Kulgmump v Kop [2019] PGNC 210; N7940 (12 August 2019)

N7940

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 230 OF 2019 (COMM)

BETWEEN
KULGMUMP LIMITED, KUPUT LIMITED, ELTIMP LIMITED, KAULI LIMITED, KUND MUGMULG LIMITED & PALIMP LIMITED all shareholders of Moge Nambuga Milimb Investments Limited
Plaintiff

AND
JACOB KOP as Chairman and Director of Moge Nambuga Milimb Investments Limited
First Defendant

AND
AKAI KUP OGUT as Secretary of the Board of Moge Nambuga Milimb Investments Limited
Second Defendant

AND
KIAU KAIPA, JOHN NEVILLE, CLETUS NIGINTS, PALAWA NINJI, PAULUS PALME, RAPHAEL RAEM & JOHN ANIS NAPIL as Directors of Moge Nambuga Milib Investments Limited
Third Defendant

Waigani: Anis J
2019: 6 & 12 August

MOTION – Section 155(4) of the Constitution - consolidation and transfer of proceedings – whether proceedings related – whether decisions made by the Court in present proceeding will impact or prejudice the outcome of the earlier proceeding

Cases Cited:

Daniel Bali Tulapi v. Aiya James Yapa (2013) N5235
Masket Iangalio v. Electoral Commission and Ors (1998) SC568

Counsel:

Mr Nicholas Tame, for the Plaintiffs
Mr Henry Pora, for the Defendants

RULING

12^th August, 2019

1. ANIS J: I dealt with 3 applications at 1:30pm on 6 August 2019. Of the 3, 1 was contested and it was argued in full in Court. That was the defendants’ notice of motion filed on 7 May 2019 (motion). I reserved my ruling on the motion to today at 1:30pm.

2. This is my ruling.

MOTION

3. The defendants initially sought a total of 14 relief in its motion. At the hearing and after various exchanges between the parties and the Court, the defendants agreed to pursue 3 of the relief plus cost. The 3 relief are, and I quote:

8. Pursuant to Section 155(4) of the Constitution, this proceeding and Originating Summon No. 502 of 2018 be consolidated.
9. Consequently, Pursuant to Section 155(4) of the Constitution this matter be transferred to the Mount Hagen National Court to be determined together with OS No. 502 of 2018.

.....

11. Pursuant to Section 19 of the Supreme Court this proceeding be stayed pending determination of the appeal in SCA No. 56 of 2019.
    

ISSUES

4. The main issue is whether there are reasonable grounds to show that this proceeding and proceeding OS 502 of 2018 should be heard together and therefore be consolidated. Subject to the Court’s determination of the first issue, the next issue is whether this proceeding should be transferred to the Mt Hagen National Court.

CONSOLIDATION

5. Let me refer to case law for assistance on whether the proceedings should be consolidated. Chief Justice Sir Salamo Injia, in the case, Daniel Bali Tulapi v. Aiya James Yapa (2013) N5235, stated at paragraph 5 of his decision, and I quote:

5. A consolidated hearing of two or more causes of action is usually ordered or directed by the Court where there are similarities in the causes of action, the issues of fact and law, the parties’ interests their desired case outcomes; such that it is desirable that the actions should be disposed of at the same time. The main purpose of a consolidated hearing is that it saves time and costs: Payne v British Time Recorder Co. [1992] 2 K.B 1 at 16. The terms upon which the consolidation ordered should set the procedural platform for the manner in which the proceedings are conducted and those terms may vary from case to case.

6. Justice Los stated in the case, Masket Iangalio v. Electoral Commission and Ors (1998) SC568, and I quote:

There is no absolute prohibition against consolidation. But the issue must be properly brought before the court with appropriate and sufficient notice to other parties. A judge before whom an application is made to consolidate certain actions, must consider the facts, practicalities and circumstances of the cases sought to be consolidated. If any two matters for instance cannot be consolidated, they could be heard consecutively.

7. I find the considerations in the 2 cases relevant and I adopt them herein. I also note that the Court’s power is discretionary and factors to be considered are not exhaustive. In my opinion, the relevant factors should be dependent upon the circumstances of each case.

PROCEEDING OS 502 of 2018

8. Let me firstly consider the parties in this proceeding (i.e., OS 230 of 2019) with the parties in proceeding OS 502 of 2018.

9. There are 3 plaintiffs in OS 502 of 2018. They are, Moge Nambuga Milimb Investments Limited (MNMI Limited) as the first plaintiff, Palimp Limited as the second plaintiff and Palawi Ninji as the third plaintiff. Tom Maip is the first defendant and Mcqueenie Waia is the second defendant. The plaintiffs there allege as follows. They claim that MNMI Limited is the parent or holding company of 10 subsidiary or trust companies who hold shares or units on behalf of group of individuals who come from villages within Western Highlands Province in Papua New Guinea. The exact composition of MNMI Limited and its 10 subsidiary or trust companies appears to be contested in proceeding OS 502 of 2018 so I will not dwell further into that at this point in time except give a general over view as I have done here. I will of course leave that to the trial Court to address at an appropriate time. The plaintiffs in OS 503 of 2018 are suing the defendants in relation to one of its shareholding companies, namely, Palimp Limited. They allege that defendant Tom Maip who was the trustee shareholder in the said company had, amongst others, fraudulently sold the trust shares which he had held in Palimp Limited, to the second defendant Mcqueenie Waia. They want, amongst other things, for these shares to be restored back to their intended purpose or back to their original status.

10. In this proceeding, the plaintiffs consist of 6 of the 10 shareholding companies of MNMI Limited. One of the plaintiff is Palimp Limited. The 6 co-plaintiffs are suing the executives of MNMI Limited. They want, amongst other things, for the Court to order the defendants to, pursuant section 104(1) of the Companies Act 1997 (the Companies Act), conduct a shareholders meeting of MNMI Limited. They are alleging that no such meetings were ever held in decades and as such, they seek the Court’s intervention which they say is warranted under the circumstances.

ARE THE PROCEEDINGS RELATED? WILL PROSECUTION OF ONE WITHOUT THE OTHER CAUSE PREJUDICE?

11. I had queried both counsel whether prosecution of this proceeding would or may prejudice the parties’ rights in proceeding OS 502 of 2018. Both counsel gave contrary views. For the plaintiffs, counsel submitted that the issues were separate and as such this matter should proceed to trial without delay and without having to transfer it to Mt Hagen. For the defendants, counsel submitted that the proceedings were related and should be dealt with together. Counsel submitted that if this proceeding goes ahead, it would affect the related proceeding namely OS 502 of 2018.

12. Both counsel also gave some detailed background of MNMI Limited in relation to its formation, information on an appeal that is pending from an injunction that has been obtained by MNMI Limited against the defendants in proceeding OS 502 of 2018, and other reasons in support of their arguments.

13. I have considered the submissions of the parties. I will now make a ruling. I note firstly that both counsel act for the same parties or for parties that have the same opposing interests in this proceeding as well as in proceeding OS 502 of 2018. The second consideration is this. I note that proceeding OS 502 of 2018 was filed first in time than this proceeding. The third consideration is this. I note that relief sought in this proceeding are not necessarily the same as those sought in proceeding OS 502 of 2018. Having said that, I note similarities therein which may be explained as follows. In proceeding OS 502 of 2018, the plaintiffs therein challenge the validity of the transfer and acquisition of shares between the first and second defendants. In this proceeding, 6 of the shareholders including Palimp Limited who is the subject of controversy in proceeding OS 502 of 2018, want the Court to, amongst others, order a shareholders’ meeting pursuant to section 104(1) of the Companies Act. These, in my view, connects the 2 proceedings and I believe that they should be dealt with together, or if not, proceeding OS 502 of 2018 should be dealt with first in time before this proceeding. Let me further explain my reasoning. Palimp Limited is one of the shareholders named as a co-plaintiff in this proceeding. MNMI Limited, as the parent company, is challenging the ownership of Palimp Limited. I note from evidence filed herein that MNMI Limited is also challenging ownership of shares that had been transferred to Palimp Limited from the other co-plaintiffs herein namely Kulgmump Limited, Eltimp Limited, Kauli Limited and Kund Mugmulg Limited. In other words, the defendants in OS 502 of 2018, whose interests are being challenged in the companies they claim to own or once own, have used these same companies to file this proceeding separately to ask for relief, amongst others, under section 104 of the Companies Act. This therefore leads me to ask this question. Should it not then be logical that the controversies surrounding the acquisition of shares in the 10 shareholding or trust companies of MNMI Limited as well as the legal structure of MNMI Limited and its shareholding or trust companies, be determined first before anything else including what the plaintiffs are now seeking in this proceeding? To me, I find that to be the case, that is, that proceeding OS 502 of 2018 should be dealt with first or otherwise together with this proceeding.

14. Let me summarise by saying this. In the present proceeding, the 6 co-plaintiffs’ legal status or shareholdings have been questioned by MNMI Limited in proceeding OS 502 of 2018, that is, particularly in relation to how shares had been transferred from 6 or so out of the 10 shareholding or trust companies of MNMI Limited, to Mr Mcqueenie Waia. In my view, this has to be addressed first and settled before anything else. For example, it raises questions of standings for the 6 plaintiffs in this proceeding and it seems that the only way these can be determined is for the National Court to first of all hear and determine the issues in proceeding OS 502 of 2018. I also note that the defendants in proceeding OS 502 of 2018 appear to question the legal set-up or framework of MNMI Limited, particularly in terms of what type of shares are held in the 6 or if not the 10 shareholding companies under MNMI Limited. To me, these may be valid issues that should also be resolved first in proceeding OS 502 of 2018.

SUMMARY

15. For these reasons, I am inclined to grant 2 of the 3 relief that are sought in the defendants’ motion, that is, I am inclined to transfer and consolidate this proceeding with proceeding OS 502 of 2018.

16. Relief 3 seeks to stay this proceeding with the Supreme Court proceeding, that is, SCA 56 of 2019. I find the relief to be defeated or futile based on the orders that I will make. I also note that if a stay is required, it should be sought in the now consolidated proceeding at the Mt Hagen National Court. The third reason why I decline to grant the third relief is because the defendants are asking this Court to invoke section 19 of the Supreme Court Act Chapter No. 37. I will say that only the Supreme Court, and not the National Court, has jurisdiction to or may invoke, section 19.

COST

17. Cost is discretionary. I will order cost to follow the event on a party/party basis to be taxed if not agreed.

THE ORDERS OF THE COURT

18. I make the following orders:

1. This proceeding shall be transferred to the Mt Hagen National Court where it shall be consolidated with proceeding OS 502 of 2018.
   
2. The plaintiffs herein shall pay the defendants’ costs of their application on a party/party basis which may be taxed if not agreed.
   
3. Time for entry of these orders is abridged to the date of settlement by the Registrar of the National Court which shall take place forthwith.
   

The Court orders accordingly.
_________________________________________________________________
Nicolas Tame Lawyers: Lawyers for the Plaintiffs
Simon Norum & Co Lawyers: Lawyers for the Defendants