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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS (COMM) NO 429 OF 2018
BETWEEN:
TAN INVESTMENT LIMITED
Plaintiff
V
HOCK HENG TEO ALSO KNOWN AS VINCENT TEO
First Defendant
AND:
REBECCA VALAHU ALSO KNOWN AS REBECCA TEO
Second Defendant
AND:
MOALE SIBONA
Third Defendant
AND:
RANU NAMONA LIMITED
Fourth Defendant
Waigani: Anis J
2021: 12th & 17th August
NOTICE OF MOTION – application for interim restraining relief – Schedule 2.2(1) – Constitution – application to preserve assets and properties - Order 14 Rule 10 – National Court Rules - consideration – whether serious challenge to the application – whether the applicant has established the pre-requisites for granting interim restraining relief and for preservation of assets and properties – exercise of discretion
Cases cited:
Papua New Guinea Cases
Ramu Nico Management (MCC) Ltd v. Tarsie (2010) SC1075
Craftworks Niugini Pty Ltd v. Allan Mott (1997) SC525
Chief Collector of Taxes v. Bougainville Copper Ltd (2007) SC853
IPBC v. MVIL (2017) SC6667
Overseas Case
American Cyanamid Company v. Ethicon Ltd (1975) 1 All ER 594
Counsel:
D Kints, for the Plaintiff
H Kevau, for the Defendants
RULING
17th August, 2021
1. ANIS J: The plaintiff filed a notice of motion on 17 June 2021 (NoM) seeking to add a number of defendants, amend the writ of summons and obtain interim restraining orders against the defendants of certain assets and properties. I heard and granted part of the relief on 15 July 2021. The balance of the NoM was adjourned to 1:30pm on 12 August 2021. I heard arguments from the parties on that day and reserved my decision to a date to be advised.
2. This is my ruling.
BACKGROUND
3. The plaintiff is suing the defendants for alleged monies it claims belonged to it that had been misappropriated (embezzled) by the defendants or in particular, by the first defendant without its consent or authority over a period of time. Briefly, the first defendant had been employed by the plaintiff for about 10 years since 17 October 2005 as its branch manager for its business called “Starland Freezes”. It is alleged that he was paid an annual average salary of about K40,000 to K50,000 throughout the tenure of his employment. He was terminated sometimes in October of 2015. He was terminated after it was alleged that he, between June of 2012 and October of 2015, had misappropriated the plaintiff’s cash sales or monies which totaled K5,224,099.13. The plaintiff alleges that the first defendant had breached his fiduciary duty which was part of the terms of his contract of employment at the material time, and as a result misappropriated the plaintiff’s monies.
4. The plaintiff seeks to recover the said money plus assets and land which it claims were purchased by the first defendants through the alleged misappropriated funds.
5. The defendants have filed their defence denying the allegations.
APPLICATION
6. The remaining outstanding relief contested in the NoM is term 3, which reads:
(1) the defendants be restrained from using, selling and/or disposing the following vehicles and properties;
(a) Nissan Navara Double Cab Utility Registration No. BCR-359, white in colour.
(b) Honda CRV Station Wagon Vehicle Registration No. BCN – 491, white in colour.
(c) Nissan Sunny Station Wagon Vehicle Registration No. BEY-734, light brown in colour.
(d) Toyota Hiaace, 15-Seater Bus Vehicle Registration No. PO321 G, grey in colour.
(e) Toyota Land Cruiser 5 Doors Station Wagon Vehicle Registration No. BDQ-041 maroon in colour.
(f) Toyota Hilux 5th Element 4x4 Utility Vehicle Registration No. BEJ-818.
(g) Isuzu FSR 8,000 Tonne Truck Vehicle Registration No. BEL-044.
(h) Nissan Altlas Easy-Loader Truck Vehicle Registration No. BEV-028.
(i) Toyota Fortuna 4WD Station Wagon Vehicle Registration No. BCN-616.
(j) Section 3 Allotment 25, Hohola, Malas Street, National Capital District.
(k) Portion 2836C, Vacant Land, Vadavada, Taurama Valley, National Capital District.
(l) Portion 2842C, Vacant Land, Vadavada, Taurama Valley, National Capital District.
(m) Portion 2843C, Vacant Land, Vadavada, Taurama Valley, National Capital District.
(n) Portion 2844C, Vadavada, Taurama Valley, National Capital District.
(2) Consequently, an order pursuant to Order 14 rule 10(1) & (2) of the National Court Rules authorizing the Police to get possession of the vehicles referred to in paragraph 3(1)(a) to (l) and detain them in Laguna Hotel Car Park or any other locations as the Court deems fit.
EVIDENCE
7. The plaintiff prepared a written submission which was handed up in Court at the hearing. The submission is comprehensive. It makes detail references to the evidence in support, which consists of a total of 5 affidavits, that is, 2 affidavits of Donald Kints both filed on 17 June 2021, 2 affidavits of Leslie Sibona filed on 17 June 2021 and 3 August 2021 respectively, and an affidavit of Londe Kumane filed on 17 June 2021 (the plaintiff’s evidence). The plaintiff also filed an Undertaking as to Damages on 17 June 2021.
8. The defendants made oral submissions in Court at the hearing. They rely on 1 affidavit, which is the affidavit of Valahu Sibona filed on 4 August 2021 (Mr Sibona’s evidence). The principal defendant, the first defendant, did not depose to any affidavit in response to the NoM.
COMMON GROUND
9. Upon hearing from both counsel, it is obvious that counsel for the defendants did not challenge the material issues and the evidence that had been presented by the plaintiff in regard to the NoM.
10. It is not disputed that the first defendant has left the country and is based overseas from the time when the allegations of misappropriation of funds were raised against him and before commencement of this proceeding. It is also not disputed that police are investigating the matter.
11. The only main argument raised by counsel for the defendants in relation to the NoM concerns the safe keep of the assets concerned, and whether it was necessary at all to grant the interim relief.
ISSUES
12. The main issues in my view are as follows, (i), whether the plaintiff has established the elements required for the Court to exercise its discretionary powers and restrain and preserve the assets and properties concerned, (ii), whether the present state of affairs of and the whereabouts of, the assets and land are sufficient, and if so, whether it is not necessary that the interim orders should be granted, and (iii), if the Court is minded to grant the interim orders, where will the vehicles be kept until further order of the Court?
SOURCE
13. Relief 3 is based on Schedule 2.2(1) of the Constitution and Order 14 rule 10(1) of the National Court Rules. The defendants did not contest the source, so I will proceed on that basis. This is besides the fact that I also find the sources invoked to be in order. The relief sought is equitable in nature and I note that it also seeks this Court’s Order to preserve assets and properties which are implicated in the allegations as pleaded by the plaintiff in the Amended Writ of Summons and Statement of Claim.
REQUIREMENTS
14. I have had the benefit of considering the plaintiff’s evidence. In my view, the allegations raised by the plaintiff are supported with evidence. I find prima facie evidence which indicates that the first defendant, his wife, and his in-laws, and with the companies that they operate, may have defrauded or misapplied substantial monies that belonged to the plaintiff, that is, between 2012 to 2015. Evidence shows that the first defendant would have earned less than K500,000 during his 10 years tenure of employment with the plaintiff yet he appears to have accumulated wealth, which included creation of companies and acquiring of land, which were valued, according to the plaintiff, beyond K5 million or millions of kina.
15. I note that this is not a trial, and the plaintiff would still have the burden of proof to establish all its allegations at the substantive hearing. However, given that the principal defendant, the first defendant, has left the country soon before or after the alleged incidents, and given that he has not provided any evidence to oppose the NoM, I find the plaintiff’s evidence filed herein in support of the NoM reliable and unopposed at this juncture.
16. That said, I note the defendants’ affidavit deposed to by Mr Sibona. The evidence only addresses the motor vehicles that are being sought to be preserved or impounded by the plaintiff in the present NoM. Mr Sibona deposes that 5 of the vehicles are presently under the care or custody of police for investigation. The vehicles are, (i) Toyota Land Cruiser 5 Doors Station Wagon Vehicle Registration No. BDQ-041 maroon in colour, (ii), Toyota Hilux 5th Element 4x4 Utility Vehicle Registration No. BEJ-818, (iii), Isuzu FSR 8,000 Tonne Truck Vehicle Registration No. BEL-044, (iv), Nissan Altlas Easy-Loader Truck Vehicle Registration No. BEV-028, and (v), Toyota Fortuna 4WD Station Wagon Vehicle Registration No. BCN-616.
17. Mr Sibona further deposes that 3 of the vehicles listed in the NoM are not road worthy. They are (i), Nissan Navara Double Cab Utility Registration No. BCR-359, white in colour, (ii), Honda CRV Station Wagon Vehicle Registration No. BCN – 491, white in colour, and (iii), Toyota Hiace, 15-Seater Bus Vehicle Registration No. PO321 G, grey in colour. In regard to this listed vehicle, namely, Nissan Sunny Station Wagon, Registration No. BEY-734, light brown in colour, Mr Sibona deposes that it belongs to a third party, a Bruce Ahab who has possession of it.
18. When I consider these, and in particular considering the fact that no serious contest is raised by the defendants to the NoM, I make the following findings based on the principles set out in these case authorities, Ramu Nico Management (MCC) Ltd v. Tarsie (2010) SC1075, American Cyanamid Company v. Ethicon Ltd (1975) 1 All ER 594, Craftworks Niugini Pty Ltd v. Allan Mott (1997) SC525 and Chief Collector of Taxes v. Bougainville Copper Ltd (2007) SC853. The requirements are, (i) whether there is a serious question to be tried, (ii), whether damages would be an adequate remedy, and if so, (iii), whether the plaintiff would be sufficiently compensated if damages is ordered in its favour at the trial and no interim order is made now, and (iv), whether the plaintiff has given an undertaking as to damages. So, I ask myself this. Is there a serious question to be tried? I am satisfied that the plaintiff has demonstrated a serious question to be tried. The plaintiff’s evidence shows serious allegations of misuse of funds that belonged to the company of more than K5 million. The main serious allegation is that during the tenure of employment with the plaintiff, the first defendant used cash deposits, from sales of the plaintiff’s products, to purchase and create his companies with the assistance of the other defendants, and that he has acquired assets and land by the said conduct. Again, I remind myself that these are allegations made by the plaintiff, and although there is evidence filed to support its claim, this is not a trial, and I am not making any substantive findings on the allegations raised at this stage.
19. In regard to the second requirement, that is, whether damages may be an adequate remedy, I am firstly satisfied that damages may be an adequate remedy if the injunction or a preservative order is not granted. However, when I consider the second leg, that is, balance of convenience or whether the defendants would be able to sufficiently compensate the plaintiff if damages is awarded, I am not satisfied that the defendants may have that capacity. See case: American Cyanamid Company v. Ethicon Ltd (supra). I say this based on the evidence and allegations that is presented. It seems that the defendants may have ceased their business activities given the police investigations which is ongoing. They have also not disclosed evidence to show their present business activities or status of their operations in response to the NoM. Evidence adduced shows that the principal defendant, the first defendant, has traveled out of this jurisdiction. All the investigations that have been carried out were by the plaintiff with the assistance of police. There is therefore, and in my view, a need to preserve the assets and properties concerned pending the final determination of the matter or until further orders of the Court. The evidence by Mr Sibona is not supported with documentations. It is given under oath like the plaintiff’s evidence, but they all have not been tested. However, unlike Mr Sibona’s deposition, the plaintiff’s evidence has documentations supporting its claims. And finally, I note that the plaintiff has given an undertaking as to damages on 17 June 2021. The undertaking was given by a director Barry James Tan and bears the plaintiff’ common seal.
20. I am therefore minded to grant the relief sought under paragraph 3 of the NoM.
21. I am also minded to grant orders that would preserve the assets and properties, that is, those that are pleaded under relief 3(1)
of the NoM. Hartshorn J in IPBC v. MVIL (2017) SC6667, stated at para. 17 which I adopt and quote in part:
To my mind, the use of the definite article in “the property” in Rule 10(1) grants jurisdiction only in respect of that property which is the subject of the proceedings, or in respect of any question that has arisen concerning that property.
The assets and properties sought to be preserved herein are the subject of the proceeding as pleaded in the Amended Writ of Summons and Statement of Claim. As such, this Court, in my view, has jurisdiction to make interim orders to preserve them.
SAFE KEEP
22. Both parties made submissions on where the assets or vehicles may be stored in the event the Court grants the relief. I am minded to make an order for the vehicles to be kept at a designated area of the plaintiff’s premises at the Laguna Hotel in Waigani. The orders will also take into account the police investigations and that it should not hinder police from having access to the vehicles for that purpose.
23. I am also minded to make orders (consequential) that permits the plaintiff to furnish a report to the Sherriff of the National Court, on a quarterly basis, setting out, amongst others, an itinerary of the impounded vehicles, their status and security for their safe keep. This order is to accommodate concerns raised by the defendants regarding the safe keep of the vehicles. In that way, they may, if they so wish, request for and obtain a copy of the report either from the plaintiff or at the Sherriff’s office for their benefit or purpose.
24. Finally, I will also make a consequential order whereby parties may be at liberty to apply upon giving 5 clear days’ notice.
SUMMARY
25. I will exercise my discretion and grant relief 3 of the NoM with variations and consequential orders.
COST
26. An order for cost in this type of application is discretionary. I will order cost to follow the event on a party/party basis to be taxed if not agreed.
ORDERS OF THE COURT
27. I make the following orders:
(1) the defendants are restrained from using, selling and/or disposing the following vehicles and properties:
Vehicles
(a) Nissan Navara Double Cab Utility Registration No. BCR-359, white in colour.
(b) Honda CRV Station Wagon Vehicle Registration No. BCN – 491, white in colour.
(c) Nissan Sunny Station Wagon Vehicle Registration No. BEY-734, light brown in colour.
(d) Toyota Hiaace, 15 Seater Bus Vehicle Registration No. PO321 G, grey in colour.
(e) Toyota Land Cruiser 5 Doors Station Wagon Vehicle Registration No. BDQ-041 maroon in colour.
(f) Toyota Hilux 5th Element 4x4 Utility Vehicle Registration No. BEJ-818.
(g) Isuzu FSR 8,000 Tonne Truck Vehicle Registration No. BEL-044.
(h) Nissan Altlas Easy-Loader Truck Vehicle Registration No. BEV-028.
(i) Toyota Fortuna 4WD Station Wagon Vehicle Registration No. BCN-616.
Properties
(j) Section 3 Allotment 25, Hohola, Malas Street, National Capital District.
(k) Portion 2836C, Vacant Land, Vadavada, Taurama Valley, National Capital District.
(l) Portion 2842C, Vacant Land, Vadavada, Taurama Valley, National Capital District.
(m) Portion 2843C, Vacant Land, Vadavada, Taurama Valley, National Capital District.
(n) Portion 2844C, Vadavada, Taurama Valley, National Capital District.
(2) Consequently, pursuant to Order 14 Rule 10(1) & (2) of the National Court Rules, members of the Royal Papua New Guinea Constabulary are authorised to get possession of the vehicles referred to in paragraph 1(1)(a) to (i) above and detain them in Laguna Hotel’s Car Park or at a designated area within the hotel precincts.
The Court orders accordingly.
________________________________________________________________
Jema Lawyers: Lawyers for the Plaintiff
Rageau Manua & Kikira: Lawyers for the Defendants
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