Kare Puga Development Corporation v Kruse [2010] PGNC 186; N4183 (16 August 2010)

N4183

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 398 OF 2010

BETWEEN:

KARE PUGA DEVELOPMENT CORPORATION
Plaintiff

AND:

JAMES KRUSE
First Defendant

AND:

MADISON ENTERPRISES (PNG) LIMITED
Second Defendant

AND:

MINERAL RESOURCES AUTHORITY
Third Defendant

Waigani: Kariko, J
2010: 12 & 16 August

PRACTICE & PROCEDURE – Joinder of parties – Principles - National Court Rules, O. 5, r. 8.

PRACTICE & PROCEDURE – Application for adjournment – Non appearance by counsel - considerations.

COMPANY LAW – application for leave to continue proceedings against company in liquidation – caveat registered – caveat based on agreement that has ceased to have legal force or effect - serious question to be tried before leave is granted.

Cases cited:

Umapi Luna Pakomeyu v. James Siai Wamo (2004) N2718
AGC (Pacific) Limited v. Sir Albert Kipalan and 4 others (2000) N1944
Giru v Public Officers Superannuation Board (2007) N3155

Counsel:

S Kambe, as representative of plaintiff
I Shepherd, for the first and second defendants
No appearance for the third defendant
M Wilson, for the intervener Puta Gold Limited
L Karri, for the interveners Hetoputa Gold Limited and Ipusa Development Corporation Limited

1. KARIKO J: By order of the National Court on 5 June 2009 James Kruse, the first defendant, was appointed the liquidator for Madison Enterprises (PNG) Limited, the second defendant. The only major asset of this company was the Exploration Licence EL1093 located at Mt Kare, Enga Province (which I will refer to as "EL1093"). An extensive marketing campaign was conducted, an appropriate bidder identified and a contract of sale for a tenement was entered into on 23 June 2010. The transfer of the licence is pending the approval by the Mineral Resources Authority, the third defendant.
   
2. On 12 June 2009, a Simon Kambe, purporting to act for and on behalf of the plaintiff, lodged a caveat with the Registrar of Tenements in respect of EL 1093. The caveat was "to stop the Liquidator from dealing on Licence EL1093". In doing so, Mr Kambe relied on the Mt Kare Joint Venture Agreement but this Agreement was disclaimed by the Liquidator on 6 August 2009.
   
3. By Originating Summons filed 21 July 2010, the Plaintiff seeks a declaration that the defendants have unlawfully dealt with EL1093 and therefore breached the caveat registered over the licence.
   

Application for adjournment

4. The plaintiff filed an amended notice of motion on 28 July 2010 seeking:
   
   • (1) leave of the court to continue these proceedings under section 298 of the Companies Act; and
     
   • (2) a restraining order against the Liquidator from transferring or dealing with EL1093.
     
5. The hearing of this amended notice of motion was previously adjourned twice, the last time on 4 August 2010 upon request by the plaintiff. Mr David Dotaona for the Plaintiff agreed then to the new hearing date of 12 August 2010.
   
6. When the matter was called on 12 August 2010, Simon Kambe representing the Plaintiff asked for an adjournment to allow for the return of Mr Dotaona counsel for the Plaintiff who is away attending a case in the Madang National Court, and asked for at least a week adjournment.
   
7. Mr Shepherd for the first and second defendants opposed the application for adjournment. He argued that the matter had been adjourned twice already; and Mr Dotaona agreed to the date adjourned to, knowing he had this other trial in Madang. Further, Mr Shepherd submitted that any injunction would prejudice the liquidator in that it would delay progress in the administration of the estate of the company in liquidation.
   
8. Lawyers are expected as professionals to maintain a diary, an appointment book or the like to note court commitments and to avoid conflict or clashes in those commitments. If such conflicts or clashes arise, then they must be properly attended to. Counsels should not just send clients to adjourn cases on the day of their hearings. In this matter now, Mr Dotaona would have known about the trial in Madang. In fact, on 6 August 2010 he requested for the hearing of another case before me to be adjourned to 23 August 2010 when he advised he should be back from Madang. I therefore refuse the application by the plaintiff for adjournment until the return of Mr Dotaona from Madang.
   

Applications for joinder

9. I also heard from counsels for various parties on their clients' applications pursuant to Order 5 rule 2 of the National Court Rules to join the proceedings as defendants - Puta Gold Limited, a shareholder of the plaintiff; and Hetoputa Gold Limited and Ipusa Development Corporation Limited, landowner companies from the EL1093 area.
   
10. The principles on joinder have been clearly established in this jurisdiction by case authorities including Umapi Luna Pakomeyu v. James Siai Wamo (2004) N2718 and AGC (Pacific) Limited v. Sir Albert Kipalan and 4 others (2000) N1944. These principles are:
    
    • (1) An applicant must have sufficient interest in the proceedings;
      
    • (2) The joinder as a party is necessary to ensure that all issues can be properly decided.
      
11. In the respective notices of motion for joinder, the applicant Puta Gold Limited challenges the authority of Simon Kambe purporting to represent the directors/members of the Plaintiff, while the other two landowner companies challenge the plaintiff's right to hold itself out as representing the landowners of the Mt Kare area.
    
12. As shareholder of Kare Puga Development Corporation Limited, I accept that Puta Gold Limited has sufficient interest. As landowner companies of Mt Kare, I accept Hetoputa Gold Limited and Ipusa Development Corporation Limited also have sufficient interest in the proceedings. As I understand, all these applicants for joinder do not oppose the liquidator carrying out his duties including the sale of EL1093, and as stated earlier only question or challenge the right or authority of Kare Puga Development Corporation Limited in instituting these proceedings. And while there has also been no objection to the applications for joinder, I am unable to find how the joinders sought will enable all the issues to be properly or fully determined. The issues in these proceedings concern the effect of the caveat under the Mining Act against the liquidator's duties and powers under the Companies Act. The plaintiff seeks a declaration that the transfer of EL1093 is in breach of the caveat. I therefore refuse the applications by Puta Gold Limited, Hetoputa Gold Limited and Ipusa Development Corporation Limited to join the proceedings.
    

Application to dismiss

13. Mr Shepherd in objecting to the adjournment sought by the plaintiff also submitted that the plaintiff's application be dismissed, as any restraining order would serve no purpose as a caveat is in place, and there is in any case no cause of action established in the Originating Summons.
    
14. I accept these submissions.
    
15. The plaintiff has a caveat registered over the exploration licence which must lapse or be removed before any transfer can be registered. Such expiration or removal of a licence can only happen pursuant to section 129 of the Mining Act:
    

129. Duration and effect of a caveat.

(1) A caveat shall lapse and cease to have effect upon—

(a) any order of the National Court for its removal; or

(b) its withdrawal by the caveator or his agent; or

(c) the expiry of a period of 14 days after notification, that application has been made for the registration of a transfer or other instrument affecting the subject matter of the caveat, has been sent by the Registrar by registered post to the caveator at the address for service given in the caveat, unless within that period the National Court otherwise orders.

(2) No transfer or other instrument affecting a tenement the subject of a caveat shall be registered while the caveat remains in force.

16. The caveat is based on the Mt Kare Joint Venture Agreement. This agreement ceased to have any legal force or effect upon the disclaimer by the liquidator. There is no cause of action. And therefore there is no serious question to be tried, which is the appropriate standard to be met in order for leave to be granted for a plaintiff to continue proceedings against a company in liquidation. See Giru v Public Officers Superannuation Board (2007) N3155. The plaintiff is therefore refused leave to continue these proceedings.
    
17. Relevant parts of section 298 Companies Act read:
    

298. Effect of commencement of liquidation.

(1) With effect from the commencement of the liquidation of a company—

.......

(c) unless the liquidator agrees or the Court orders otherwise, a person shall not—

(i) commence or continue legal proceedings against the company or in relation to its property; or

.......

18. As the plaintiff has neither the consent of the liquidator or the leave of court to continue these proceedings under section 298 of the Companies Act, the proceedings must be dismissed.
    

Orders

19. Orders of the court are:
    

(1) The application by the plaintiff for adjournment of the hearing of its amended notice of motion filed 28 July 2010 is refused.

(2) The applications by Puta Gold Limited, Hetoputa Gold Limited and Ipusa Development Corporation Limited to join the proceedings are refused.

(3) The amended notice of motion filed 28 July 2010 by the plaintiff is dismissed.

(4) These proceedings OS No. 398 of 2010 are dismissed.

(5) The plaintiff shall pay the costs of the defendants.

__________________________________

Dotaona Lawyers: Lawyer for the plaintiff
Blake Dawson Waldron: Lawyer for the first and Second Defendants
In-house counsel, Mineral Resources Authority: Lawyer for the Third Defendants

Warner Shand Lawyers: Lawyer for intervener, Puta Gold Limited
PNG Legal Services Lawyers: Lawyer for interveners, Hetoputa Gold Limited and Ipusa Development Corporation Limited