Wembut v Ok Tedi Fly River Development Foundation Ltd [2020] PGNC 23; N8192 (17 February 2020)

N8192

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS No. 928 of 2019 (COMM)

BETWEEN:
STEVEN WEMBUT
Plaintiff

AND:
OK TEDI FLY RIVER DEVELOPMENT FOUNDATION LTD
First Defendant

AND:
STEVEN BAGARI in his capacity as Directors of Ok Tedi Fly River Development Foundation Limited
Second Defendant

AND:
ABEL DARUKO in his capacity as Director of Ok Tedi Fly River Development Foundation Limited
Third Defendant

AND:
JACOB KABOGE in his capacity as Director of Ok Tedi Fly River Development Foundation Limited
Fourth Defendant

AND:
MICHAEL LAM GEN in his capacity as Director of Ok Tedi Fly River Development Foundation Limited
Fifth Defendant

AND:
BOSTON KASIMAN in his capacity as Director of Ok Tedi Fly River Development Foundation Limited
Sixth Defendant

AND:
REX SALLE in his capacity as Director of Ok Tedi Fly River Development Foundation Limited
Seventh Defendant

AND:
SISA BAIDAM in his capacity as Director of Ok Tedi Fly River Development Foundation Limited
Eight Defendant

AND:
IAN KUN in his capacity as Director of Ok Tedi Fly River Development Foundation Limited
Ninth Defendant

AND:
SAMSON JUBI in his capacity as Secretary of Ok Tedi Fly River Development Foundation Limited
Tenth Defendant

Waigani: Anis J
2020: 14^th & 17^th February

NOTICE OF MOTION – restraining orders – inter-partes hearing – whether the injunction should continue –arguable case coupled with whether the plaintiff has standing – no valid challenge by submission and evidence – Companies Act 1997 – whether correct mode of proceeding should be to invoke Court’s power under section 142, Companies Act

Cases Cited:

Gogi Naru Resource Owners Association Inc. v. Jant Ltd (2011) N4472
Kepas Tapkon v. Tutuman Development Ltd (2013) N5090

Counsel:

Ms G Kogora with counsel assisting Ms Geroro, for the Plaintiff
Mr G Sheppard with counsel assisting Ms Painap, for the Defendants

RULING

17^th February, 2020

1. ANIS J: The plaintiff obtained ex-parte interim orders on 4 February 2020. The matter returned for inter-partes hearing on 14 February 2020. I reserved my ruling to today at 1:30pm.

2. This is my ruling.

BACKGROUND

3. The plaintiff says he comes from Moian village which is situated in the Middle Fly area of Western Province. He says that in or about 2001, his area, which he describes as Middle Fly Region plus 7 other areas (i.e., Kiwaba area, Dudi area, Manawete area, Suki-Fly Gogo area, Highway area, North Ok Tedi area and Lower Ok Tedi area) entered into an agreement with the Ok Tedi Mining Limited. The agreement, he says, is called Community Mine Continuation Agreement (CMCA). In 2006 and 2007, the plaintiff says the CMCA had resolved to and had facilitated another agreement with the Ok Tedi Mining Limited (OTML), the Papua New Guinea Sustainable Development Program (PNGSDP) and the Independent State of Papua New Guinea. That agreement, he says, is called Memorandum of Agreement and is dated 29 June 2007 (the MOA). He says, amongst others, that it was the MOA that had facilitated the creation of the first defendant.

4. Evidence that he has adduced, which is not contested, shows that the first defendant was created under the Companies Act 1997 (the Companies Act) on 23 September 2016. The plaintiff says, which also appears uncontested, that each of the 8 groups have appointed representatives who each held 1 shares in the first defendant, for or on their behalf. A total of 8 shares were created by the first defendant and allocated to each of the 8 representatives for the 8 regions or groups. The plaintiff, also as it appears undisputed, comes from the Middle Fly Region. He and those people in the said region have appointed Rex Salle, who is the 7^th defendant herein, to be their representative and shareholder in the first defendant.

5. The plaintiff seeks various declaratory relief in his originating summons. His claim is this. He challenges the appointment of directors and the secretary of the 1^st defendant. He claims that their appointments were done contrary to what had been resolved by CMCA and the MOA.

MOTION

6. The plaintiff’s notice of motion was filed on 17 December 2019. The main interim relief sought which were granted ex-parte, were as follows, and I quote:

(2) Pursuant to Order 12 Rule 1 of the National Court Rules, pending determination of the substantive relief sought herein are granted:

(a) The first, second, third, fourth, fifth, sixth, seventh, eighth, ninth and tenth Defendants, their servants, agents, employees and whomsoever, be restrained from conducting any dealings, meetings and conferences, for and on behalf of the first defendant in relation to its affairs and operations.

(b) The first, second, third, fourth, fifth, sixth, seventh, eighth, ninth and tenth Defendants, their servants, agents, employees and whomsoever, be restrained forthwith from interfering with the community consultant and endorsement of the directors.

(c) The first, second, third, fourth, fifth, sixth, seventh, eighth, ninth and tenth Defendants, their servants, agents, employees and whomsoever, be restrained from accessing monies maintained in Australia New Zealand Bank (PNG) Limited Account Number 12767475 and or any other bank accounts establish for the purposes of the First Defendant or under its name or under Trust instruments dated 12 June 2007, 4 February 2013, 9 October 2013, and 9 April 2014 respectively, and any other subsequent Trust instruments that are created from time to time, of and incidental to WPPDTA-CMCA in any manner, shape or form.

(d) The Australian New Zealand Bank (PNG) Limited produce a Statement of Account to the Plaintiff for the periods including February 2018 to December 2019 and monthly statements thereafter pending the determination of the proceeding.

3. The plaintiff to immediately serve all the documents including this Court Order on the defendants without delay.
4. The matter shall return for inter-pates hearing of the plaintiff’s Notice of Motion filed 17/12/19 on the 14/2/20 at 9.30am.
   

PRELIMINARY ISSUES/ CONTENTIONS

7. The defendants raise various preliminary issues. Let me deal with them. As a start, the defendants complain that the interim orders taken out by the plaintiff may have been altered. Counsel submits that the sealed Order that was taken out by the plaintiff’s lawyers, appears different from the actual order as endorsed by the Court in the Court file. The complaint in particular refers to term 2(c) where it is alleged that the words “Region including any monies parked in any lawyers trust account” had been added into the said order. Thus, it is alleged that term 2(c) was altered to read as follows:

The first, second, third, fourth, fifth, sixth, seventh, eighth, ninth and tenth Defendants, their servants, agents, employees and whomsoever, be restrained from accessing monies maintained in Australia New Zealand Bank (PNG) Limited Account Number 12767475 and or any other bank accounts establish for the purposes of the First Defendant or under its name or under Trust instruments dated 12 June 2007, 4 February 2013, 9 October 2013, and 9 April 2014 respectively, and any other subsequent Trust instruments that are created from time to time, of and incidental to WPPDTACMCA Region including any monies parked in any lawyers trust account in any manner, shape or form.

8. I note that the plaintiff’s counsel did not provide its response. I will say this. I do not have the transcript to confirm whether I have made these additional orders. In remark, I say that it is not unusual for parties to request for additional orders or variations to be added, to give full effect to the orders that are being sought. At this juncture though, I note that the file notation supports the defendant’s claim, that is, that the order recorded in the Court file under term 2(c) is not quite the same as its replica that is sealed and entered on 5 February 2020.

9. The next preliminary matter is this. The defendants submit that since the plaintiff is seeking the removal of directors and secretary of the first defendant, the proper mode of proceeding should have been to file proceeding under the provisions of the Companies Act, that is, under section 142. Section 142 states, and I quote:

142. Injunctions.

(1) The Court may, on an application under this section, make an order—

(a) restraining a person who is engaging in or proposes to engage in conduct that is or would contravene the constitution of the company or this Act from engaging in that conduct; or

(b) requiring a person who has refused or failed, is refusing or failing, or is proposing to refuse or fail, to do an act or thing that he is required to do by the constitution of the company or this Act, to do that act or thing.

(2) An application may be made by—

(a) the company; or

(b) a director or shareholder of the company; or

(c) an entitled person; or

(d) the Registrar.

(3) Where the Court makes an order under Subsection (1), it may also grant such consequential relief as it thinks fit.

(4) An order may not be made under this section in relation to conduct or a course of conduct that has been completed.

(5) The Court may, at any time before the final determination of an application under Subsection (1), make, as an interim order, any order that it is empowered to make under that subsection.

(6) Where an application is made to the Court under Subsection (1) for the grant of an injunction under this section, the Court shall not require the applicant, as a condition of granting an interim injunction, to give any undertakings as to damages.

10. The plaintiff’s counsel was not prepared for this and had tried to request for an adjournment to respond. After some consideration, counsel opted to proceed. I note, however, that counsel made no submissions in response to this argument.

11. I find it quite odd that the plaintiff was not prepared to address this issue. In my view, issues concerning mode of proceeding are fundamental and may be relevant. A counsel, I would expect, will have advised his or her client of the appropriate mode or manner of proceeding before filing the preferred type, and as such should, in my view, be ready to assist the Court. To be unaware, or to appear surprised and unprepared, to assist the Court, is not, in my view, a satisfactory excuse. In fact, it demonstrates to me that the plaintiff may not have contemplated section 142 or the appropriate mode of proceeding, before he filed the originating summons in the manner has he has done herein.

12. I find the argument and claim by the defendants to be valid or reasonable. The defendants’ submission regarding section 142 was not challenged. At this juncture, I would regard the defendants’ submission as meritorious in so far as it questions the mode of proceeding. That said, I also note that what is before me is not an application questioning the substantive proceeding, but rather, an application for the grant of interim relief. The defendants, at this stage, are raising the argument to demonstrate that they have this serious issue which they intend to raise at an appropriate time, and on that basis, they say that the plaintiff’s present notice of motion should be declined.

13. Let me now consider the plaintiff’s claim and his standing, as he submits, that is, in view of section 142 of the Companies Act. Evidence adduced to date by the parties shows the following. Firstly, it reveals that the first defendant is established under the Companies Act. Evidence also shows that the plaintiff comes under the group Middle Fly Region. Evidence also shows that the authorized representative of Middle Fly Region, which the plaintiff falls under, is the 7^th defendant, Rex Salle. Rex Salle I note, represents, not just the plaintiff, but all the persons who come from the Middle Fly Region area, in the first defendant. And all these persons including the plaintiff, have consented to appoint Rex Salle as their shareholder and representative in the first defendant. So this then, in my view, raises the following questions. Can the plaintiff, without the consent of all the people from the Middle Fly Region area which he is part of, and also without the consent of all the people from the other 7 regions who are represented by their respective representatives in the first defendant, commence this proceeding in the manner as he has done? Where is his authority to do so? And this. Given that the first defendant is a company that is established under the Companies Act, on what basis or right can the plaintiff challenge the appointment of the directors and secretary of the first defendant? Is he an authorized person under the Companies Act to seek declaration for the nullification of directors and company secretary of the first defendant?

14. I have heard submissions and considered the evidence that have been presented by counsel for the plaintiff. The main basis for alleging the plaintiff’s standing are, (i), that he had been part of the initial group that had negotiated the establishment of the CMCA and the MOA, and (ii), that he was, and still is, a member of the Middle Fly Region. I recall that I had, at the hearing of the ex-parte application, reminded counsel that the first defendant was a company which was a legal person. I had also inquired of the standing of the plaintiff in the matter. And I note that at the inter-pates hearing, counsel for the plaintiff still has not sufficiently explained her client’s standing against the first defendant. For example, whether the plaintiff qualifies as a shareholder, or as a former shareholder, or as an entitled person, within the meaning of section 142(2) of the Companies Act. Or if the plaintiff is a beneficiary, what are his primary rights against the first defendant? Does he have any?

15. The defendants, I note, are raising standing as a preliminary matter to question whether there is an arguable case to be tried. Such considerations are valid. See cases: Gogi Naru Resource Owners Association Inc. v. Jant Ltd (2011) N4472 and Kepas Tapkon v. Tutuman Development Ltd (2013) N5090.

16. Without any valid challenge made by the plaintiff concerning his standing, I find that it puts into serious doubt whether there is an arguable case to be tried. And with the merit of the matter in doubt, I believe that I am in a position now to make a decision.

SUMMARY

17. I am inclined to refuse the plaintiff’s notice of motion filed on 18 December 2019. I am not satisfied that there may be an arguable case, and I find and say this based on the defendants’ strong argument that the plaintiff may not have standing to seek the sort of relief as pleaded in the originating summons against the defendants. I remind myself that I am not making any final determination here. I simply find the plaintiff’s standing in this proceeding to be at reasonable to serious doubt. I also find that it is arguable whether the plaintiff has commenced the correct mode of proceeding, that is, whether the correct mode should have been to invoke the Court’s jurisdiction under section 142 of the Companies Act.

18. Given my findings, particularly concerning standing which is tied to the merit of the matter, it is not necessary, in my view, to proceed to consider the other requirements, namely, balance of convenience, damages being an inadequate remedy if the injunction is refused, and undertaking as to damages. These requirements are of course relevant and must be met but on the basis or presumption, in my view, that standing or mode of proceedings are not seriously contested. Because they are in this case, and there appears to be valid grounds for raising them, the Court should first of all make a determination on these questions plus other issues, at an appropriate time.

COST

19. Award of cost is discretionary. In this case, I do not see any reason why I should not order cost to follow the event. I will award cost of the application to the defendants to be assessed on a party/party basis which may be taxed if not agreed.

ORDERS OF THE COURT

20. I make the following orders:

1. The plaintiff’s notice of motion filed on 18 December 2019 is dismissed.
   
2. For clarity, the interim ex-parte orders made on 4 February 2020 are set-aside.
   
3. The plaintiff shall pay the defendants’ cost of the application on a party/party basis to be taxed if not agreed.
   
4. Time for entry of these orders is abridged to the date of settlement by the Registrar which shall take place forthwith.
   

The Court orders accordingly
________________________________________________________________
Namani & Associates: Lawyers for the Plaintiff
Young & Williams Lawyers: Lawyers for the Defendants