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Papir Holdings Ltd v Kokiva [2020] PGNC 178; N8405 (3 July 2020)

N8405


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
First Respondent


AND:
ALBERT PAROPET, LEO BARIS AND LUKE IRUM
Second Respondents


Madang: Narokobi J
2020 : 23rd June & 3rd July


INJUNCTIONS – injunction – application for injunction to stop eviction from property – relevant considerations to exercise of court’s discretion – equitable principles


DISMISSAL OF PROCEEDINGS – dismissal – application to dismiss for abuse of process – principles to consider


COMPANIES ACT 1997 – Application pursuant to Section 142 of the Constitution for injunction – whether to grant in the circumstances


STAY APPLICATION - application to stay proceedings pending investigations – Application pursuant to Order 12 Rule 1 of the National Court Rules – whether to grant in the circumstances.
Facts


An appeal was lodged against the decision of the Registrar of Companies removing the Second Appellants as Directors of the First Appellant and also the removal of their agent Reckon Ltd from representing them. They obtained interim orders ex parte to stay the decision of the First Respondent and their motion was returnable to be argued inter partes. The First Respondent also filed a motion to dissolve the injunction and dismiss the proceedings for abuse of process.


Held:


(1) When dealing with extension of interim orders made ex parte, the considerations during inter partes hearing are the same as when the order was issued ex parte, but now with the benefit of opposing parties arguments, Ekepe v Gaupe [2004] PNGLR 22, distinguished as there was no material change in the condition that existed at the time of the issuance of the interim orders. But parties should raise these principles during return of ex parte injunctions for inter partes argument to assist the court.


(2) Since the Appellants were seeking negative and mandatory injunctions the eight relevant considerations to apply are stated in Yama Group of Companies Ltd v PNG Power Ltd N2831.


(3)The eight main principles to consider in the grant of mandatory injunctions are: (a) it should only be granted where a strong case that serious damage will occur to the applicant is made out; (b) the general principles for negative injunctions apply, that there is a serious question to be tried, damages are not an adequate remedy and the other factors affecting the balance of convenience favour the applicant; the case should normally be one which gives an unusually strong and clear view that the applicant will be successful at trial(c) the more likely it appeared that the plaintiff would succeed at trial the less reluctant the court would be to interfere at the interlocutory stage; (d) the cost to the defendant in performing the mandatory acts should be weighed against the likely damage to the applicant; (e) if the relief sought is such as would normally be granted after a trial it should be refused on an interim application unless the prejudice or hardship to the applicant is disproportionate to the prejudice and hardship to be caused to the defendant in performing the order; (f) if the mandatory injunction is simply to restore some activity which has been previously performed by the defendant, rather than to embark on some new activity, it will be more readily granted; (g) ultimately in deciding whether or not to grant a mandatory injunction the over-riding consideration is an exercise in deciding which course will do the least damage, or to put it another way, the lower risk of injustice, if it turns out that the court has made the ‘wrong’ decision; (h) if an injunction is granted the order should specify exactly what it is the defendant has to do, leaving the defendant in no doubt as to what is required to comply with the order.


(4) In the circumstances, all of the considerations favoured the extension of the negative and mandatory injunction sought until further orders or determination of the proceedings.


(5) The application for an interim injunction granted ex parte was accordingly extended until further orders or determination of the substantive proceedings.


(6) The application to set aside the orders, dismiss the proceedings, injunct the Second Appellants and stay the proceedings were therefore refused.


Cases Cited:


The following cases are cited in the judgment:


AGK Pacific (NG) Ltd v William Brad Anderson, Karson Construction (PNG) Ltd and Downer Construction (PNG) Ltd (2000) N2062
Aloi v Aka (2020) N8359
Doriga Berasi v Konekaru Holdings Ltd (2010) N4189
Ekepa v Gaupe [2004] PNGLR 22
Employers Federation of Papua New Guinea v Papua New Guinea Waterside Workers and Seaman's Union and Others (1982) N393
Ewasse Landowners Association Incorporated v Hargy Oil Palms Ltd (N2878)
Gobe Hongu Ltd v National Executive Council (1999) N1920
Mainland Holdings Limited & Others -v- Paul Robert Stobbs & Others (2003) N2522
Papir Holdings Ltd v Kokiva (2020) N8376
Robinson v National Airlines Commission [1983] PNGLR 276
Yama Group of Companies Ltd v PNG Power Ltd (2005) PGNC 2831


Counsel:


Mr. J. Wohuinangu, for the Appellants
Mr. M. Miningi, for the First Respondent
Mr. R. Mannrai, for the Second Respondents


RULING
3July, 2020


  1. NAROKOBI J: INTRODUCTION: The substantive proceedings is an appeal from the decision of the Registrar of Companies under Section 408 of the Companies Act 1997, and so the parties are named as Appellants and Respondents.
  2. Before me are two motions, one filed by the First and Second Appellants on 11 June 2020 for the interim ex parte orders issued on 11 June 2020 to be extended until further orders or the determination of the proceedings and the other filed on 22 June 2020 seeking amongst other relief, the discharging of the interim injunctions or dismissal of proceedings for abuse of process by the Appellants.
  3. There was no objection to late service, and I decided to hear both motions. But leave was granted to the Appellants to proceed first as their motion from which the ex parte orders were issued was returnable, and then I would hear the First Respondent on their motion.
  4. Just a short note on the second Respondents. On 19 June 2020, I heard the application of the Second Respondents to be joined as parties to the proceedings and on 23 June 2020 granted leave to them to be joined as Second Respondents (see Papir Holdings Ltd v Kokiva (2020) N8376). I decided to consider their application before the return of the ex parte orders to be argued inter partes, as in my view they have an interest in the matter, and ought to be heard on the further conduct of the proceedings.
  5. I have taken the position in Aloi v Aka (2020) N8359 that the appropriate principles to consider when an interim ex parte is made, is the same principles in relation to the grant of injunction should be considered, with the full benefits of arguments from all parties. I take this approach in this case.

B BACKGROUND


  1. For the purpose of this proceedings, I set out the background to this case as follows, which is substantially similar to the background I enumerated in Papir Holdings Ltd v Kokiva (2020) N8376.
  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- the First Respondent in this proceeding.
  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”


  1. 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 “


  1. Essentially the reasons for challenging the two decisions in the grounds of appeal 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.
  2. The Appellant seeks the following orders from the court in the appeal:

“1. The Appeal is allowed.

  1. 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.

  1. Such further or order orders as this Honourable Court deems fit.”
  2. The Appellant also sought interim relief, including orders in terms of mandatory injunction.
  3. On 11 June 2020, I issued the following orders ex parte:

“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.


  1. 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 order.
  2. 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:
  3. 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 order.
  4. The Appellants serve the proceedings on the Respondents by delivering the:

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

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

8 ...”


  1. 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 and ordered on 23 June 2020 for the Second Respondents to be added as parties to the present proceedings.
  2. The First Respondent on 15 June 2020 filed a Notice of Motion, subsequently amended on 22 June 2020 seeking the following reliefs:
    1. The entire proceedings be dismissed pursuant to Order 12 Rule 40 of the National Court Rules for abuse of court process.
    2. In the alternative, the Ex Parte Order obtained on the 11th of June 2020 be set aside pursuant to Order 12, Rule 1 of the National Court Rules, and Section 155(4) of the Constitution.
    3. Pursuant to Section 142 of the Companies Act 1997 (as amended), the Second Respondents be restrained from holding themselves out as Directors of the First Appellant company until the Respondents completes her investigations under section 400 to 407 of the Companies Act 1997 (as amended).
    4. In the further alternative, the entire proceedings be stayed pending investigation by the Respondent pursuant to Order 12 Rule 1 of the National Court Rules,
    5. ...
  3. The above provides a summary of the background to the proceedings.

C ISSUES


  1. Six main issues arise for the court to deliberate on, and they are:

D PARTIES CONTENTION


  1. Appellant’s Contention
  2. The factual basis of the Appellant’s contention is deposed to in the following affidavits:
  3. The submission of the Appellants are premised on a number of grounds on the basis that the First Respondent in making her two decisions improperly and invalidly exercised her power and that the injunction should continue.
  4. Firstly, the First Respondents decision published in the National Gazettal Notice No. G287 of 2020, dated 21 May 2020, to order that the Second Appellants be indefinitely disqualified as directors of the First Appellant was wrong in law because neither section 129 of the Companies Act nor any other provision of the Act provides for the indefinite disqualification of a director for a related reason. The First Respondent relied on section 53 of the Companies Regulation, and in the Appellants view, it did not grant the necessary power to the First Respondent to indefinitely disqualify the Second Appellants.
  5. Secondly, the First Respondent did not accord natural justice to the Appellants prior to making the decision via email dated 22 May 2020, to revoke the authority of the First Appellant’s authorised agent, that is Reckon Limited to lodge document on its behalf. If they did, then the three reasons offered in the Gazette, that is failure to comply with the Companies Act, defying court orders and committing criminal offences against the First Appellant would have been sufficiently responded to.
  6. Thirdly the Appellant’s submits, the actions of the First Respondent, in the circumstances were harsh and oppressive contrary to Section 41 of the Constitution.
  7. Fourthly, the Appellants submits in relation to balance of convenience, that it favours the grant of injunction in that there will continue to be confusion as to who properly manages, directs or supervises the business and affairs of the First Appellant. In addition, they suffer the possibility of losing their position as directors. Furthermore, their names are tainted as one of the grounds for disqualification contained in the Order as published in the National Gazette is committing criminal offences against “PHL”.
  8. Fifth, the Appellants rely on the case of Yama Group of Companies Ltd v PNG Power Ltd (2005) PGNC 2831, to submit that the grounds for the grant of a mandatory injunction have been met, one of which is that if the mandatory injunction is simply to restore what has been performed by the defendant, rather than embark on some new activity, it will be more readily granted.
  9. Sixth, the Appellants submits that they have satisfied the six principles established in Ekepe v Gaupe [2004] N2694 for the continuation of the injunctions.

2) First Respondent’s Contention


  1. The factual basis of the First Respondent’s contention is contained in the following affidavit of Malis Miningi filed on 15 June 2020.
  2. The First Respondent seeks the following alternative reliefs - dismissal of the proceedings, discharge of the injunctions, injuncting the Second Appellants pending investigations and stay of the proceedings pending investigations. In support of the orders she seeks, she submits as follows.
  3. Firstly, the First Respondent submits that the Second Appellants are former directors of the First Appellant company since the First Respondent made the decision to indefinitely disqualify them on 21 May 2020. Therefore, if they are to file an appeal they should have filed the Appeal in their capacity as former directors and or shareholders of the First Appellant. The pleading suggesting them as directors of the First Appellant is misleading the court.
  4. Secondly, the First Respondent submits that the Second Appellant have no right whatsoever to join the First Appellant as a party to the case. In the event that they felt that joining the First Appellant was necessary, then they should have sought leave of this Court under Section 143 of the Companies Act before joining in this proceeding. That provision allows a director or shareholder to apply to court for leave to bring proceedings in the name of the company or a related company.
  5. Thirdly, the First Respondent submits that there is no authority for Gileng and Co lawyers to act for the First Appellant.
  6. Fourthly, the First Respondent submits that since an injunction is an equitable remedy, the maxim, “he who comes to equity must come with clean hands” applies to the circumstances of the present case. The Second Appellants were subject of investigation by the First Respondent because of the issue of shares of which 60 shares were issued cumulatively making them 94% shareholders. The other four directors cater for only 6% of the shareholding with one share each giving them edge over any decision-making in the First Appellant. This is a serious allegation and is the subject of investigation by the Respondent. Having 94% of shares is even more than 75% majority in the Company Act for purposes of approving major transactions under Section 110 of the said Act and waiving shareholding meeting requirements under Section 103 of the same Act.
  7. Finally, the First Respondent drew the court’s attention to the case of Doriga Berasi v Konekaru Holdings Ltd (2010) N4189 which outlines the necessary principles to set aside an interim order. The First Respondent relies on the fact that they did not disclose to the court that they were former directors and that new shares were issued to themselves to support its submission that the interim orders should be set aside.

3) Second Respondent’s Contention


  1. The Second Respondent essentially relies on the affidavit of Adolf Paropet filed on 18 June 2020.
  2. The Second Respondent supports the First Respondent’s submission.
  3. The Second Respondent further submits that what the Second Appellants have done, is to commit fraud on the First Appellant and the Second Respondent. They have illegally issued additional shares to themselves to take control of the company. What they did,as is the allegation, is criminal in nature, and this has resulted in them being charged by the police.

E FINDINGS OF FACTS


  1. I make the following findings of facts before I turn to applying the law to the facts on each of the several issues raised. I emphasise that the findings are for the purposes of dealing with the present applications, and the facts may change when further evidentiary material is tendered and or the present evidence is subject to more robust scrutiny.
  2. The first finding of fact I make is that in the First Appellant’s board of directors meeting of 23 September 2019, Gileng and Co lawyers were instructed to act for the First Appellant in WS 953 of 2019 and in any related proceedings by the board of directors resolution.
  3. The resolution of 23 September 2019 is contained in the affidavit of Albert Waket filed on 29 September 2019 in WS No 953 of 2019. I have accepted the affidavit relying on Section 44 of the Evidence Act 1975 and have overruled the objection of the Second Respondent as it addresses one of the issues in this case and there is no suggestion that the affidavit was fraudulent.
  4. Adolf Paropet’s affidavit filed on 18 June 2020 refers to director’s resolution in a Meeting Minute dated 20 May 2020 to terminate the services of Gileng and Co Lawyers, however the Minutes do not contain the company seal, and so the issue of the legitimacy of the meeting arises. For this reason, I will defer to the earlier resolution of 23 September 2019 where Adolf Paropet was also present in that meeting.
  5. The second finding of fact I make is that there is strong evidence to suggest that the First and Second Appellant were not accorded any opportunity to respond to the allegations supporting the indefinite disqualification in the Gazette Order of 21 May 2020. I refer to the affidavit of Justin Wohuinangu filed on 10 June 2020 to make this finding, especially after considering paragraphs 23 and 24 and his further affidavit filed on 19 June 2020 at paragraph 3.
  6. The affidavit of Miles Miningi filed on 15 June 2020, contains a number of correspondences. After carefully considering the letter dated 26 February 2020 and 14 May 2020 addressed to the directors of the First Appellant, I am not able to see anywhere in those correspondence, the three grounds for the indefinite disqualification, being put to the Second Appellants and asking them to respond before the First Respondent proceeded to indefinitely disqualify them.
  7. Even if those letters do constitute the observance of the right to natural justice, the Second Appellant deny receiving the correspondence, and this may become a factual issue at trial.
  8. The third finding of fact I make is that there was no opportunity given to the Appellants to respond to the actions taken by the First Respondent in suspending their agent Reckon Ltd on 22 May 2020 to continue acting for them as their agent.
  9. The fourth finding of fact I make is an observation in relation to paragraph 8 of the affidavit of Adolf Paropet filed on 18 June 2020. He says that after the Registrar of Companies disqualified the other faction (Second Appellants) except Robert Suku, they met on 20 May 2020 and agreed to a number of resolutions. It is undisputed evidence that the First Respondent’s decision only became public in the Gazette on 21 May 2020. This is a factual issue that needs to be resolved at trial as to how they became aware of the Registrars decision on 20 May 2020 before it was made public.
  10. I do not make any findings of facts on the propriety of the change in directors effected by lodgement of form 16 on 14 May 2020 deposed to in the affidavit of Justin Wohuinangu filed in 10 June 2020. In my view, it is untested evidence, and I will leave that for trial.
  11. I draw the same conclusion on the allegation of fraudulent increase of the number of shares to each of the Second Appellant as deposed to in the affidavit of Miles Miningi filed on 15 June 2020, as per the letter of 14 May 2020. The allegation is that the shares were increased without following due process. The court would have to be satisfied as to what process under the Companies Act were not complied with, and have evidence led in that regard to prove non-compliance with due process. It may well be that there was non-compliance of due process, but at this stage, the court is not in a position to make that finding on the evidence before it, especially in light of the fact that the Appellants claim they have the authority to increase shares pursuant to Section 43 of the Companies Act.

F THE LAW


  1. The law on the grant of injunction is settled in this jurisdiction.
  2. The first point of law to observe is that an injunction is founded in equity and as such it is applied at the discretion of the courts (see AGK Pacific (NG) Ltd -v- William Brad Anderson, Karson Construction (PNG) Ltd and Downer Construction (PNG) Ltd (2000) N2062, Injia J, (as he then was)).
  3. There are many cases which outline the following principles which the court ought to address its mind to, before it issues an injunction:
  4. In addition to this, I have had recourse to a number of proceedings in relation to dismissal for abuse of process, especially Pruaitch v Manek (2019) SC1884.

G APPLICATION OF THE LAW TO THE FACTS


  1. First Issue
  2. As a result of my first finding of fact above, I conclude on the first issue that for the moment, Gileng and Co. Lawyers have authority to act for the First and Second Appellant by virtue of the resolution of its directors on 23 September 2019.
    1. Second Issue
  3. On the second issue, my view is that the interim injunction should continue until further order or determination of the proceedings.
  4. I do so on the authority of Yama Group of Companies Ltd v PNG Power Ltd and the principles set out in that case, as part of the orders sought are in the nature of mandatory injunctions. The principles from the headnotes of the case are:

(a) it should only be granted where a strong case that serious damage will occur to the applicant is made out; (b) the general principles for negative injunctions apply, that there is a serious question to be tried, damages are not an adequate remedy and the other factors affecting the balance of convenience favour the applicant; the case should normally be one which gives an unusually strong and clear view that the applicant will be successful at trial(c) the more likely it appeared that the plaintiff would succeed at trial the less reluctant the court would be to interfere at the interlocutory stage; (d) the cost to the defendant in performing the mandatory acts should be weighed against the likely damage to the applicant; (e) if the relief sought is such as would normally be granted after a trial it should be refused on an interim application unless the prejudice or hardship to the applicant is disproportionate to the prejudice and hardship to be caused the defendant in performing the order; (f) if the mandatory injunction is simply to restore some activity which has been previously performed by the defendant, rather than to embark on some new activity, it will be more readily granted; (g) ultimately in deciding whether or not to grant a mandatory injunction the over riding consideration is an exercise in deciding which course will do the least damage, or to put it another way, the lower risk of injustice, if it turns out that the court has made the ‘wrong’ decision; (h) if an injunction is granted the order should specify exactly what it is the defendant has to do, leaving the defendant in no doubt as to what is required to comply with the order.”


  1. I now turn to deal with how each of the facts relate to eight (8) considerations referred to above.

(a) Serious Damage


  1. The order of the First Respondent to indefinitely disqualify the Second Appellants is a serious incursion into their rights. There is no information on how long they will be disqualified for. This is against a factual background that they were not afforded the opportunity to respond.
  2. The Gazette is a public information and it has published that the Second Appellants have “committed criminal offences against PHL” but there is no criminal conviction by a court of competent jurisdiction against them when the Gazette was published. This has the potential to cause irreparable harm to the Second Appellants.
  3. This consideration has therefore been met.

(b) Principles of Negative Injunction


  1. I am persuaded by the submission of the Appellants that they were not afforded an opportunity to respond to the allegations in the Order of 21 May 2020 to have them indefinitely disqualified. The order to indefinitely disqualify them is a serious incursion into their rights, and they should have been afforded an opportunity to be heard by the First Respondent before she took the actions she did against them on 21 May 2020 and 22 May 2020. I am guided by the case of Ombudsman Commission v Peter Yama (2004) SC747 in the position that I have taken, that those exercising statutory power have the duty to give reasons for their decisions. This to me suggest that this is an arguable case, for that reason alone.
  2. It is also arguable that they were not given an opportunity to respond to the First Respondent before she took her action to terminate their agent Reckon Ltd.
  3. It is also arguable as to whether the First Respondent had correctly relied on Section 53 of the Companies Regulation. It is not my role at this stage to decide this issue. I am not in a position to decide this issue conclusively.
  4. I reject the argument that the Appellants did not come with clean hands, as there is no conclusive fact as to the circumstances surrounding the increase in the number of shares. The Second Respondent says that the Second Appellant has been criminally charged for this. The outcome of those proceedings will determine whether what they did was fraudulent or not.
  5. This is a case where damages would not be an adequate remedy because it involves the exercise of director’s powers in relation to important decisions about the work of the company, and damages would not adequately compensate the Appellants for this.
  6. The Respondents have not taken serious issue on the question of undertaking as to damages and each of the Second Appellant has filed his undertaking.
  7. On the balance of convenience,as I have allowed the Second Respondents to join, they can participate in the proceedings and have their say so that all interests are catered for. The balance of convenience favours the continuation of the injunction for the reason that on the face of the evidence before the court, they have been affected without being afforded natural justice.
  8. In my view, the principles of negative injunctions have been satisfied by the Appellants.

(c) Likelihood of Succeeding at Trial


  1. My view on this consideration relates to my conclusion that there is an arguable case for not affording the First and Second Appellants the right to natural justice, that is giving them an opportunity to respond before they were disqualified.
  2. The strongest case for the Respondents is in relation to locus standi of the Second Appellant and the authority for the First Appellant to be named as a party. This are issues relevant at the substantive hearing.

(d) Cost to the Defendant As Against the Applicant in Performing the Mandatory Act


  1. For this consideration, I find that the cost to the Appellants is greater than the costs to the First Respondent to perform the mandatory act, that is to reverse its decision of 21 May 2020 and 22 May 2020. The Appellants will suffer greater consequence if they are omitted from being directors for an indefinite period.

(e) Should the Applicant Wait Until Trial to Get Their Relief


  1. For the reasons that I have stated above in consideration (a) that the Appellants will suffer serious damage on account of being indefinitely suspended, I find that the interests of justice requires that the mandatory injunction ought to be maintained until trial.

(f) Restoring What Has Been Performed by the Defendant


  1. For this consideration, the First Respondent is not being asked to embark on some new activity, and so this favours the continuation of the mandatory injunction.

(g) Lower Risk of Injustice


  1. There is a less risk of injustice to the First Respondent if the Appeal should fail, for the reason, that it will be able to continue to perform its functions under the Companies Act.
  2. The greater risk is in relation to the Second Respondents. It is for this reason, that I have allowed the Second Respondents to join and they are at liberty to make any necessary application during the operation of the mandatory injunction if their rights and interests are impinged.

(h) Specific and Clear Orders


  1. Since the order is to restore the state of affairs as it existed before the First Respondents decision of 21 May 2020 and 22 May 2020, my conclusion is that this is sufficiently clear to the Respondents. This consideration has also been met.
  2. My view is that this is an appropriate case for mandatory and negative injunction.
    1. Third Issue
  3. As I have found that the injunction should continue, my view is that the injunction should not be discharged, subject to the other conclusions I reached on the other issues.
    1. Fourth Issue
  4. In relation to the fourth issue, that at the time the proceedings were filed, the Second Appellants were not directors and had no authority to have the First Appellant named in the proceedings, my view is that these are valid contentions and may determine the appeal in favour of the Respondents, but they are substantive issues that the court will consider at trial. I take this approach based on the preliminary finding I make that there was a potential breach of natural justice.
  5. I have had recourse to a number of National Court and Supreme Court decisions, which have dealt with the issue of dismissal of proceedings for abuse of process.
  6. The issue of abuse of process arises in relation to the mode of proceedings. For example in Pruaitch v Manek (2019) SC1884, an appeal against a dismissal for abuse of process failed for filing multiple proceedings failed. In that appeal, abuse of process was made out because after a litigant failed in one mode of proceeding, a different mode was commenced.
  7. In this case, the First Respondent does not dispute the mode of proceedings under Section 408 of the Companies Act. She argues that the Appellant’s lack standing and authority. As I said above, I am of the view that this is an issue for the substantive hearing, with the benefit of full arguments and evidence.
  8. Usually the question of standing at the preliminary stage is relevant to proceedings commenced by way of Order 16 Rule 3 of the National Court Rules in relation to judicial reviews and also Applications under Section 18 of the Constitution.
  9. Applying these principles to the facts of this case, I am drawn to the conclusion that the issue of lack of standing of the Second Appellant and lack of authority for the First Appellant to be involved in these proceedings, are issues that are properly to be raised at the trial.
    1. Fifth Issue
  10. On the issue of whether the court should issue an injunction under Section 142 of the Companies Act to restrain the Second Appellants from holding themselves out as directors of the First Appellant pending the outcome of investigations into their conduct, my view is that whichever way the appeal goes, whether it succeeds or fails, the First Respondent will still be overseeing the conduct of the Second Appellants by virtue of their position as directors under the Companies Act.
  11. The present Appeal relates to the purported breach of the Appellant’s right to natural justice and this should be determined first as a matter of course while the status quo is maintained.
  12. It is therefore appropriate to allow the present proceedings to be heard and determined.
  13. Since the Second Respondents are now added as a party, they are at liberty to make any necessary applications if their rights and interests are being affected in any way by the Second Appellants.
  14. For this reason, I refuse the application made pursuant to Section 142 of the Companies Act.
    1. Sixth Issue
  15. On the issue of whether the proceedings should be stayed pending the outcome of the investigations pursuant to Order 12 Rule 1 of the National Court Rules, I also refuse the application for the reason I concluded on the fifth issue. That is, again, whichever way the appeal goes, whether it succeeds or fails, the First Respondent will still be overseeing the conduct of the Second Appellants by virtue of their position as directors under the Companies Act. It is therefore appropriate to allow the present proceedings to proceed to trial and be determined.
  16. Again, I observe that since the Second Respondents are now added as a party, they are at liberty to make any necessary applications if their rights and interests are being affected in any way by the Second Appellants.

H CONCLUSION


  1. I have also formed the view that the best recourse now owing to the highly contentious matter is to expedite the proceedings, and I will make appropriate directions in this regard in my final orders.
  2. In consideration therefore of the facts, issues and the law, I make the following orders:
    1. The interim orders granted on 11 June 2020, are extended until further orders.
    2. For the avoidance of doubt the orders extended are:
      1. Pursuant to Order 12 Rule 1, Order 14 Rule 9(a) of the National Court Rules and Section 155(4) of the Constitution, the First Respondent, her agents, officers and employees at Investment Promotion Authority (“IPA”) are restrained from causing any changes to the records held on behalf of the First Appellant until further order or determination of the proceedings.
      2. 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 Rulesand Section 155(4) of the Constitution, that until further order or determination of the proceedings:

(i)Reckon Limited be restored back to the First Appellant’s records held at IPA as the First Appellant’s Agent.


(ii) The 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.


  1. 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 order or determination of the proceedings.
  2. The First Respondent’s Amended Notice of Motion filed on 22 June 2020 is dismissed.
  3. Costs of both the Appellant’s Notice of Motion and the First Respondent’s Amended Notice of Motion are costs in the cause.
  4. The following directions are issued to expedite the proceedings:

(a) Appellants shall file and serve any affidavits it intends to rely on at trial by 10 July 2020;

(b) First and Second Respondents are to file and serve any affidavits in reply it intends to rely on at trial by 17 July 2020;

(c) Any relevant notices under the Evidence Act shall be filed and served by 21 July 2020;

(d) Parties shall attend a Pre-Trial Status Conference on 24 July 2020 at 9.30am to confirm compliance of the above directions and obtain a trial date.


  1. Time is abridged.

________________________________________________________________
Gileng and Co Lawyers: Lawyers for the Appellants
IPA In House Lawyers: Lawyers for the First Respondent
Mannrai Lawyers: Lawyers for the Second Respondent


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