Mahuke v Maipakai [2018] PGNC 311; N7422 (5 June 2018)

N7422

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OSNO: 71 OF 2018 (CC1)

BETWEEN
KEII MAHUKE as Director and Chairman of GOPERA INVESTMENTS LIMITED
First Plaintiff

AND
GOPERA INVESTMENTS LIMITED
Second Plaintiff

AND
MARK IVI MAIPAKAI
First Defendant

AND
MALIS MININGI as Deputy Registrar Legal Compliance for Investment Promotion Authority
Second Defendant

Waigani: Dingake J
2018: 22^nd May & 5^th June

PRACTICE AND PROCEDURE – Interim Injunctive relief – Allegation of fraud and criminality – Application refused.

Cases Cited:
Papua New Guinea Cases

Ewasse Landowners Association Incorporated v Hargy Oil Palms Limited (2005) N2878;
Employers Federation of Papua New Guinea v Papua New Guinea Workers and Seamen’s Union 1982 PGNC 24 N393;
Mount Hagen Air Port Hotel Pty Ltd v Gibbes (1976) PNGLR 216.

Overseas Cases

American Cynamid Company v Ethicon Ltd [1975] UKHL 1; (1975) AC 396

Counsel:

Mr. Mokawau Mukwesipu, for the Plaintiff
Mr. David Mamu, for the Defendants

5^th June, 2018

1. DINGAKE J: This is an application for an interim injunction to be granted, restraining the defendants, their servants, agents or employees from dealing with the current records for Gopera Investments Limited as held by the third defendant pending determination of these proceedings or until further order from the Court.
2. The applicants also seek an order restraining the first defendant from intimidating, interfering or issuing threats against the plaintiffs, their servants and agents and all the officers, Directors, Shareholders, business partners and Investors of Gopera Investments Limited or taking any action whatsoever relating to the business of the second plaintiff, including giving instructions to third parties, pending resolution of the substantive matter or until further orders from the Court.
3. The application is brought in terms of Order 12 Rule (1) of the National Court Rules and Section 155(4) of the Constitution.
4. The applicants rely, for the relief sought, on the affidavit of Mr. Keii Mahuke, sworn on the 11^th of February, 2018 and eight (8) other affidavits by directors and shareholders of the second plaintiff, sworn on the 11^th February, 2018 and thereafter, the latest being that one of Mr. Tom Arugu sworn on the 20^th of April, 2018.
5. The first defendant Mr. Mark Ivi Maipakai, who is opposing the application, filed an affidavit in support of his opposition on the 4^th of June, 2018. The affidavit was filed late. The applicants did not seek an adjournment to consider the affidavit. In the circumstance no prejudice would result from taking it into account.
6. I have read all the affidavits filed by the plaintiff’s and first defendant.
7. At the heart of this dispute is a fight over the control of the governance and or operations of the second plaintiff, a registered company, in terms of the Companies Act. Essentially, the fight or disagreement amongst the Directors and or Shareholders, is over the alleged removal of Mr. Maipakai as the Chairman and Director of the second plaintiff.
8. Mr. Mahuke claims to be the new Chairperson having been so elected at a meeting of Directors held on the 17^th of August, 2017.
9. On the other hand Mr. Maipakai, claims to be the legitimate Director and Chairman of the second plaintiff.
10. The applicants did not attach the Constitution of the second plaintiff because it could not be found. The absence of a Constitution leaves the Court with the Companies Act to apply in this proceedings.
11. The parties’ factual averments relating to the alleged removal of the first defendant as Chairperson of the second plaintiff differ considerably, in that the applicants aver that the first defendant’s removal was lawful, whilst the second defendant says it was illegal.
12. The plaintiffs (applicants) aver that, on the 10^th of August, 2017, Mr. Keii Mahuke in his capacity as Director of the second plaintiff, pursuant to consent of all Directors, gave notice to the second defendant of a Directors’ Meeting.
13. The letter is dated the 10^th of August, 2017 and it informs Mr. Maipakai that the Board of Directors meeting of the company will be held on the 17^th of August, 2017, at 2:00pm. It also states the business or agenda of the meeting, which included the election of the company’s new Chairman and Deputy Chairman.
14. The letter was apparently sent to Post Office Box 378, Badili, National Capital District, which is the address that appears in the Company records.
15. The manner in which the letter was ‘sent’ is not clear. In other words it is not clear whether it was sent by ordinary post or by registered post. There is no evidence that Mr. Maipakai received the letter and if so, when he received it.
16. The Companies Act 1997 does not shed light on how notices to the Directors should be effected.
17. On or about the 1^st of September, 2017, Mr. Mahuke and other Directors held a meeting, whereat, among other things, a resolution was passed to allocate new shares.
18. It would also seem that the second plaintiff now under the Chairmanship of Mr. Mahuke, on the 16^th of September, 2017, convened another meeting to remove the first defendant as a Director of the second plaintiff.
19. On the 28^th October, 2017, Mr. Maipakai, commenced Court proceedings as a shareholder in OS No. 836 of 2017 and was able to secure injunctions against the defendants (plaintiffs), but such proceedings were eventually discontinued.
20. It would seem that an attempt by Directors and Shareholders who had elected Mr. Mahuke as Chairperson experienced some problems when they tried to complete forms to reflect new Chairman and Directors as Mr. Maipakai still appears in the official records as Director.
21. Mr. Maipakai, for his part avers that his removal as Chairman and or as Director was illegal.
22. There is documentation filed of record that suggests that the National Fraud and Anti-Corruption Directorate alleges that some Directors were involved in some fraud over the transfer of shares in the second plaintiff with intent to defraud Mr. Maipakai.
23. The grant or refusal of an interim injunction is a discretionary remedy. To obtain such relief this Court must be satisfied that:
    1. There is a serious question to be determined;
    2. That the balance of convenience lies in favour of granting the relief;
    100. That damages would not afford the applicant adequate remedy.

(American Cynamid Company v Ethicon Ltd [1975] UKHL 1; (1975) AC 396; Ewasse Landowners Association Incorporated v Hargy Oil Palms Limited (2005) N2878; Employers Federation of Papua New Guinea v Papua New Guinea Workers and Seamen’s Union 1982 PGNC 24 N393; Mount Hagen Air Port Hotel Pty Ltd v Gibbes (1976) PNGLR 216).

24. In this case there is no positive evidence that the second plaintiff was notified of the meeting scheduled to remove him as Chairperson. Ordinarily, it would offend against the principles of fairness to remove a party as Chairperson and or Director, without any notification or an opportunity to be heard. Failure to give the requisite notice would render the meeting that removed him illegal. In my considered opinion, the possible illegality of the meeting is relevant in considering the balance of convenience and whether the case of the applicant is not speculative.
25. Given the doubtful legality of the meeting that removed the second defendant, on account of the uncertainty over whether requisite notice was given, I am not satisfied that the case of the applicant is not speculative, and that it has real prospect of success and that there is a legal or equitable right, title, or interest which might be jeopardized if the injunctive relief was not granted.
26. This Court should tread carefully in this matter given that serious allegations of fraud and other criminal conduct have surfaced over the affairs of the second plaintiff involving some Directors who participated in the removal of Mr. Maipakai as Chairman and Director, and that the National Fraud and Anti-Corruption Directorate has or intends to criminally charge some Directors. Given all the above considerations, I am of the view that the balance of convenience favour the Pre – 17^th of August, 2017 status quo, in which Mr. Maipakai was Chairman and Director.
27. Additionally, it is unsafe and unwise to resolve issues in which fraud is alleged on affidavit evidence only.
28. In my mind, for one or all of the above reasons, the balance of convenience seem to favour the maintenance of the Pre – 2017 August, 2017 status – quo – that is the status quo that would leave Mr. Maipakai as Chairman and Director of the second plaintiff.
29. In addition to the above there is no sufficient evidence, other than ‘mere saying so’ that the first defendant or his agents or servants ever intimidated and interfered or threatened the Directors, shareholders, agents or investors of the second plaintiff to justify any injunction against him. The evidence, if any, deposed by the applicants, is insufficient to ground an injunctive relief of the nature sought by the applicants.
30. In all the circumstances of this case, the applicants have not satisfied the Court to exercise its discretion in favour of granting the relief sought.
31. In the result, the application is without merit, and it is refused with costs.
    

___________________________________________________________
Mukwesipu Lawyers : Lawyers for the Plaintiff
Adam Ninkama Lawyers : Lawyers for the Defendants