Papir Holdings Ltd v Kokiva [2020] PGNC 144; N8376 (23 June 2020)

N8376

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

CIA NO. 21 OF 2020

BETWEEN:
PAPIR HOLDINGS LIMITED
First Appellant

AND:
ALBERT WAKET, PIUS SEKARI, RAYMOND SUMAPER, ANTON WAKOWAK, MARTIN DARO, STEVEN NAROP, MARCEL WARAVI IN THEIR CAPACITY AS DIRECTORS OF PAPIR HOLDINNGS LIMITED
Second Appellant

AND:
HARRIET KOKIVA, ACTING REGISTRAR OF COMPANIES
Respondent

Madang: Narokobi J
2020 : 19^th & 23^rd June

PRACTICE AND PROCEDURE – consideration of principles concerning joinder of parties – Order 5 Rule 8 National Court Rules

An appeal was lodged against the decision of the Registrar of Companies removing the Second Appellants as Directors of the First Appellant. The Applicants who were also directors of the First Appellant, sought leave to join as party to the proceedings pursuant to Order 5 Rule 8(1) (a) and (b) of the National Court Rules, on the basis that they have an interest in the proceedings.

Held:

(1) Where an applicant wishes to join proceedings under Order 5 Rule 8(1)(a) and (b) of the National Court Rules it must satisfy the following alternative conditions:

a) that it has sufficient interest in the proceedings; and/or

b) whether the applicant’s joinder as a party is necessary to ensure that all matters in dispute in the proceedings can be effectively and completely adjudicated upon.

(2) The considerations to take into account when determining sufficiency of interest are, whether:

a) any relief is sought against the proposed party;

b) the plaintiff opposes the application for joinder;

c) the proposed party will be affected if the relief sought in the statement of claim is granted; and

d) the joinder of the proposed party is necessary to satisfy any orders made in the proceeding.

(2) Although the Appellants opposed the joinder and the relief sought is not against the applicant, it will be affected by the relief granted and will be required to comply with the existing interim orders. On this basis, the Applicant had sufficient interest and ought to be added as a party.

(3) The second condition of whether the applicant’s joinder as a party is necessary to ensure that all matters in dispute in the proceedings can be effectively and completely adjudicated upon is alternative to the test for sufficiency of interest, but in the circumstances of the present case, the addition of the Applicant will assist the court to fully determine the issues before the court.

(4) In order for a party to be added, they must give their consent, and on the evidence, there is no indication that one of the Applicants gave their consent and their inclusion was accordingly refused.

(5) An order for the remaining Applicants is therefore made for them to be added as the Second Respondents, except for the applicant who did not give his consent.

Cases Cited:

Kara v Public Curator of Papua and New Guinea (2010) N4048

NOTICE OF MOTION

This was a motion to add parties to the proceedings.

Counsel:

Mr. R. Manrai, for the Applicants
Mr. J. Wohuinangu, for the Appellants
Mr. M. Miningi, for the Respondent

RULING

23^rdJune, 2020

1. NAROKOBI J: The Applicants, Adolph Paropet, Leo Baris, Luke Irum and Albert Purarum have filed an application to join the proceedings pursuant to Order 5 Rule 8(1)(a) and (b) of the National Court Rules.

A BACKGROUND

2. The First Appellant, Papir Holdings Ltd, and the Second Appellants – Albert Waket, Pius Sekari, Raymond Sumaper, Anton Wakowak, Martin Daro, Steven Narop, Marcel Waravi in their capacity as Directors of Papir Holdings Ltd, appealed against the decision of Harriet Kokiva, Acting Registrar of Companies- First Respondent, and Malis Miningi, Deputy Registrar of Companies - Second Respondent.

3. The appeal is made pursuant to Section 408 of the Companies Act 1997.

4. There were two decisions that the Appellants are aggrieved about and have appealed those decisions.

5. The first decision appealed against is the decision to revoke the appointment of the First Appellant’s Agent, namely, Reckon Limited by way of an email dated 22 May 2020 from the Respondent:

“Company Name: PAPIR HOLDINGS LIMITED (1-116396)

The authority previously granted to Christine Ngu for the above company was revoked on 22 May 2020 at 12:27pm. As per the Court Order dated 19 July 2019, current authorised agent is revoked.

Please notify the Investment Promotion Authority if you feel authority should not have been revoked.

Harriet Kokiva

Acting Registrar of Companies”

6. The second decision appealed against is the order by the Respondent published in the National Gazette on 21 May 2020:

“It is hereby ordered pursuant to powers enabling me under Section 55(3) of the Companies Regulations that the following Directors are indefinitely disqualified from being Directors of Papir Holdings Limited (1-116396) (“PHL”) until such time the shareholders in a properly constituted meeting reconsider their (sic) positions:

1. Albert Waket
2. Pius Sekari
3. Raymond Sumaper
4. Anton Wakowak
5. Martin Daro
6. Steven Narop
7. Marcell Waravi

The reasons for their disqualifications are:

1. Failure to comply with the Companies Act 1997 (as amended).
2. Defying Court Orders.
3. Committing criminal offences against PHL.
   

Harriet Kokiva

Acting Registrar of Companies “

7. Essentially the reasons for challenging the two decisions are breach of natural justice, not affording the Second Appellants the right to be heard and the Respondent’s failure to comply with the Companies Act 1997 and breach of the Stay Orders in SCA No 110 of 2019 and SCA No. 111 of 2019.

8. The Appellant seeks the following orders from the court in the appeal:

“1. The Appeal is allowed.

2. That the decision made by way of the email by the Respondent dated 22 May 2020 are null and void.

3 That the Order as published in the National Gazette on 21 May 2020 of the Respondent are null and void.

4. That the Respondent pays the costs of the First and Second

Appellants on a full indemnity or solicitor/client basis.

5. Such further or order orders as this Honourable Court deems fit.”

9. The Appellant also sought interim relief, including orders in terms of mandatory injunction.

10. On 11 June 2020 the following orders were issued ex parte by this court:

“1 The requirements for service of this Notice of Motion and Affidavits in Support be dispensed with pursuant to Order 1 Rule 7 of the National Court Rules.

2. 2 Pursuant to Order 12 Rule 1, Order 14 Rule 9(a) of the National Court Rules and Section 155(4) of the Constitution, and order restraining the Respondent, her agents, officers and employees at Investment Promotion Authority (“IPA”) from causing any changes to the records held on behalf of the First Appellant until further earlier order.
   
3. An order in the nature of interim mandatory injunction pursuant to Order 12 Rule 1 and Order 14 Rule 9(a) of the National Court Rules or alternatively Section 155(4) of the Constitution, that until further order the:
   

(a) Reckon Limited be restored back to the First Appellant’s records held at IPA as First Appellant’s Agent.
(b) Second Appellants be restored back to the First Appellants records held at the IPA as First Appellant’s directors and that they continue to perform their functions and powers conferred under the Companies Act 1997 or other legislation

4. Pursuant to Order 12 Rule 1 Order 14 Rule 9(a) of the National Court Rules and Section 155(4) of the Constitution, an order that Reckon Limited and the Second Appellants continue to perform their duties and functions under the Companies Act 1997 and other legislation until further earlier order.
   
5. The Appellants serve the proceedings on the Respondents by delivering the:
   
   • (a) Notice of Appeal;
   • (b) Notice of Motion;
   • (c) Affidavit of Justin Wohinangu;
   • (d) Affidavit of Christine Ngu;
   • (e) Affidavit of Martin Daro;
   • (f) Affidavit of Albert Waket; and
   • (g) This Court Order

By or before 16^th June 2020 of the front counter of the IPA office at Konedobu, National Capital District.

6. The Notice of Motion is adjourned to 19 June 2020 at 9.30am for hearing inter partes.
7. The parties be at liberty to apply to set aside or vary this interim interlocutory orders upon giving 72 hours notice in writing.
8. ...”

11. The orders were returnable on 19 June 2020 for inter partes hearing, but since an application for joinder was made, the extension of the injunction was not heard and the court proceeded to hear the application to join.

B PRESENT APPLICATION

12. Adolph Parapet, Leo Baris, Luke Irum and Albert Purarum have filed an application by way of Notice of Motion on 18 June 2020 to join the proceedings pursuant to Order 5 Rule 8(1)(a) and (b) of the National Court Rules, on the basis that they have an interest in the proceedings and are directors of the First Appellant. There was no objection to short service and I proceeded to hear the matter.

13. The application is supported by the following affidavits:

• Adolph Paropet filed on 18 June 2020;
• Leo Baris filed on 18 June 2020;
• Luke Irum filed on 18 June 2020
  

14. The application is opposed by the First and Second Appellant but is supported by the Respondent.

C PARTIES CONTENTION

1) Applicant’s Contention

15. Adolph Parapet, Leo Baris and Luke Irum and Albert Purarumsought to be joined as they say they are the directors of the First Appellant and they are on one faction of the directors while the Second Appellant have been the other faction, and as a result they ought to be added as a party to the proceedings.

16. The only evidence of Albert Purarum seeking to join as a party is the affidavit of Adolph Paropet. Adolph Paropet says that he has authority from Albert Purarum to speak on his behalf. With respect, I cannot accept that as sufficient evidence to support the application. The court would need evidence from Albert Purarum himself stating that he wishes to join these proceedings.

17. Being involved in a court proceeding will bear consequences such as costs, so if an applicant intends to join as a party they must state that by way of sworn evidence that it is their wish that they join as a party. This is especially important in matters such as this, where parties can change their position.

18. The factual basis of the application is found in the affidavit of Adolf Parapet filed on 18 June 2020.

19. Mr Parapet says that he is a landowner of the Kumil Consolidated TRP Timber Project area in Bogia, Madang Province. He further says that he is a shareholder and director of the First Appellant.

20. In Mr Parapet’s view there are two factions. One composed of the Second Appellant, and the other by himself and three others - LeoBaris, Luke Irum and Albert Purarum.

21. Mr Parapet is only a trustee shareholder and he represents four big landowning clans of Mawak Village. Each landowning clan from the Kumil TRP project nominate and appoint their own representatives to be a shareholder and director of the board of the First Appellant. He says that this is the same for all the Applicants and for most of the Second Appellants.

22. Mr Parapet refers to several National Court proceedings and Supreme Court proceedings relating to who should be the legitimate directors of the First Appellant and also who should be the legitimate holder of the Logging and Marketing Agreement to harvest the logs in their area. These proceedings are – OS No 15 of 2019, OS No 780 of 2018, SCA No 110 of 2019 and SCA No 111 of 2019.

23. Mr Parapet says they held a meeting on 20 May 2020 and made a number of resolutions including the removal of Rekon Ltd as agent of the First Appellant and resolved to charge 6 directors, Albert Waket, Martin Daro, Raymond Sumaper, Anton Wakowak, Pius Sekari and Robert Suku for fraudulently increasing their shares and defrauding other shareholders.

24. Mr Parapet concludes by saying that any decision made by the court will affect them.

25. Mr Parapet’s evidence is supported by Leo Baris and Luke Irum in their affidavits filed on 18 June 2020.

2) Appellant’s Contention

26. The Appellant simply states that the decision being challenged is that of the Respondent in relation to the exercise of her power under the Companies Act and does not involve any actions of the Applicants and they therefore do not have an interest in this matter.

D FINDINGS OF FACTS

27. For the purpose of this application, I accept the matters deposed to in the affidavit of Adolf Paropet, especially in relation to the court orders and their interests as directors and shareholders of the First Appellant.

E ISSUE

28. The issue here is whether the Applicants should be joined as a party to the proceedings pursuant to Order 5 Rule 8(1)(a) and (b) of the National Court Rules?

F THE LAW

29. I adopt Hartshorn J’s following statement of the law in Kara v Public Curator of Papua and New Guinea(2010) N4048 as appropriate for the court to consider when deciding whether to allow an applicant leave to join as a party to court proceedings:

a) whether the applicant has sufficient interest in the proceedings,

b) whether the applicant’s joinder as a party is necessary to ensure that all matters in dispute in the proceedings can be effectively and completely adjudicated upon.

30. To determine whether a party has sufficient interest, Hartshorn J in Kara v Public Curator of Papua and New Guineaoutlines the following considerations, which I adopt, that is whether:

a) any relief is sought against the proposed party;

b) the plaintiff opposes the application for joinder;
c) the proposed party will be affected if the relief sought in the statement of claim is granted; and

d) the joinder of the proposed party is necessary to satisfy any orders made in the proceeding.

31. I now consider the facts of this case in relation to the principles of joinder.

G APPLYING THE LAW TO THE FACTS

1. Sufficiency of Interest
   

32. In terms of consideration (a) I have considered the Notice of Appeal and note that there is no relief being sought against the Applicants. This consideration therefore does not favour the Applicant.

33. For consideration (b), the Appellants have objected to the Applicants joining, on the basis that the decision being challenged is not in relation to the exercise of their powers under the Companies Act. This consideration also speaks against the joinder by the applicants.

34. Consideration (c) favours the Applicants. Without making any findings of facts, the issue essentially revolves around a power struggle between two factions of directors in the First Appellant. This is clear from the affidavit of Adolph Paropet. Whichever way the court decides, the Applicants will be affected. For example if the court upholds the appeal, they will be in the minority and risk being voted out as directors. If the appeal is dismissed, they will carry on their duties as directors and push for the removal of the Second Appellant and the recognition of their preferred developer.

35. Consideration (d) also favours the Applicants. The effect of the court order is such that they will be bound by the court order. This is clear in terms of the changes they sought to make in the Investment Promotion Authority records but were told that there is a court order on foot preventing any changes to the First Appellant’s records. The inclusion of the Applicants will ensure the compliance with any order the court makes, to settle the issues between all parties.

36. When weighing the four considerations, I would defer to allowing the Applicants to join, as it will give them an opportunity to be heard considering that they represent landowners within the project area and assist the court settle the issues before it.

37. I was minded to follow the course in Kara v Public Curator of Papua and New Guineathat is to refuse leave to join and allow the Applicants opportunity to provide affidavits to the Respondent but decided against it on the basis that the Respondent perception of being free from bias must be maintained and the Applicants can air their views to the court in their own capacity.

2. Disposition of All Matters Effectively and Completely
   

38. As I have determined the issue of whether the Applicants have an interest, it is not necessary to address the question of whether the applicant’s joinder as a party is necessary to ensure that all matters in dispute in the proceedings can be effectively and completely adjudicated upon. As the conditions are stated in the alternative.

39. However, it is important that I do, because an issue that the court will need assistance from, is in relation to the proceedings in SCA No 110 of 2019 and SCA No 111 of 2019, where the Applicants are parties in those two appeals. The Appellants in this proceeding rely on the stay orders in SCA No 110 of 2019 and SCA No 111 of 2019 to challenge the decision of the Respondent. The court will need assistance from submissions from the Applicants as to whether the interim orders in those cases have any bearing on the decision of the Respondent that is now being challenged. This is an important consideration and speaks in favour of granting the application to join.

40. For the reasons given, the two conditions for grant of leave to join have been met and I so order.

H CONCLUSION

41. In consideration of the facts, the issues and the law, I make the following orders:

1. Pursuant to Order 5 Rule 8(1) (a) and (b) of the National Court Rules, leave is granted to Albert Paropet, Leo Baris and Luke Irumto be joined as Second Respondents to the proceedings;
2. In the absence of consent to be joined in the proceedings, Albert Purarumis refused leave to join as a party;

100. No order as to costs is made in relation to this application;

4. Time is abridged.
   

Manrai Lawyers: Lawyers for the Applicants

Gileng and Co Lawyers: Lawyers for the Appellants

In House Lawyers: Lawyers for the Respondent