, he could have said, without applying the usual examination procedure and test, he could not say whose signature it was and could have indicated only a preliminary opinion subject to proper examination and assessment. He did not do that. He gave a final assessment and opinion on the signature.

Secondly, there is nothing to confirm his training and experience in this specialized field. All we have are his claims of having attended short courses, workshops and work attachments. It is usual of experts to provide copies of their training and work experiences to enable the Court to accept them as experts unless there is no serious issue. In this case, the Cross Defendants do not accept this witness as an expert and the Court has no knowledge of this witness as an expert until called.

Thirdly, Warner Shand, Lawyers gave him 8 documents purporting to contain the signature of Mr. Lapiso. In his evidence in chief, he spoke of having examined these documents and arrived at the conclusion that "there are some strong indications that all the eight ‘Himony Lapiso’ signatures appearing on the documents ... were from the one writer." He did not specify how and where he examined them. He also did not specify what were the indications supporting his conclusion. On the Court asking him to explain how he carried out the examinations, he said, he put the documents under a microscope and looked for similarities and differences or variations. The similarities he said were more than the differences and that led to his conclusion. He did not produce any evidence of what he may have noted for each of the documents. Similarly, he did not specify what the usual procedure is in his line of work and did not state whether he followed that procedure. Further, he did not state what are standard tests for authenticity and whether those tests were met in this case.

Thirdly, Mr. Marshall testified that he took these documents to the witness. He was with the witness as the witness set out to examine them. This, to my mind, suggests no independent examination and assessment by the witness but a joint enterprise with Mr. Marshall for the kind of conclusion he preferred. This, in my view, became evident when in Court the witness quickly indicated a conclusion on the signature purporting to be that of Mr. Lapiso without applying the usual laboratory procedure and tests. I am thus of the view that the result was influenced and therefore tainted and unreliable.

Fourthly, the witness said the documents provided to him were only copies. This contradicted Mr. Marshall’s testimony that he provided the originals of the purported management agreements to the witness. When all the witnesses said he had, were the copies, it should have immediately occurred to him that those documents could not have been genuine, given the availability of photocopying and scanning technology. Hence, he could have asked for the originals and failing any satisfactory explanation, he could have approached the documents with caution but he gave no evidence of doing that. The witness also said, he did not give any thought or consideration to the possibility of the signatures being forgeries. Yet he was prepared to maintain his conclusion. His demeanour demonstrated to me as a person prepared to defend his conclusion. This was apparent in his lack of preparedness to agree to a suggestion under cross-examination that a perfect forgery could fool an expert eye so one has to be careful to consider that and have it ruled out before arriving at any final conclusion. His testimony however, is that he was asked to examine the documents. As such, the possibility of the documents themselves being forgeries did not cross his mind and was not part of his examination. Clearly therefore, he proceeded on the assumption that those documents were genuine.

Notwithstanding the above, if the witness was telling the truth, his evidence fails to establish on the balance of probabilities that the signature on the lease is that of Mr. Lapiso. Even if the documents and the signatures he examined were not forgeries, there is simply no evidence from this witness that the signatures he examined were in fact that of Mr. Lapiso. All he said was that the signatures appear to come from the same source. I can appreciate that the witness was in no position to give that evidence because he has not seen Mr. Lapiso sign or had an undisputed original and genuine sample of Mr. Lapiso’s signature.

Apart from the above, the purported date of the lease’s execution is at odds with the dates when Mr. Marshall said he was in PNG. He said he visited his mother, met with Brilee Davies and negotiated his business and this lease with Mr. Lapiso around February and or March. His first purported employment contract (exhibit "A") is dated 18th May 1998. Given that, he could not have arrived back in PNG any earlier than 18th of May 1998. This seems to auger well with Mr. Marshall’s testimony that, he returned to PNG on 14th June 1998. Given these facts, I find that Mr. Marshall could not have been legally in the country and was not in the country on 28th April 1998. If he was in the country at the relevant time, he did not say so in his testimony. Therefore, I find that no lease was executed on that date.

Taking all of these factors into account, I find that the purported lease is not authentic. Even if it does exist, I find that it is bad for uncertainty because it is not clear whether the contract was between SHL by which time a company by that name had not yet come into existence or with Mr. Marshall. It is settled law that, in order for a contact to be valid and legally enforceable, its essential terms must be certain: see Fly River Provincial Government v. Pioneer Health Services Limited (24/03/03) SC705 for a detailed discussion on the requirement for certainty in the terms of a contract. In my view, there cannot be a more serious uncertainty than in the identity of the parties to an agreement as in this case. This is in addition to the issue of stamp duty as noted above.

In arriving at this finding, I note that, there is no dispute that there existed a lease agreement between Lapony Carriers Ltd and SHL. Unfortunately, a copy of that is not in evidence in these proceedings because as Mr. Bray of counsel for the Cross Defendants submits and as noted already, the pleadings do not raise the issue of a lease in anyway. Therefore, no discovery was required and given. For the same reason, the Cross Defendants have had no obligation to produce the relevant copy.

In addition to the foregoing, a further factor renders the purported lease illegal and unenforceable. If the contract was with Mr. Marshall in his personal capacity, he lacked the legal capacity to enter into that contract without first obtaining an approval from the IPA. Section 25 of the Investment Promotion Act 1992, prohibits a foreign enterprise from carrying on business in PNG without first applying for and obtaining a certificate to do so. Section 1 of the Act defines the term "enterprise" to mean "any person, corporation, body or association of persons engaged, or proposed to be engaged in carrying on business in any activity in the country". It also defines the term "foreign enterprise" to mean:

"an enterprise—

(a) which is not a national enterprise or a citizen; or

(b) declared to be a foreign enterprise by the Minister under Section 25A."

This requirement is not unique to PNG. It is a universal requirement throughout the world including Australia. Every country controls and regulates the conduct of business within their territorial jurisdictional limits by non-citizens.

Section 41 of the Act then makes it an offence for a foreigner to carry on business in PNG without first obtaining the required IPA approval. In Investment Promotion Authority v. Niugini Scrap Corporation Pty Ltd; Investment Promotion Authority v. James Sinton Spence (03/06/01) N2104, I observed that this is a serious offence, as it carries a penalty of K100, 000.00 and K10, 000.00 in default. I also observed that, Parliament shifted the burden of prove to an accused person to prove his innocence. Hence, it is an important requirement to obtain IPA approval by a foreigner before undertaking or carrying on any business in PNG.

Section 3 (1) of the Act gives a wide meaning to the phrase "carrying on business" to includes:

"[M]aintaining an agent, employee or officer for the purpose of soliciting or procuring or entering into orders, arrangements, agreements or contracts (whether conditional or not) whether or not the agent, employee or officer is continuously resident in the country."

However, a more specific provision for the purpose of the case before me is s. 41A of the Act. This provision reads:

"41A. Contract, etc., to be unlawful and void in certain circumstances.

Where a contract, agreement or understanding is entered into between a foreign enterprise and another enterprise and —

(a) that foreign enterprise had not been issued a certificate at the time at which the contract, agreement or understanding was entered into; or

(b) the subject matter of the contract relates to business activities outside of the nature of the activities for which the foreign enterprise is certified to carry on business,

the court may, on the application of that other enterprise or of the Authority, declare the contract unlawful and void."
(Emphasis supplied)

What all these means is that, a foreigner like Mr. Marshall in his personal capacity or as he claims through SHL as its majority shareholder, could not carry on any business in PNG without first obtaining IPA approval. Carrying on business means to include the signing of contracts such as the one under consideration. For more discussion on the provisions in question and more, see Odata Limited v. Ambusa Copra Oil Mill Limited and National Provident Fund Board of Trustees (06/07/01) N2106.

There is neither any evidence nor is there any dispute that Mr. Marshall in his own name or in the name of SHL did not obtain IPA approval to carry on business. Yet he carried on business by entering into the lease, setting up the business, establishing office, employing servants or agents and carrying on the business as a Fairdeal Liquor outlet. On these facts, there can be no doubt that the lease was illegal and as such, it is incapable of enforcement. The Supreme Court in Fly River Provincial Government v. Pioneer Health Services Limited (supra) made that clear in the context of the requirements for public tender under the Public Finances (Management) Act 1995.

(b) Employment Contracts

(i) Mr. Marshall

The next thing chronologically, is the purported employment contract between Mr. Marshall and Patu No. 94 Pty Limited dated 18th May 1998. A copy of the contract is in evidence as exhibit "A". There is no explanation as to where the original is. Mr. Marshall was the addressee and should produce the original of the letter but he has not. Given the dispute over the authenticity of this document, the lack of a reasonable explanation for the whereabouts of its original and my findings in relation to Mr. Loh’s evidence, I am not able find that document produced in evidence is a genuine copy of its original and therefore authentic.

Even if the copy produced is authentic, I find that it does not constitute a legally binding contract of employment. The reason for this is simple. As far as Mr. Marshall was concerned, he was dealing with a company that existed only in paper and so the offer of employment was from a company that had no means to give valuable consideration, in terms of paying him. Accordingly, he also knew no functioning company existed at the relevant time to which he could render his services.

It is a settle principle of contract law that in order for there to be a legally binding and enforceable contract valuable consideration must pass between the parties. In the case of an employment contract, an employer passes to an employee a promise to pay an agreed wage or a salary. From an employee passes to the employer a promise to provide his services in return for the agreed wage or salary. Where no such consideration passes from either or both of the parties, it ceases to be a contract of employment: See Mathew Petrus Himsa & Anor. v. Richard Sikani & Anor (08/11/02) N2307 and Jack Livinai Patterson v. National Capital District Commission (05/10/01) N2145.

In this case, no real consideration passed between the parties. In fact, the company was in no position to pay Mr. Marshall and Mr. Marshall was in no position to provide his service because the company existed only in name. The situation was akin to pre-incorporation contracts, which require ratification by the board. There is no evidence of any such ratification of the contract in question. I therefore, find that the purported contract of employment between Mr. Marshall and Patu No. 94 Pty Limited is not a valid contract of employment between the parties.

Further, if anything I find that this was a deliberate fraud on the PNG immigration and labour laws. Section 6 of the Employment of Non-Citizens Act (Chp. 374) requires every employer to apply for work permits for every non-citizen they wish to employ. The Secretary of the Department of Labour may or may not grant such an application, depending on the application meeting a number of conditions, including special skills and expertise. A grant of a work permit is also dependant on a valid entry visa under the Migration Act (Chp.16). A work permit and an entry visa for employment purposes are inter-related. The grant of one paves the way for a grant of the other and the opposite applies where there is a decision against a grant of one of them.

An application for a work permit and entry visa proceeds on the basis that, there are a real and functioning companies and or employers. A person, or a company that is in no position to provide employment and pay wages cannot be in a position to validly, apply for work permits and employment visas for a prospective employer. A shelf-company exists only in name and paper. As such, it cannot apply for a work permit and a visa because of that. Where such a company or a non-entity makes such applications, it amounts to a fraud on the relevant legislation, the relevant departments and the country. I find this is the case, here. What this means is that, the purported contract of employment if it is authentic, is a deliberately designed fraud against the relevant legislation, departments and the people of PNG as noted. As such, it is an illegal and therefore unenforceable.

Mr. Marshall’s purported contract of employment was purportedly, varied twice. The first one was purportedly by letter dated 1st July 1998 and the second one is by a letter dated 1st January 2000. What appears to be an original of the first letter is in evidence as exhibit "GG" while the second letter dated (exhibit "HH") is a computer generated print out by a computer expert on the instructions of Mr. Marshall. The letters are in similar terms. The only difference is in the salaries and profit share per month. In the first letter, the salary is for A$85,000.00 and profit share of 15% of the profit not to exceed K20, 000.00. The second letter provides for a salary of A$125, 000.00 and profit per month not exceeding K30, 000.00.

The first of these two letters is addressed to Mr. Marshall at an Australian address. By that, time Mr. Marshall was already in the country after arriving on 14 June 1998. This begs explanation as to why it was necessary to have it addressed to Mr. Marshall in Australia and not his PNG address. Did he return to Australia after having arrived in PNG on 14 June 1998? If so, when did he return to PNG? If he was in PNG at the relevant time, how was the letter delivered to him? Mr. Marshall did not provide any answer to any of these questions.

With regard to the second variation, I notice in the 1999 diary (exhibit "KK") for 24th December shows an entry in terms of that salary package. Mr. Marshall said nothing about that and its bearing on the letter of 1st January 2000. I note that 24th December is usually a day on which much of the focus is on the Christmas which is the next day. Similarly, I note 1st January is a public holiday as that is the new year’s day. Most businesses close except for trading companies during the period 24th December in the last year to the 1st January in the new year. If notwithstanding that, SHL operated and the directors met and discussed business, there has to be evidence of that. There is no such evidence before me here. Further, I note that, the purported management agreement update for 18th May 2000, contains the 1998 first purported employment variation contract terms.

A common feature for both letters is that, Mr. Lapiso appears to have written both of these letters for and on behalf of the company. Mr. Marshall has failed to provide an explanation for the need for Mr. Lapiso’s signature. This question arises particularly if it is true that, Mr. Marshall was the 100% beneficial owner of SHL as he says in his own evidence in the context of the alleged trust deed. In other words, if it is true that Mr. Marshall was the 100% beneficial owner, why was it necessary for Mr. Lapiso to write and sign these letters? The answer to that question is in a letter dated 16th August 2000 from Mr. Marshall to Mr. Lapiso. The letter in relevant parts states:

"Thank you for the letters of Contracts dated 1st July 1998 and January 2000. I acknowledge that these letters were written for the purpose of you and me gaining finance for the purchase (sic) an investment property in Australia.

I agree not to use these letters other than for this finance. That is, I will not hold Himony Lapiso or Spirit Haus to these agreements what so ever. I will not use in any court or try to gain any favourable advantage."

This seems to make sense because the first purported variation is taking place before SHL commenced its operations. There is no evidence of the company’s assets and its ability to pay and provide to Mr. Marshall, A$85,000.00 salary a free car with fuel, accommodation with all utilities paid, 15% of net profit per month not exceeding K20, 000.00, two return airfares economy class and security dog and security systems in his house and office. What is clear is that, the predecessor of SHL was a shelf company and the name got changed to SHL in May of 1998 and did not commence its operations until 4th July 1998. It makes sense when Mr. Lapiso asks, how could he have increased the salary and include the return airfares for two when there was no significant period of employment.

Mr. Marshall did not discover the letter of 16th August 2000. When he was cross-examined both on the effect of the letter and its existence, he tried to re-write the letter. He also tried to suggest that the reference to the contracts meant two different contracts. He said nothing about those contracts in his evidence in chief and did not even give any discovery of them. He tried his very best to cloud the clear import of the letter by quickly suggesting for example that, Mr. Lapiso committed perjury by saying he (Lapiso) did not know anything about the purchase of properties in Australia.

What Mr. Marshall tried to do was to add to or vary the terms of the letter. This was contrary to clear law on point. In Igiseng Investments Limited v. Starwest Constructions Limited and Igiseng–Okmanip Business Group Inc (supra), I summarized the relevant principles and stated it in these terms:

"It is settled law that, generally where parties have reduced their agreement in case of an agreement into writing the document should be allowed to speak for itself. Therefore, no extrinsic evidence can be allowed to add to, subtract from or contradict what is stated in the document. The same goes for any other written record."

This was based on authorities such as the Supreme Court decision in Curtain Brothers (QLD) Pty Ltd & Kinhill Kramer Pty Ltd v. The Independent State of Papua New Guinea [1993] PNGLR 285. That case has been cited with approval in a large number of cases, which includes my own judgment in Odata Ltd v. Ambusa Copra Oil Mill Ltd (supra) and Papua New Guinea Forest Authority v. Concord Pacific Limited, Paiso Company Limited and The Independent State of Papua New Guinea (No 2) (2003) N2465.

I also noted that, this is a general rule only. As such, extrinsic evidence could be admitted to help resolve any ambiguity in a written document or record. Lord Davey in Bank of New Zealand v. Simpson [1900] UKLawRpAC 6; [1900] AC 182 (see also Horsfall v. Braye [1908] HCA 85; (1908) 7 CLR 629) the Privy Council stated this principle in these terms:

"Extrinsic evidence is always admissible, not to contradict or vary the contract: but to apply it to the facts, which the parties had in their minds and were negotiating about."

There is no submission by the Cross Claimant’s against the application of the general, principle that a document should speak for itself. Similarly, there is no argument from them that, the exception applies to their case. In any case, I note that the weight of the evidence goes against Mr. Marshall’s best attempts at trying to avoid the natural effect of the letter of 16th August 2000. His attempts added to his habit of trying to cover up the obvious by becoming evasive and introducing new things and surprises such as his allegation that there were two separate contracts, not pleaded and given in discovery. Through this, it also became clear that he was prepared to conceal this documentary evidence by failing to refer to it in his evidence in chief. In these circumstances, I allow the letter in question to speak for itself.

The letter, speaks in support of the argument that, the letters purporting to vary Mr. Marshall’s purported contract of employment were written to enable him to obtain finance to buy a property in Australia. That was indeed another fraud but this time against the whichever the Australian bank or finance institution Mr. Marshall sought funding from.

In respect of all of these contracts, there are no tax returns, or pay slips or such other evidence confirming the payment and receipt of such salaries and the benefits at the relevant times. Taking all of this and all the above factors into account, I find that these purported contracts are not genuine contracts of employment.

(ii) Mrs. Aesha Marshall Contracts

Whilst on the subject of employment contracts, I turn now to the purported contract of employment (exhibit "C") between Mrs. Aesha Marshall and SHL. I will consider this purported contract along with the video library contract (exhibit "U") because they raise common issues.

There is no dispute that Mr. Marshall wrote the relevant letters constituting these purported contracts on behalf of SHL. Both of them are with his wife, Aseha Maureen Kusunan. He said he had the authority to enter into those contracts on behalf of SHL and as such, he did not require Mr. Lapiso’s approval, let alone disclose his possible conflict of interest as husband of the other contracting party.

Mr. Lapiso confirms the lack of any disclosure of Mr. Marshall’s possible conflict of interest in these transactions. Similarly, he said he was not aware of the existence of these contracts except in the context of these proceedings. Also, Mr. Lapiso said, he would not have approved these purported contracts if Mr. Marshall sought his approval. He reasoned that the terms of the purported contracts were very generous to Mrs. Marshall and most unusual and referred to the one overseas plane ticket in the purported employment contract, without any apparent benefit to SHL.

Neither Mr. Marshall nor his wife gave any evidence in relation to what was the gain for SHL in return for both of these contracts. There is no evidence of Mrs. Marshall’s special qualifications, training and experience as an office clerk as well as her special qualifications, training, experience and skills in owning and running a successful business. There is simply no evidence as to the gain for SHL in the giving of these purported contracts to Mrs. Marshall.

The letter purporting to offer Mrs. Marshall employment, is dated 4th March 1999 under the hand of Mr. Marshall in SHL’s letterhead. It reads in relevant parts:

"I am pleased to confirm your appointment to our company as Office Clerk starting on Monday 8th March 1999.

You conditions of employment are as follows:

1. 150.00 paid per fortnight to be reviewed after 3 month trial period.
2. One overseas plane ticket not exceeding K4000.00 to be reviewed.
3. Use of the company vehicle.
4. Housing allowance of K100.00 per week to be reviewed every 6 monthly.
5. Food allowance of K50.00 per week."
   

Mr. Marshall testified that, after the three months probation period, he increased his wife’s fortnightly salary to K300.00 and elevated her position to Office Manageress.

If there was this contract, other independent evidence, such as Mrs. Aesha Marshall’s tax returns corroborate the terms of the contract. There is also no evidence of SHL in fact employing her under this contract and paying her in accordance with the contract. Such evidence could include the wages and salaries records of SHL employees, financial statements and such other records confirming the employment and payment of what was due to her. In these circumstances, I am unable to find as a fact that, this contract existed.

If however, it did exist, then I note that the terms of the contract are very biased toward the employee. The package adds to a total of K15, 700.00 a year. If the one overseas plane ticket (not clear) is not for a year but say a fortnight, month, a quarter or half a year, the package could far exceed K20, 000.00. I must confess this is the first time I am seeing a contract of employment for an office clerk on such generous terms. I must also add that, it contains terms that a quite unusual and not generally found in contracts of this type. Obvious examples of the unusual terms are the one overseas airplane ticket up to K4,000.00, meal allowance of K50.00 per week and housing allowance of K100.00 a week. Generally, most persons employed as office clerks are on terms far less than the terms on which Mrs. Marshall was.

I now turn to a consideration of the purported video library contract. It reads in relevant parts as follows:

"Spirit Haus will provide funding up to K10, 000.00 with the following provisions:

1. Aesha Kusunan is to be the sole owner of all tapes, material and records.
2. The above funding is only to be spent on tapes purchased.
3. You are required to develop the membership to a level that will provide back to the Spirit Haus K10, 000.00 at the end of the second year.
4. From the end of the first year to the end of the second year you must rent an average of 7 tapes per day at a rate of K4.00 per tape.
5. After the second year you are required to pay to Spirit Haus K10, 000.00 per annum or half of the net profit which ever is the less.
6. You are required to keep and maintain records for each rental, name, membership # and date.
   

Should you agree please sign below.

[Signed] [Signed]

Robert Marshall Aesha Kusunan

Manager Aseha Video Library."

Mr. Marshall added that the video library business operated out of SHL’s premises. Neither Mr. Marshall nor his wife gave any evidence of paying any rents to SHL for the use of its premises. Mr. Lapsio confirmed the fact of the business operating out of the SHL premises. Ignorant of the existence of the contract and its terms, Mr. Lapiso assumed that, it was an extension of SHL business.

I find this purported contract is also generous and does contain some most unusual terms. It is clear that SHL is advancing K10,000.00 to Mrs. Marshall interest free. There is no requirement for immediate and periodical repayment until after the end of two years. There is no security for the advance, especially when there is no evidence showing that Mrs. Marshall is well-qualified, experienced and is a trustworthy businesswoman who would repay the advance. Another unusual feature is the fact that an employer was advancing its money to one of its employees to conduct her own business out of her employer’s business premises and possibly company time.

This certainly gives rise to an apparent conflict of interest. The fact that Mr. Marshall was negotiating and entering into both of these contracts on behalf of SHL with his own wife exacerbates the situation. He stood to gain from these contracts because they both meant extra incomes to his wife and his family at no extra costs to them. For example, the one overseas plane ticket meant that Mrs. Marshall could travel out of the country at the expense of the SHL. I remind myself that, it does not make any sense for SHL to allow for two overseas plane tickets under Mr. Marshall’s purported contract and one overseas plane ticket for his wife. This represents a saving to the Marshalls and therefore a double income from the same source. There is no evidence of corresponding arrangements on Mr. Lapiso’s side. Hence, commonsense dictates that Mr. Lapiso, Mr. Marshall’s business partner and a fellow director be informed and his approval sought and obtained. Mr. Marshall deliberately decided against that, as he did not see the need for it. At the time when Mr. Marshall entered into these contracts, he acted in his capacity as a director of SHL.

The conduct of company directors are governed by law. It is settled law that, directors of companies owe a fiduciary duty to the companies they are directors of. This duty extends to even a "nominee", "alternate" or a "puppet" director. Paramount in that duty is the duty to exercise their powers bona fide for the benefit of the company to the exclusion of those responsible for their appointment, consistently with the well-accepted principle that, a company is a separate legal personality. Lord Greene M.R. made that clear in Re Smith and Fawcett Ltd [1942] AC Ch. 304; 1 All E.R. 542 in these terms:

"...[Directors] must exercise their discretion bona fide in what they consider –not what the court may consider – is in the interest of the company, and not for any collateral purpose..."

This imports an obligation on the directors of companies not to place themselves in a position where the exercise of their powers for the company’s benefit is in any way fettered. More specifically, this means that the directors must not place themselves in a position where their duties and personal interests may conflict.

Where a director is in a position of possible conflict of interest, he is required to disclose the nature of his interest to his fellow directors. Additionally, if the matter in which a director has an interest is significant, he is required to have that disclosed in the directors’ report. Further, unless the articles or the constitution of the company otherwise provides, a director may not vote or participate in the decision concerning the matter in which he has an interest. The accepted practice is for him to disclose his interest and disqualify from participation in the deliberations on the matter he as an interest in.

Division 3 of Part VIII, ss. 112 to 127 of the Companies Act 1997 codify these principles and deal specifically with the duties of directors of companies. Of specific application to the present case are sections 112, 115, 117 and 118, which restate in detail what the above principles say. Section 117 (1) defines the term "interest" in these terms:

"Subject to Subsection (2), for the purpose of this Act, a director of a company is interested in a transaction to which the company is a party where, and only where, the director –

...

(d) is the parent, child, or spouse of another party to, or person who will o may derive a material financial benefit from, the transaction, or

(e) is otherwise directly of indirectly materially interested in the transaction."

The legislation could not be any clearer than the words it employs to identify the possible conflict situations. In any case, it is clear that all other relationships and situations are covered as long as they come within the test of "otherwise directly or indirectly materially interested in the transaction." The provisions of subsection (2) deal with the giving of security by the company to third parties, which have no connection with a director.

Section 118 provides as to the manner in which a director should disclose his interest. It provides that as soon as a director becomes aware of the fact that he is interested in a transaction or proposed transaction with the company, he must cause to be entered in the company’s interests register and where the company has more than one director disclose that to the board of the company. That discloser must include the full monetary value if known or if it cannot be quantified, the nature and extent of that interest.

These requirements are very serious matters. That seriousness is highlighted by the fact that s. 112 (5) and s. 118 (4) make it an offence for a director to breach his fiduciary or duty of care and the duty to disclose a situation of conflict of interest, respectively. These offences attract penalties respectively of K200, 000.00, or a term of imprisonment up to five years or both and a penalty of K10, 000.00. This is by virtue of s. 413 (4) and (2) respectively.

In the present case, the two contracts were between Maureen Aesha Kusanana, Mr. Marshall’s wife and Mr. Marshall, one of the directors of SHL at the relevant times. According to his own testimony, Mr. Marshall did not disclose his interest and disqualify from participating in the decisions leading to the contracts, as he did not see the need for it saying he had the authority to do what he did. As noted, the terms of both contracts were more generous and biased toward Mrs. Marshall. The contract contained benefits or entitlements that are most unusual. What is more, there is no evidence of what was the gain for the company and what might have persuaded SHL to enter into such contracts with some most unusual terms for no apparent benefit and therefore not in the best interest of SHL. There is little doubt that, Mr. Marshall was in a conflict of interest position and yet he failed to disclose his interest and enter into contracts that were in breach of his fiduciary duty. There is no doubt also that, these contracts if they do exist, were in breach of Mr. Marshall’s fiduciary duty to SHL and the provisions of ss. 112, 115 and 118 of the Companies Act 1997. Accordingly, this would attract an application of the provisions of s. 112 (5), 118 (4) and s. 413 (2) and (4) of the Act. I recommend that IPA take the appropriate actions against Mr. Marshall for these apparent breaches.

The question then is, what should be the consequence on the contract because of these breaches. Section 118 (3) of the Companies Act 1997 provides that a failure to disclose a directors interest as required "does not affect the validity of a transaction entered into by the company of the director." However, that is not the end of the matter. The next section, s. 119 (1) provides that such a transaction "may be avoided by the company at any time before the expiration of three months after the transaction is disclosed to all the shareholders". Nevertheless, the transaction cannot be avoided if the company receives fair value under it (subs.2). The question of fair value is dependant on the information known to the company and the interested director at the time of the transaction (subs.3). There is a presumption in favour of fair value if the transaction is entered into in "good faith and in the ordinary course of business on usual terms and conditions" (emphasis mine).

In the present case, there is no evidence as to when Mr. Marshall disclosed the contract to all the shareholders. Depending on when the discloser took or takes place, the company has three months from the date of the discloser the SHL may seek to avoid the contract. In view of the finding that the terms of the contract are most unusual, I find that the presumption in favour of fair value to prevent avoidance by SHL does not exist.

(c) Trust Deed

The next document to consider is the purported trust deed. Mr. Marshall’s evidence is that, before coming to PNG on 14th June 1998, he had a discussion with his mother about the ownership of the SHL. His mother said to him, there might be difficulties with 100% ownership of the shares as he was not a PNG National. She therefore suggested that they go by a trust deed and sent him a draft trust deed. He approved the draft before returning to PNG. After his arrival in PNG, Mrs. Beverly Marshall, his mother, Mr. Lapiso and him signed the final version of the trust deed on 29th July 1998.

The deed provided for 55 % shareholding by a Mr. Lapiso a PNG national and 45% shareholding by his mother all in trust for him, until IPA approval was granted for foreign ownership. In fact, therefore he was 100% shareholder of SHL.

The witness was not able to produce the original or a copy of the deed. He said the original of the deed was in the IPA files. The relevant IPA files are in evidence as exhibit "VV". My examination of the document in the IPA file fails to show as an original but a copy only. This inconsistency goes against the credibility of Mr. Marshall.

Cross-examination of Mr. Marshall on the deed commenced with a reference to an affidavit he deposed to on 1st June 1999 in relation to O.S. 267 of 1999. After Mr. Bray substantially took Mr. Marshall to the contents of the affidavit, Mr. Wilson of counsel for the Cross Claimants objected to further cross-examination based initially on the fact that Mr. Bray witnessed that affidavit. Counsel later had that changed to one of unfairness to the witness. This took up a sizable amount of the Court’s time, which included a brief adjournment for the Court to consider the arguments and arrive at a decision on it. The Court was not able to do that as neither of the counsels were able to provide any useful assistance to the Court. Therefore, the Court reserved a ruling on that and directed the hearing to continue. At the end of all these, Mr. Wilson of counsel eventually agreed to an admission into evidence the affidavit in question as exhibit "D4". Again, this is an instance of Mr. Wilson not seriously taking on his responsibility in terms of s. 15 (4) (b) of the Professional Conduct Rules.

The affidavit in question was in support of an action by Mr. Lapiso against Mrs. Beverly Marshall and SHL seeking relief amongst others a removal of Mrs. Beverly Marshall as a shareholder and director and a repayment of a sum of K23, 000.00 by Mrs. Marshall to SHL. In that affidavit, Mr. Marshall deposed that he was the manager of SHL, a position he assumed in June 1998 and one, which his mother interfered with. Although Mr. Bray tried to make much out of Mr. Marshall saying in paragraph 4 of his affidavit that he did not know Mr. Lapiso at that time, as if at the time of the swearing of the affidavit, I note that this statement is in the context of June 1998, which the earlier paragraph refers.

Mr. Marshall went on to saying that the interference by his mother generated considerable friction between him and her and placed him in an impossible position. She gave him directions and even threatened to terminate him if he did not comply with her directions. His mother told him not to tell Mr. Lapiso anything about the financial affairs of the company and that Mr. Lapiso should be in the dark.

Mr. Marshall further deposed to being aware of his mother creating documents to show falsely her contribution to the company’s capital. At the time, he deposes to seeing his mother sending to her Australian account funds from the company. He also speaks of seeing a weekend taking of K23, 000.00, which she did not bank.

Furthermore, Mr. Marshall deposed to a recollection that Mr. Lapiso requesting his mother Beverly Marshall, by letter to provide evidence of her contribution toward the capital of the company. By this time, Mr. Marshall deposed to not being sure about Mr. Lapiso’s status with the company. He thought his mother owned the company and that he would have shares in it. Later, he came to realize that he would not be given shares and that the business did not belong to his mother.

Mr. Marshall further deposed that, he desperately wanted the business to succeed as he had a personal stake in it "namely that of continued employment and the prospect of joint ventures with Mr. Lapiso in coffee buying." He realized that there were certain irregularities and decided to tell Mr. Lapiso to avoid being guilty by association. His courage to do so was bolstered when he came across certain documents relating to his mother’s business, which was now indebted to its Australian suppliers up to A$120,000.00. These documents sought to transfers shares to Mr. Lapiso and a security transfer form, which Mr. Lapiso eventually managed to remove with his lawyer’s assistance on Mr. Marshall’s disclosure. Not long after this, his mother was removed as a director.

This affidavit contrasts greatly with Mr. Marshall’s evidence in chief. In his evidence in chief he said, when SHL commenced business on 4th July 1998, it had Mr. Marshall as its managing director, Mrs. Beverly Marshall and Mr. Lapiso as directors. The company made about K8, 000.00 a day. That increased substantially to K100, 000 to K120, 000.00 within a few months. This meant a higher turnover of stock. All these resulted in an estimated 11 and 12 per cent net profit. Both Mrs. Beverly Marshall and Mr. Lapiso played no part in this successful operation. He attributes the success to himself as managing director later also becoming the company’s secretary.

In his affidavit, he said nothing about the trust deed and the fact that he was in fact the 100% shareholder and that his mother and Mr. Lapiso held the shares in trust for him. Similarly, Mr. Marshall and his lawyers did not plead the existence of the trust deed and Mr. Marshall being the 100% beneficial owner. Earlier affidavits deposed to in these proceedings by Mr. Marshall failed to correct the lack of acknowledgment of this important fact if it is indeed the case. This situation was carried over in a number of the affidavits done earlier on in these proceedings. When asked under cross-examination for him to explain why he left this important information out, he said, he did not have to. This was so because; the affidavit did not require that. The affidavit was to obtain and get back certain motor vehicles that his mother had taken. He said therefore, he was not required to step in.

I do not find this explanation reasonable. If he was indeed the 100% beneficial owner, there was a compelling reason for him to assert his rights there and then. The action in support of which he deposed to the affidavit was by Mr. Lapiso. Mr. Lapiso wanted amongst others Mrs. Beverly Marshall’s shares transferred or vested in him. That would have seen Mr. Lapiso having 100% shares in SHL. If it was not necessary for Mr. Marshall to step in, then what was the arrangement or agreement with Mr. Lapiso as to his (Marshall’s) interest in the company? Was Mr. Lapiso to later transfer the shares to him. If so, what was the consideration for Mr. Lapiso holding the shares in trust for him in a company according to his own evidence, a multi million kina going concern? What guarantee was there that Mr. Lapsio would not honour his trusteeship and that Mr. Marshall did not see the need to step in? Further, if indeed he was the 100% beneficial owner, why did he say in paragraph 13 of his affidavit that his "personal stake in its success" was "namely that of continued employment and the prospects of joint ventures with Mr. Lapiso in coffee buying" and stop at that? Was the joint venture prospect in the business of SHL, a subsidiary or a different business?

Mr. Marshall is not in the same boat as most Papua New Guineans are. He is an Australian and as such, speaks, reads and writes well in the English language. There can therefore, be no doubt that he understood the full importance of what he was deposing to. It was thus, in his interest to indicate the correct position in the company if indeed, he was the managing director and a 100% beneficial owner but he did not.

Further, if indeed the purported trust deed existed, he would have been clear on Mr. Lapiso’s status. By then, it would have been clear to him that Mr. Lapiso was his trustee and a director of SHL. Further, the letter purporting to vary Mr. Marshall’s contract of employment if it is genuine, which is what Mr. Marshall claims, he had reason to know that Mr. Lapiso was a director of SHL and it was Mr. Lapiso for SHL who varied his contract on 1st July 1998. These evidences, which are coming from Mr. Marshall himself, contradict what he says in paragraph 8 of his affidavit of 1st June 1999.

On the other hand, if he was not a 100% beneficial owner of SHL and was only an employee, it could explain his lack of knowledge of and Mr. Lapiso’s request for Mrs. Beverly Marshall to provide evidence to him of her contribution toward the capital of the company. Unless, Mr. Lapiso was a mad man, an opinion I find difficult to form of him, he could not have made such a demand unless that is what was to happen. This also addresses the question of why, would Mr. Lapiso have agreed to hold substantial shares for Mr. Marshall if he and Mrs. Marshall were to contribute to the capital of SHL against Mr. Marshall.

Mr. Lapiso does not admit the existence of the purported deed. He did not know anything until in the course of the trial. From that background, he asked the fundamental question, to which the Cross Claimants have not provided an answer. The question was in terms of, if he were to hold the shares in trust for Mr. Marshall, why would he have gone to the bank and borrowed K25, 000.00 to meet his part of the bargain toward the capital of the SHL? These augers well with Mr. Marshall saying in his affidavit of 1st June 1999, that Mr. Lapiso requested Mrs. Beverly Marshall to provide evidence of her contribution and Mrs. Marshall creating a document to falsely show that she did meet her capital contribution requirements.

In these circumstances, I find that the deed story was an invention well after the issue of the proceedings and did not exist before than. In arriving at that finding, I have disregard Mr. Loh’s evidence regarding the signature appearing on a copy of the purported deed. My reasons for that are the same as in the case of the purported lease agreement. This is particularly in relation to the date when the witness saw a copy of the deed and his assessment of it.

The invention came well after a number of interlocutory applications and decision on them by at least two other judges. The Cross Claimants did not seek and obtained leave to amend their pleadings to include the existence of the purported deed and its import, well before the trial. As far as the pleadings and earlier testimonies of the Cross Claimants are concerned, the purported deed did not exist until they introduced it in the course of the trial before me.

If the deed does exist notwithstanding the above finding, it is necessary to address the issue of its validity and enforceability. The first thing to note about this issue is the lack of pleadings. The comments I have made in relation to the question of pleadings in the context of the purported lease equally applies here. The effect of that is that, the Cross Claimants cannot take the issue of the purported trust deed any further without the necessary foundation in the pleadings.

Secondly, on the evidence before me, the purported deed, if it did exist, it was a deliberate design to avoid compliance of the mandatory requirements of the IPA Act for foreigners like Mr. Marshall. The effect of Mr. Marshall’s evidence is clear that the purpose of the deed was to overcome the requirements of the IPA Act for him as a foreigner. I discussed the relevant provisions of the IPA Act in the context of the purported lease agreement. They equally apply here with the necessary modifications to reflect the focus here is on the trust deed. In short, the intent of the relevant requirements of the IPA Act is to ensure that foreigners do not conduct or carry on business in PNG without first obtaining IPA approval. The aim of the deed was to avoid meeting that legislative intent.

Despite the clear provisions of the IPA Act and the law on it as noted in the foregoing, Mr. Marshall with the encouragement of his counsel has shown no reluctance in trying to get this Court to recognize his illegal deed. Before coming to this Court, Mr. Marshall has had the deed lodged with the IPA. The relevant IPA records for SHL are in evidence only as prove of the records produced before the Court and not as evidence of its contents. The contents include a copy of the deed as opposed to an original according to Mr. Marshall’s testimony. This was because the officer, dealing with this file and or directly involved in the receipt and accepting for lodgment the relevant company documents for SHL was not available to answer a number of pertinent questions. Such questions include when was the document lodged and by whom? Who on behalf of IPA accepted the document for filing and what did or has IPA done about the apparent breach of the requirements of the IPA Act?

I find the conduct of Mr. Marshall and his counsel most contemptuous of the requirements of the IPA Act. It amounts, in my view, to a deliberate fraud against the said Act of the IPA office, the State and the people of Papua New Guinea. Accordingly, I recommend that, the IPA carry out appropriate investigations if not already done. If those investigations reveal that there was in fact a deed contrary to the findings in this judgment, then Mr. Marshall and those who might have acted with him be prosecuted.

Finally, if the deed does exist, there is no evidence that the requirements of the Stamp Duties Act have been met. I therefore find that those requirements have not been met. Accordingly, the discussion on this in the context of the other documents does appear here.

(d) Management Agreements

This leads me to the final document for consideration, which is the purported management agreement. By way of background, Mr. Marshall said Mr. Lapiso came to live in Goroka, in February 1999, from Lae after failing in his service station business in Lae. When that happened, he said he made available SHL’s back office with a computer to Mr. Lapiso on the latter’s request. Once there, Mr. Lapiso asked for money for school fees and other needs, which became frequent, fairly insistent and demanding. He felt he owed Mr. Lapiso because he (Lapiso) owned the warehouse. Therefore, Mr. Marshall said he decided to help him out and he did. Those assistances were in addition to Mr. Lapiso receiving director’s fees.

By this time, Mr. Marshall said, the relationship between Fair Deal Liquors and him was very strong and good. That however, changed later with Fair Deal Liquors giving him 10 to 12 months to get a bank guarantee on the company’s credit facility of K200, 000.00. He gave no reason for this change and went on to say that, this made him to offer Mr. Lapiso a 50 % share in the company on the condition that Mr. Lapiso put up his warehouse, the company premises, as collateral for the required bank guarantees from the ANZ Bank. On his part, he agreed to put in his T35 truck, two forklifts, his computer programs, and other items in exchange for 50% of the shares in SHL.

This agreement was to enable him to go into other business, namely coffee and certain others. Accordingly, he and Mr. Lapiso agreed to equal shares (50/50) in another company called the Goroka Coffee Exchange ("GCE").

In pursuance of the agreement in around April/May 1999, he approached the ANZ Bank and the Bank created the relevant documents for Mr. Lapiso to sign. He took those documents and passed them onto Mr. Lapiso. However, he believes that Mr. Lapiso did not fill the forms properly in terms of the registered owner of the warehouse being Lapony Carriers Ltd and not Mr. Lapiso. The bank without knowing those errors granted the guarantee but later discovered them and it revoked its guarantee. This resulted in a cancellation of the credit facilities with Fair Deal Liquors and others.

Around this time, he said, he paid K30, 000.00 (K10, 000.00 from him personally and K20, 000.00 from SHL to him) for a 50% share in GCE, which owned a property at six mile out of Goroka. The property was than known as the old PNG Coffee Exports, which was originally under a company called ATSBOO No. 3 Limited. After the acquisition of the property, he carried out improvements to the property bringing its estimated value to well over K800,000.00, with rental incomes put at K10,000 per month and changed the name of the company to GCE.

The ownership of GCE was to be transferred to him and he spoke at some length about this with his then lawyers, Messrs Pryke & Co, failing to effect that promptly. He said this has resulted in a non-filing of the relevant documents, which has in turn facilitated Mr. Lapiso now showing as the sole shareholder and director of the company. He claimed that he signed all of the relevant company documents but were not lodged for him by his then lawyers. Apart from a letter from him to Pryke & Co dated 10th March 1999, (exhibit "D"), he did not produce any other documentary evidence to support his claims.

According to a company search toward the end of March 1999, Mr. Marshall, Mr. Lapiso and Mrs. Beverly Marshall were directors of SHL. This changed to only him and Mr. Lapiso being directors. He also acquired the added responsibility of company secretary. This change, he said was necessary as his mother went finished by this time. He was not prepared to admit in his evidence in chief that his mother left following a deterioration of relations between him and her as well as between her and Mr. Lapiso as covered in Mr. Marshall’s affidavit of 1st June 1999 under OS 267 of 1999 as already noted and covered in this judgment.

He went on to say, both him and Mr. Lapiso had directors loan facilities with SHL. They also had drawings. Up to the year 2000, Mr. Lapiso took over K160, 000.00. This was possible under a management agreement between him, Mr. Lapiso, GCE and SHL, created by him with Mr. Lapiso’s agreement. He noted the terms of the agreement in his 1999 diary for 20th of May. A copy of the original agreement dated 20th May 1999 is exhibit "FF". This agreement, he said was updated twice, firstly on 25th December 1999 and secondly on 20th May 2000.

Mr. Marshall admitted into evidence without any objection from the Cross Defendants as exhibit "I" a statement by Mr. Lapiso, modified on 13th November 2000, in support of his testimony.

As already noted in the earlier part of this judgment, Mr. Marshall said, the originals of the purported agreement were given to Mr. Loh for his expert examination. However as noted, Mr. Loh said the documents he received from the Cross Claimant’s lawyers were only copies. In other parts of his evidence, Mr. Marshall said the original of the agreement was sent to IPA and it is with them. This is why there were some arguments over the admissibility of a copy of the purported agreement. Then eventually a document purporting to be an original version of the updated agreement was admitted into evidence as exhibit "Q".

This agreement, Mr. Marshall said, came about as result of an advice from Pryke & Co Lawyers and it marked the new beginning for SHL. The advice was for them to first, have an audit of the company account and then establish a management agreement.

In line with the legal advice, Mr. Lapiso contacted Kiddie & Associates in Lae (exhibit "J") and they came and did the audit. Subsequent to the audit is the unspoken suggestion in his evidence that, the agreement came into existence. There is no evidence in Court that confirms the conduct of the audit. Mr. Lapiso’s testimony is that, although, the auditors came, Mr. Marshall came up with a lot of excuses and did not provide the company’s books for audit resulting in sending away of the auditors. Given the lack of an audit, Mr. Lapiso said he was not prepared to agree to any management agreement, as he wanted to establish the true financial position first.

The rest of Mr. Marshall’s evidence on this is a restatement and elaboration of the terms of the purported agreements. He also testified to most of the terms of the agreement being performed and stated further that, he could have had them all performed if Mr. Lapiso did not wrongfully remove him from SHL on or about 27th October 2000.

I do not find Mr. Marshall’s testimony convincing on the balance of probabilities. There are number of reasons for that. Firstly, his 1999 diary (exhibit "KK") and in particular for the month of February, has no record of Mr. Lapiso leaving Lae and taking up residence in Goroka, which necessitated the arrangements Mr. Marshall said he made to accommodate Mr. Lapiso. This is rather strange given that, he tried to create the impression that he records important and notable events in his diary. Mr. Lapiso’s resettlement was a significant one because it meant according to Mr. Marshall’s evidence, the spending of a lot of money and utilization of SHL facilities. A perusal of his dairy has entries even for food items and some other insignificant items. The only entries for February 1999 that has a reference to Mr. Lapiso is one for Monday the 1st, about a meeting with a Tony and a call to a Lapiso. The next entry is for Monday the 22nd in terms of "Himony agrees to pay Bev out". Thereafter is the one for Friday 26th in terms of "Directors Meeting, Bray/Lapiso/Marshall".

Secondly, other evidence particularly Mr. Marshall’s own affidavit of 1st June 1999 in OS 267 of 1999 and the findings I have made in relation to the other documents, dictated the conclusion that, relations between Mrs. Beverly Marshall and him as her son had turned for the worse culminating in Mr. Marshall supporting Mr. Lapiso in his action against her. In addition, the relations between Mr. Lapiso and Mrs. Beverly Marshall had also turned bad resulting in the actions he took against her with the support of her son. I find these were the circumstances in which, Mrs. Beverly Marshall left PNG and re-settled in Cairns Australia. Rather than stating that obvious fact, Mr. Marshall merely referred to that as a simple going finish for his mother.

The third reason follows on from the second reason. When Mrs. Marshall’s relationship with her own son and Mr. Lapiso turned soar, it is reasonable infer that she got in touch with her friends and contacts who made SHL work in terms of its business to cease doing business with SHL now that she was going finish and that her son and Mr. Lapiso were against her. According, to Mr. Marshall’s own evidence, the Fairdeal Liquors business, which appears to have been the main business for SHL, was through Mrs. Beverly Marshall’s good friendship with Brileee Davies. Accordingly, I do not find it a coincidence but rather a natural consequence of Mrs. Beverly Marshall leaving SHL and PNG that the credit facilities with Fairdeal Liquors and others had to be seriously re-examined and I find that is what happened.

Fourthly, following on from the above, Mr. Marshall has not provided any reasonable explanation as to why the Fairdeal Liquors and his other business partners now required a bank guarantee on the credit facilities. This is a critical question given Mr. Marshall’s own testimony that he was running a multimillion-kina business with profit margins between K4.32 and K5.184 million. If indeed he was running such a business, he could have simply placed a million Kina or more in IBD or a guarantee on the credit facility with his supplies, given that the credit limit was up to about K200,000.00. This would have eliminated the need for a bank guarantee requiring collateral from Mr. Lapiso.

Fifthly, the legal advice following which Mr. Marshall said the management agreement came about also recommended an audit. An audit would state who took what and for what purpose and give an accurate financial position of the SHL before the parties could agree on a management agreement. There is no dispute that an audit was to be carried out. Mr. Marshall stated that it was carried out without producing an audit report or evidence of an audit. The best he could do was to provide a summary of drawings (Exhibit "M"). Once he was cross-examined on that, it became clear that, it was not necessarily an accurate statement of what he and Mr. Lapiso took. In the circumstances, I accept Mr. Lapiso’s testimony that no audit was done and as such, no management agreement could be signed although there were some discussions of the matters set out in the purported management agreement.

Sixthly, Mr. Marshall testified that he drew up the management agreement by dictating to his wife, the terms from notes of the agreement in his diary for 20th May 1999. The relevant diary entry for that date starts off with the entries, "Write Agreement now. Call Bray. Set meeting" and covers the spaces for the 21st and 22nd. The rest of the entries are not strictly speaking in direct correspondence to the terms of the purported agreement. An obvious one is the fact that the numbered items in the diary for that day ends at number 11 as opposed to 17 paragraphs in the purported agreement. If there is a carry-over to the other days’ spaces, it is not indicated in any manner. Further, a close examination of these entries fails to indicate that Mr. Marshall and Mr. Lapiso agreed to these terms. At best, at least from the opening of the entry, it seems to me, it is a notation of what was to happen as opposed to recording what happened on that day.

Next, with regard to the alleged updated on 25th December 1999, the diary space for that date does not show any entry. There is however, an entry for the 24th, which comes closer to the subject matter for the alleged up dated agreement. That entry starts however with the words "Clear up Director Meeting." Again, this does not speak of an agreement being reached in terms of an update of an earlier agreement let lone the alleged agreement of 20th May 1999. Apart from these, I note 25th December is the usual Christmas day and most people would be celebrating Christmas and would not be conducting business. If notwithstanding that common and usual practice, Mr. Marshall and Mr. Lapiso met for business to update the agreement, evidence providing a reasonable explanation for the conduct of business on that day is lacking here.

Further, there is no diary entry for 20th May 2000 confirming the second update. I repeat my earlier observation that, Mr. Marshall tried to impress upon the Court that he kept diary notes of significant or notable events. Despite that, we have no diary confirmation for this update because it is an important one as that covered Mr. Marshall’s new salary package. Further, as at the time of the second update on 18th May 2000, I note that Mr. Marshall would have been on the salary package under the letter dated 1st January 2000 (exhibit "HH"), which he said was the second variation to his purported employment contract. However, the entries under the second update to the purported management agreement, corresponds to the salary package under the first variation to his employment contract under the letter dated 1st July 1998, exhibit "GG". There is therefore a serious anomaly here. Mr. Marshall did not provide any reasonable explanation for it.

Finally, I note that the terms of the purported management agreement, greatly favour Mr. Marshall. A very good example of this is paragraph 4 under 20th May 1999 agreement. This provision gives Mr. Marshall overriding and controlling powers over Mr. Lapiso. The next paragraph, paragraph 5 gives Mr. Marshall first priority in the event of liquidation. This line of control is carried through in paragraphs 8 and 12. Then under the 25th update, all gun and shooting expenses are to be that of SHL. Mr. Marshall’s own testimony is that, this is a matter that is personal to him and nothing to do with SHL. Yet under this agreement, the associated expenses belong to that of the company.

Given these facts and coupled with the findings in relation to audit issue, and the decision against Mr. Loh’s evidence, I accept Mr. Lapiso’s evidence that he did not and could not have signed such an agreement as the purported management agreement.

Taking all of the foregoing factors and findings into account, I find that the purported management agreement is not authentic. Consequently, I find that it did not and does not exist as between the parties. Even if it does exist, I am not satisfied that it is legally valid for a number of reasons.

Firstly, if this purported agreement did exist, it gave Mr. Marshall a non-national, controlling rights and powers over the assets of SHL. This no doubt brings into application the provisions of the IPA Act. The discussions on this aspect under the purported lease agreement do equally apply here, and I would make the same recommendation for prosecutions under the IPA Act.

Secondly, the agreement has not met the requirements of the Stamp Duties Act. The discussion on this under the purported lease agreement also applies here.

Finally, the agreement takes on some of the personal expenses particularly of Mr. Marshall as in the case of the guns and shooting expenses. This might amount to a tax evasion because of which the purported agreement would be an illegal contract and therefore unenforceable.

Summary

In summary, I find as follows:

1. The Cross Claimants and their witnesses were incredible witnesses given their demeanour, and because they gave evidence that were seriously misleading, inconsistent, incomplete, biased toward the Cross Claimants’ case, illogical and out of commonsense accounts;
   
2. The purported lease agreement and the purported trust deed have no foundation in the pleadings and as such the Cross Claimants could not take them any further from the limited purpose of determining their authenticity;
   
3. All of the purported agreements and or contracts and the trust deed have failed to meet the requirements of the Stamp Duties Act. As such the Cross Claimants are precluded from pleading, adducing them into evidence and using them in any manner or form until they pay the appropriate stamp duty and penalties and produce evidence of that to the Court;
   
4. Each of the documents in issue between the parties are not authentic or do not exist for various reasons.
   
5. Further or in the alternative that, I find that, if these documents are authentic they are invalid and or illegal and are therefore unenforceable or avoidable because some are in breach of the IPA, Migrations, Employment of Non-citizens, and the Companies Acts and some lack certainty, an intention to create a legally binding contract and valuable consideration.
   
6. Furthermore, I find that Mr. Michael Wilson breach his professional duties to this Court in terms of s.15 of the Professional Conduct Rules. That is particularly in relation to the claims concerning the Musso motor vehicle, and the confessional letter purportedly dictated to Mr. Marshall by Mr. Lapiso, in view of positive findings already made by Kirriwom J. in these proceedings on 21st March 2001 and others as noted in the course of the judgment.
   

In view of the above findings, I make the following orders:

1. An order in the form of a declaration that the purported lease agreement between Mr. Marshall and Lapony carriers Ltd dated 28th April 1998, the purported trust deed between, Mr. Lapiso, Mrs. Beverly Marshall and Robert Marshall dated 29th July 1998, the purported employment contracts between Patu No. 4 Ltd and Mr. Marshall and the two purported variations thereto; the purported employment contract between Maureen Aesha Kusunan (Mrs. Marshall) dated 4th March 1999, purported video library contract between SHL and Mrs. Marshall and the purported management agreement between, Mr. Marshall, Mr. Lapiso, GCE and SHL dated 20th May 1999 and the purported updates thereto do not exist or are not authentic.
   
2. Further or in the alternative, an order in the form of a declaration that these documents are invalid and are therefore unenforceable on grounds of illegality for some, lack of valuable consideration and certainty for others and also fraud on the relevant legislation for others.
   
3. That Mr. Michael Wilson be referred and I hereby refer Mr. Wilson to the Lawyers Statutory Committee to be dealt with appropriately for his breach of his duties to this Court under s. 15 of the Professional Conduct Rules.
   
4. An order in the form of a recommendation that, in view of the findings of breaches of the requirements of the IPA, Migrations, and Employment of Non-Citizens Act, Investment Promotion Authority, the Departments of Foreign Affairs and Labour and Employment and the National Fraud Squad to undertake the necessary investigations and prosecute Mr. Robert Marshall and those acting in association with him for the breaches highlighted in this judgment.
   
5. Costs against the Cross Claimants to be agreed if not taxed.

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Lawyers for the Cross Claimants : Warner Shand Lawyers
Lawyers for Cross Defendants : Pryke & Bray Lawyers