Grand Columbia Ltd v Anis [2020] PGNC 141; N8323 (11 March 2020)

N8323

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 871 OF 2019

GRAND COLUMBIA LIMITED
First Plaintiff/Cross-Defendant

FINANCE CORPORATION LIMITED
Second Plaintiff/ Cross-Defendant

ANTHONY WITHAM
Third Plaintiff/Cross-Defendant

KIEN JOO (ANDY) KUEK
Fourth Plaintiff/Cross-Defendant

ALOIS KINGSLEY
First Cross-Defendant

JOHN KIVUNG
Second Cross-Defendant

-V-

ANDREW ANIS
Defendant/Cross-Claimant

Waigani: Kariko, J
2019: 25^th November
2020: 11^th March

PRACTICE & PROCEDURE – application for summary judgement – part of relief sought - principles– evidence not rebutted – declaratory orders - defamation– injurious falsehoods -whether summary judgement available

PRACTICE & PROCEDURE – application to strike out defence –claims still in dispute

PRACTICE & PROCEDURE – application to dismiss cross-claim – claims for fraud and breach of statutory duties - whether statute-barred – abuse of process

Cases Cited:
Papua New Guinea Cases

Bruce Tsang v Credit Corporation (PNG) Ltd [1993] PNGLR 112
Dep International Private Limited v Ambogo Sawmill Pty Limited [1987] PNGLR 117
Hornibrook Construction Limited v Lihir [1998] PNGLR 53
Julius Pololi v Bryan James Wyborn (2013) N5253
Kimbe Nivani Properties Ltd v Nivani Ltd (2019) SC1842
Rex Paki v MVIL (2010) SC1015
Sali Tagau v Vitus Kais (2018) SC1755

Overseas Cases

Palmer Bruyn & Parker Pty Ltd v Parsons [2001] HCA 69

Legislation

Companies Act 1997
Frauds and Limitations Act 1988
National Court Rules

Counsel

Mr D Katter & Mr C Joseph, for the Plaintiffs/Cross-Defendants
Mr M Phillip, for the Defendant/Cross-Claimant
No appearances for the first and second cross-defendants

DECISION

11^th March, 2020

1. KARIKO, J: The plaintiffs have moved pursuant to their Notice of Motion filed 1^st November 2019, for:

• Summary judgement in respect of part of its claims against the defendant.
• Judgement on admissions in respect of part of its claims against the defendant.
• The defendant’s defence to be struck out and his cross-claim dismissed.
• The balance of the plaintiff’s claims to be set down for directions hearing to progress to trial.
• Costs of the motion.
  

2. While the competency of the Notice of Motion was challenged for not citing the concise jurisdictional basis for the applications, I reject the objection for reasons that the relevant provisions of the National Court Rules are cited, the defendant has not been left confused as to the nature of the applications, and he has therefore not been prejudiced in preparing his case.

Brief background

3. In their Statement of Claim, the plaintiffs plead that:

• Grand Columbia Limited (Grand Columbia) is the sole shareholder of Finance Corporation Limited (Fincorp).
  
• Anthony Witham (Witham) is a director of Grand Columbia and was a previous director of FinCorp.
  
• Kien Joo (Andy) Kuek (Kuek) is the majority of the two shareholders of Grand Columbia and is a director of both plaintiff companies.
  

4. The defendant alleges that he was fraudulently removed as a shareholder and director of Grand Columbia and Fincorp and that he has suffered substantial financial loss as a result. These assertions have been published to the public (including through letters sent to various institutions such as the Investment Promotion Authority and the Bank of Papua New Guinea), while criminal investigations have been commenced by the Police upon the defendant’s complaints of the alleged fraud.

5. The plaintiffs deny the allegations stating that the defendant is not and has never been a director or shareholder of the plaintiff companies. They counter that the false allegations have caused them damages, including loss of reputation and business.

6. In their Statement of Claim, the plaintiffs seek the following relief:

1. A declaration that the defendant is not and has never been a shareholder of Grand Columbia Limited (1-17750).
2. A declaration that the defendant is not and has never been a director of Grand Columbia Limited (1-17750).
3. A declaration that the defendant is not and has never been a shareholder in Finance Corporation Limited (1-14333).
4. A declaration that the defendant is not and has never been a director of Finance Corporation Limited (1-14333).
5. A declaration that the defendant has never had any delegation of power whatsoever by the first plaintiff pursuant to section 111 of the Companies Act 1997 or at all.
6. A declaration that the defendant has never had any delegation of power whatsoever by the second plaintiff pursuant to section 111 of the Companies Act 1997 or at all.
7. A permanent injunction restraining the defendant, his servants, agents and/or representatives from communicating that he is or has been at any time an office holder, director, secretary and/or shareholder or that he has had a delegated power of the first plaintiff.
8. A permanent injunction restraining the defendant, his servants, agents and/or representatives from communicating that he is or has been at any time an office holder, director, secretary and/or shareholder or that he has had a delegated power of the second plaintiff.
9. Further to 1-8 above, damages to the first and/or second plaintiffs for injuries falsehood to be assessed.
10. Further to 1-9 above, damages to the third and/or fourth plaintiffs for defamation to be assessed.
11. Interest pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act 2015.
12. That the defendant pays the plaintiffs’ costs on a solicitor/client or full indemnity basis, or alternatively that the defendant pays the plaintiffs’ costs to be assessed on the standard basis.
    

7. The defendant has filed a Defence and Cross-claim in which he pleads that he was the majority shareholder and director of three companies, Jugami No.18 Limited (Jugami 18), Mabella No. 88 Limited (Mabella 88), and Blue Chip No. 15 Limited (Blue Chip 15),which were incorporated and operated in partnership arrangement between him and Kuek. He alleges that they both established Grand Columbia as a holding company for the other three companies, but somehow, the assets of Jugami18 was fraudulently transferred to Grand Columbia, while he was fraudulently removed as director and shareholder of Mabella 88, and Blue Chip 15. His shares in Blue Chip 15 were unlawfully transferred to the first and second cross-defendants. He claims that Kuek intentionally failed to lodge annual returns of these companies, in breach of his “fiduciary duties” as a director, thereby causing the three companies to be de-registered. He seeks damages as the principal relief.

Issues

8. The main issues for determination are:

(1) whether this is an appropriate case for the entry of summary judgement against the defendant or judgement on the alternative ground, in relation to relief sought numbered 1-9;

(2) whether the Defence should be struck out; and

(3) whether the cross-claim is tenable.

Law on summary judgement

9. The Court’s power to enter summary judgement under O12 r38 National Court Rules is a discretionary one. The relevant principles in considering summary judgement are well settled in this jurisdiction. In the case of Hornibrook Construction Limited v Lihir [1998] PNGLR 53 for example, Sevua, J stressed that:

“There are two elements involved in this rule:

(a) evidence of the facts proving the essential elements of the claim; and

(b) that the plaintiff or some responsible person gives evidence that in his belief there is no defence.

As to the second element, the plaintiff must show in absence of any defence or evidence from the defendant that in his belief, the defendant has no defence. If a defence is filed or evidence is given by the defendant, as in this case, the plaintiff must show that, upon the facts and/or the law, the defendant has no defence. The plaintiff will not be entitled to summary judgment if there is a serious conflict on questions of fact or law. Whether a case should go to trial on these issues will be determined on the facts of each case.” (My underlining)

10. Order 12 r38(1) permits the Court to enter summary judgement on part of the relief claimed by a plaintiff.

11. Summary judgement should be declined if there is a serious conflict on questions of fact or law; Bruce Tsang v Credit Corporation (PNG) Ltd [1993] PNGLR 112.

Submissions

12. The plaintiffs seek summary judgement in relation to relief numbered 1-9 in their Statement of Claim.

13. However, the defendant has urged the Court against that, arguing that O12 r37 does not permit the entry of summary judgement where a plaintiff’s claim is for defamation or where it alleges fraud. This submission is misconceived, because judgement sought in this application is not in respect of the claim for defamation. That claim will progress to directions hearing for a full trial. Further, O12 r37 refers to a plaintiff’s claim based on fraud, whereas in the present case, fraud is being alleged by the defendant. In the circumstances, O12 r37 does not assist the defendant.

14. The plaintiffs based their submissions largely on filed copies of relevant company records of Grand Columbia and Fincorp maintained by the Registrar of Companies. Those documents disclose the initial shareholders and directors of both these companies from:

• its incorporation (in the case of Grand Columbia); and
• from Grand Columbia becoming a shareholder (in the case of Fincorp).
  

15. None of these records mention or refer to the defendant at all, let alone as a shareholder or as a director.

16. The defendant insists he was a founding shareholder and director of both companies and was removed from those positions by fraud as that was done without his knowledge or consent. However, he has not produced any evidence that properly rebuts the company records produced by the plaintiffs. Nor does he deny the case advanced by the plaintiffs, either in the Defence/Cross-claim or in the evidence he has filed.

17. The plaintiffs also state that the defendant has never been delegated, under s.111Companies Act 1997 (Companies Act), any of the powers of the Boards of Directors of either Grand Columbia or Fincorp, to act on behalf of those companies. That statement has also not been disputed by the defendant.

18. In the circumstances, I find the defendant has never been a shareholder or a director of the plaintiff companies. Neither has he been delegated powers pursuant to s.111 Companies Act. It is noted that Anthony Witham, the Chief Executive Officer of Fincorp and a director of Grand Columbia, has in his affidavit confirmed the story disclosed by the company records, and stated that in his view, the defendant has no defence to these claims.

19. I am thus satisfied that the two pre-requisites for entry of summary judgement have been established in the present application, except for the relief sought by way of permanent injunctions, and judgement on injurious falsehood.

Permanent injunctions

20. The application for summary judgement extends also to permanent injunctions sought in the Statement of Claim. As the plaintiff has proven that the defendant has never been a shareholder or director of the plaintiff companies, I would have no difficulty in granting the injunctions sought, except that there is evidence of an ongoing criminal investigation by Police into the fraud alleged by the defendant. As this Court cannot be seen to be interfering with the Constitutional duties of the Police to investigate criminal complaints, I invite further submissions on this aspect before I finalize the formal orders.

Injurious falsehood

21. Relief number 9 of the Statement of Claim seeks assessment of damages for injurious falsehood. The relief assumes that liability has been established. There are four elements of this tort:

(1) A false statement must be made about the plaintiff’s goods, business or profession, or property
(2) Publication of the false statement to a third party
(3) Malice by the defendant
(4) Proof by the plaintiff of actual damage to the plaintiff’s business or profession caused by the malicious statement.

(Palmer Bruyn & Parker Pty Ltd v Parsons [2001] HCA 69)

22. I am not properly satisfied that there is evidence of the last two elements, and it is noted that the defendant denies malice in his Defence. In any case, injurious falsehood is akin to defamation although they are two different claims. Defamation is when a person publishes a false statement that injures your reputation, while injurious falsehood happens when a person publishes a false statement with malice that causes financial damage to you or your business. As summary judgement may not be entered for defamation (libel and slander) pursuant to O12 r37(b)National Court Rules, I would exercise my discretion to decline summary judgement for injurious falsehood.

Judgement on admissions

23. Given my conclusion in relation to the application for summary judgement, I consider it unnecessary to address the alternative application for judgement on admissions except to state that there is strong argument for the proposition that where a defendant admits the facts, this may form the basis of an application for summary judgment; Dep International Private Limited v Ambogo Sawmill Pty Limited [1987] PNGLR 117.

Defence

24. As the defendant has denied the claims of defamation and injurious falsehood, and I have refused summary judgement in respect of those claims, I refuse the application to strike out the Defence.

The cross-claim

25. I am satisfied the cross-claim is properly in court.

26. The alleged fraud pleaded in the Cross-claim arose on or about 1997 while the alleged breach of “fiduciary duties” seemingly occurred on or about 2002. This proceeding was filed last year, 2019. Based on these facts, the plaintiffs argue that the claims are statute-barred pursuant to s.16(1)(a) Frauds and Limitations Act 1988 (Frauds Act) which states that an action based on tort or simple contract shall be commenced within six years of the cause of action accruing.

27. As noted earlier, the defendant alleges a breach of fiduciary duties against Kuek, based on his assertions that the fourth plaintiff:

• fraudulently transferred the assets of Jugami18 to Grand Columbia and Fincorp;
• fraudulently transferred the defendant’s shares in Mabella 88 and Blue Chip 15; and
• failed, as a director, to lodge the annual returns of Jugami18, Mabella 88, and BlueChip 15.
  

28. The fraud claims are founded on the common law tort of fraud, which attracts the application of s.16 Frauds Act; Julius Pololi v Bryan James Wyborn (2013) N5253, Sali Tagau v Vitus Kais (2018) SC1755. In respect of the annual returns, s.215 Companies Act states that the board of directors shall ensure an annual return is lodged with the Registrar of Companies each calendar year. This claim properly amounts to a breach of statutory duties, which is a tort and is therefore subject to s.16 Frauds Act also; Kimbe Nivani Properties Ltd v Nivani Ltd (2019) SC1842. I should point out that while the defendant has cited sections 112 to 118 Companies Act in his claim for breach of fiduciary duties, he has not pleaded any facts in support of these claims.

29. The net effect is that the defendant’s cross-claim is untenable, and is therefore frivolous and vexatious and is an abuse of process. It must be dismissed.

Costs

30. The plaintiffs have urged the Court to award costs on a solicitor/client basis against the defendant. Awarding costs is a discretionary matter, and costs on a solicitor/client basis may be awarded against a party whose conduct has been improper, unreasonable and blameworthy; Rex Paki v MVIL (2010) SC1015.

31. As the proceedings are continuing, I will reserve on costs until the matter is finally determined.

Conclusion

32. I will now hear further submissions regarding the matter of permanent injunctions.

(Parties were heard, and they agreed to the orders to be issued in respect of the injunctions)

Orders

33. The Court orders that:

(1) Summary judgement is entered for the plaintiffs in respect of the following relief pleaded in the Statement of Claim:

1. A declaration that the defendant is not and has never been a shareholder of Grand Columbia Limited (1-17750).
2. A declaration that the defendant is not and has never been a director of Grand Columbia Limited (1-17750).
3. A declaration that the defendant is not and has never been a shareholder in Finance Corporation Limited (1-14333).
4. A declaration that the defendant is not and has never been a director of Finance Corporation Limited (1-14333).
5. A declaration that the defendant has never had any delegation of power whatsoever by the first plaintiff pursuant to section 111 of the Companies Act 1997 or at all.
6. A declaration that the defendant has never had any delegation of power whatsoever by the second plaintiff pursuant to section 111 of the Companies Act 1997 or at all.
7. A permanent injunction restraining the defendant, his servants, agents and/or representatives from communicating that he is or has been at any time an office holder, director, secretary and/or shareholder or that he has had a delegated power of the first plaintiff.
8. A permanent injunction restraining the defendant, his servants, agents and/or representatives from communicating that he is or has been at any time an office holder, director, secretary and/or shareholder or that he has had a delegated power of the second plaintiff.
   

(2) The injunctive orders (1)7 and (1)8 above, do not in any way affect the Constitutional duties of the Police to investigate the criminal complaints already lodged by the defendant against the plaintiffs.

(3) The application to strike out the defendant’s Defence is refused.

(4) The defendant’s Cross-claim is dismissed in its entirety.

(5) Costs of and in relation to this notice of motion, is reserved.

(6) The case is adjourned to 9.30am on 9^th April2020 for parties to settle directions for hearing to progress the balance of the case to trial.

(7) Time for entry of these orders is abridged to the date of settlement by the Registrar which shall take place forthwith.

______________________________________________________________
Ashurst Lawyers: Lawyer for the Plaintiffs/Cross-Defendants
Korerua & Associates: Lawyer for the Defendant/Cross-Claimant