Yaga v Sallel [2011] PGNC 322; N4253 (15 April 2011)

N4253

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO 369 OF 2010

DAVID YAGA AS KIN OF YAGA POMIAK
FOR HIMSELF AND ON BEHALF OF FIVE OTHER PLAINTIFFS PER THE SCHEDULE OF PLAINTIFFS
Plaintiff

V

ANDREW SALLEL, BATENG PUTO, BAWAN BULUM,
JONAH DEMBI, USAM MAI, YANAM MUL & PHILIP WARINIKI
First Defendants

RAIKOS HOLDINGS LIMITED
Second Defendant

Madang: Cannings J
2010: 22 October
2011: 15 April

INJUNCTIONS – interim injunctions – orders for interim preservation of property – National Court Rules, Order 14, Rule 10.

The plaintiff, representing himself and others who claim to be the proper shareholders and directors of a company, commenced proceedings by originating summons seeking declarations and orders that would see the Register of Companies rectified to reflect their proper positions in the company. After commencement of the proceedings the plaintiff applied by motion for orders in the nature of interim injunctions, pending determination of the substantive proceedings, that the first defendants be restrained from holding themselves out as shareholders, directors or officers of the company and that all money payable to the company in respect of the logging operations on a timber rights purchase area over which it holds a permit be put on hold. The first defendants argued that the court should not entertain the motion as it had not been served on all defendants, the provisions of the National Court Rules relied on by the plaintiff did not support the orders sought, the plaintiff lacked standing and the entire proceedings were an abuse of process. In the event that the court entertained the motion the first defendants argued that it should be dismissed as it lacked merit.

Held:

(1) None of the preliminary points raised by the first defendants warranted the court not entertaining the motion so the court proceeded to address the merits of the motion.

(2) The primary considerations to be taken into account when the court decides how to exercise its discretion whether to grant an interim injunction are: (a) are there serious questions to be tried and does an arguable case exist? (b) has an undertaking as to damages been given? (c) would damages be an inadequate remedy if the interim order is not granted? (d) does the balance of convenience favour the granting of the interim order? (e) do the interests of justice require that the interim order be made?

(3) If all considerations are in the affirmative it will generally be the case that an interim injunction should be granted. Failure to satisfy one or more of the criteria will work in favour of refusing the injunction.

(4) Here: (a) there are serious questions to be tried and the plaintiff has a serious, not merely speculative, case, with a real possibility of ultimate success; and (b) an undertaking as to damages has been given. Those factors favour granting the injunction.

(5) However: (c) damages would be an adequate remedy; (d) the balance of convenience does not favour granting an injunction in the terms sought and (e) the interests of justice do not require that the injunction be granted, given the delay by the plaintiff in seeking it and the circumstances in which, in separate proceedings, similar claims by persons with similar interests to those of the plaintiff against the same defendants were dismissed.

(6) As three of the five considerations do not favour its granting, an injunction in the terms sought by the plaintiff was refused.

Cases cited

The following cases are cited in the judgment:

Chief Collector of Taxes v Bougainville Copper Ltd (2007) SC853
Ewasse Landowners Association Inc v Hargy Oil Palms Ltd (2005) N2878
Gawan Kuyan v Andrew Sallel (2008) N3376

Counsel

S Toggo, for the plaintiffs
T Anis, for the defendants

15 April, 2011

1. CANNINGS J: This is a ruling on an application by the plaintiff, David Yaga and others, for an interim injunction concerning the affairs of a landowner company, Raikos Holdings Ltd.

2. Raikos is the permit holder for the Rai Coast TRP, issued under the Forestry Act in 1990. It has since 2005 had a logging and marketing agreement with a foreign company called Porche Enterprise Ltd, which was renewed in 2007. There have over the years been a number of disputes in the ranks of the directors and shareholders of Raikos. One of those disputes led to court proceedings that resulted in a ruling favouring the first defendants, Andrew Sallel and others (Gawan Kuyan v Andrew Sallel (2008) N3376).

3. In the present proceedings the plaintiff and the people he represents claim to be the proper shareholders and directors of Raikos. They claim that the first defendants improperly acquired their shareholdings and directorships under an unlawful meeting held on 22 October 2004. They acknowledge that the first defendants had their positions in the company endorsed by the court's orders in Gawan Kuyan v Andrew Sallel (2008) N3376. However they claim that since those orders were made there has been a shareholders meeting conducted at Mot Place, Madang on 25 July 2009, which passed a number of resolutions to the effect that they become the shareholders and directors of the company and that the first defendants be removed from their positions in the company. They claim that the Registrar of Companies is reluctant to rectify the Register of Companies in the absence of a court order. Hence they seek, in the substantive proceedings, various declarations and orders that would see the Register of Companies rectified to reflect their proper positions in the company.

4. After commencement of the proceedings the plaintiff applied by motion for orders in the nature of interim injunctions, pending determination of the substantive proceedings. The injunctions are twofold:

• First, that the first defendants be restrained from holding themselves out as shareholders, directors or officers of the company.
  
• Secondly, that all money payable to the company in respect of the logging operations on the timber rights purchase area over which it holds a permit be put on hold. This would result in a temporary freeze on amongst other things the levy fees that are payable by Porche to Raikos under the logging and marketing agreement between the two companies.
  

PRELIMINARY ISSUES

5. The first defendants argued that the court should not entertain the motion as it had not been served on all defendants, the provisions of the National Court Rules relied on by the plaintiff (Order 14, Rule 10) did not support the orders sought, the plaintiff lacked standing and the entire proceedings are an abuse of process.

6. I am not persuaded by any of these preliminary points that the court should decline to hear the motion, so I will deal with it on its merits. Though two quite distinct orders are sought, the applications for both of them can be dealt with together.

RELEVANT CONSIDERATIONS

7. The primary considerations to be taken into account when a person seeks an interim injunction were confirmed by the Supreme Court in Chief Collector of Taxes v Bougainville Copper Ltd (2007) SC853 as being:

(a) are there serious questions to be tried and does an arguable case exist?

(b) has an undertaking as to damages been given?

(c) would damages be an inadequate remedy if the interim order is not made?

(d) does the balance of convenience favour the granting of interim relief?

(e) do the interests of justice require that the interim injunction be granted?

8. Those considerations have been set out so that a 'yes' answer will be a factor weighing in favour of granting an interim injunction and a 'no' answer will work against making such an order.

(a) ARE THERE SERIOUS QUESTIONS TO BE TRIED AND DOES THE PLAINTIFF HAVE AN ARGUABLE CASE?

9. This requires the Court to make an assessment of the prospects of success of the plaintiff's substantive action by looking at the originating process (in this case, the writ of summons) and the evidence that has been adduced to date. The issue is not simply whether the plaintiff has raised serious allegations, but whether the plaintiff appears to have a reasonable prospect of succeeding in the substantive case (Ewasse Landowners Association Inc v Hargy Oil Palms Ltd (2005) N2878). Put another way, the court assesses whether there are serious questions to be tried and the plaintiff has a serious, not merely speculative, case, with a real possibility of ultimate success.

10. I have concluded after assessing the material filed by both the plaintiff and the first defendants that there are serious questions to be tried and the plaintiff has a serious, not merely speculative, case, with a real possibility of ultimate success. The plaintiff claims that the 2004 meeting, which led to the first defendants having their present positions in the company was unlawful, and more importantly, that the 2009 meeting had the effect of removing them from those positions. I am not satisfied, at this stage, that the plaintiff's case is hopeless or that the case he wishes to prosecute is foreclosed by the 2008 decision of the court in Kuyan v Sallel or that the issues are res judicata.

(b) HAS AN UNDERTAKING AS TO DAMAGES BEEN GIVEN?

Yes.

(c) IF AN INTERIM INJUNCTION WERE NOT GRANTED, WOULD DAMAGES BE AN INADEQUATE REMEDY?

11. What will happen if the injunction is not granted, but it turns out the plaintiff succeeds at the trial and proves that the first defendants have been improperly holding shares and directorships? Would damages be an inadequate remedy?

12. The answer is no. The plaintiff and his group could in my view be adequately compensated with an award of damages.

(d) DOES THE BALANCE OF CONVENIENCE FAVOUR THE GRANTING OF THE INJUNCTION?

13. As I said in Ewasse Landowners Association Inc v Hargy Oil Palms Ltd (2005) N2878 this requires the court to ask: what is the best thing to do on an interim basis taking into account the conflicting interests? What will happen if an injunction is not granted? What will happen if the injunction is granted? Who will suffer the greatest inconvenience or prejudice?

14. If an injunction is not granted, Raikos will continue as it has done at least since the 2008 decision of the court in Kuyan v Sallel, under which Mr Sallel is expressly recognised as managing director of the company and the shareholders and directors of the company are clear. If an injunction is granted, there will be a very significant change in ownership and control of the company, which would inevitably be confusing and may lead to further litigation. I think the best thing is to preserve the status quo.

Question (d) is answered no.

(e) DO THE INTERESTS OF JUSTICE REQUIRE THAT THE INJUNCTION BE GRANTED?

15. I do not think so. The internal affairs of Raikos have been contentious over many years. Allied to what I said about the balance of convenience, I consider that it is not in the interests of the company to have a further chopping and changing of shareholders and directors on an interim basis.

16. The issue of delay also works against the plaintiff. He wants to argue that decisions made at a meeting held more than six years ago were unlawful. Then he wants to argue that a meeting held almost 12 months before the commencement of these proceedings was lawful and that the decisions made at it should be given effect.

17. It may be that at a trial these delays can be explained satisfactorily. But for present purposes they are significant matters, which help persuade me that the interests of justice require that both interim injunctions be refused.

Question (e) is answered no.

CONCLUSION

18. Summing up the five considerations: (a) there are serious questions to be tried and the plaintiff has a serious, not merely speculative, case, with a real possibility of ultimate success; and (b) an undertaking as to damages has been given. Those factors favour granting the injunction.

19. However: (c) damages would not be an inadequate remedy; (d) the balance of convenience does not favour granting injunctions in the terms sought; and (e) the interests of justice do not require that either injunction be granted.

20. As three of the five considerations do not favour the plaintiff's case, injunctions in the terms sought will be refused.

21. As to costs, as the plaintiff's motion has failed, it is appropriate that he bear the first defendant's costs.

ORDER

(1) All relief sought in the plaintiff's notice of motion filed on 21 September 2010 is refused.

(2) The plaintiff shall pay the first defendant's costs of the motion, on a party-party basis, to be taxed if not agreed.

(3) Time for entry of this order is abridged to the date of settlement by the Registrar which shall take place forthwith.

Ruling accordingly.

____________________________
Daniels & Associates: Lawyers for the Plaintiff
Blake Dawson Lawyers: Lawyers for the Defendants