Gigira Development Corporation Ltd v Talu [2021] PGNC 79; N8852 (1 June 2021)

N8852

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

MP (COMM) NO. 19 OF 2020 (IECMS)

IN THE MATTER OF THE COMPANIES ACT 1997, SECTION 152(1)(2)(3) & (4)(g) AND IN THE MATTER OF THE COMPANIES RULES, RULE 14(c)

AND:
IN THE MATTER OF PETROLEUM EXPLORATION JOINT VENTURE LIMITED (1-35304)

BETWEEN:
GIGIRA DEVELOPMENT CORPORATION LIMITED
First Petitioner

AND:
TUKUPA DEVELOPMENT CORPORATION LIMITED
Second Petitioner

AND:
KEWAPA DEVELOPMENT CORPORATION LIMITED
Third Petitioner

V

STANIS TALU
First Respondent

AND:
PUKULA HEREBA
Second Respondent

AND:
DANIEL NERE
Third Respondent

Waigani: Anis J
2021: 21^st May & 1^st June

NOTICE OF MOTION –– Application to dismiss based on doctrine of res judicata and issue estoppel– finality of litigation – claim that matter had been trialed by the petitioners in related proceedings which had gone as far as the Supreme Court and dismissed – whether this proceeding is an abuse of process – considerations – exercise of discretion

Cases Cited:

Maip v. Moge Nambuga Milinb Investment Ltd (2020) SC1908
Niugini Building Supplies Ltd v. National Housing Estate Ltd (2020) SC1985
Sunset Rentals Ltd v. Pacific View Apartments Ltd (2020) SC 1994
Gawan Kuyan v. Andrew Salle; Andrew Sallel v. Gawan Kuyan (2008) N3376
GR Logging Limited v. David Dotaona and Ors (2018) SC1690
Tulom Abai and 765 others v The State (1995) N1402
Mark Ekepa & ors v. William Gaupe & ors (2004) N2694

Counsel:

D Bidar, for the Petitioners
G Manda, with counsel assisting G Makap, for the Respondents

RULING

1^st June, 2021

1. ANIS J: The respondents applied to dismiss the proceeding for abuse of court process. The application was contested. It was heard at 2:30pm on 14 May 2021. I reserved my ruling thereafter to a date to be advised.

2. Parties have been notified so I rule on it now.

BACKGROUND

3. The 3 petitioners (the petitioners) are companies created under the Companies Act 1997 (the Companies Act). They are landowner companies of one of the oil and gas rich provinces of Papua New Guinea, the Hela Province. They represent more than 6,000 landowners from the area where Petroleum Development License One (PDL 1) is situated. In May of 1999, the petitioners entered into a joint venture agreement (JV) amongst themselves. From the JV, they established an umbrella company, the subject of this proceeding, called Petroleum Exploration Joint Venture Limited (PEJVL or the company). The petitioners hold equal shares in PEJVL.

4. The petitioners file this petition as shareholders, pursuant to s. 152 of the Companies Act. They argue or assert their rights as shareholders of PEJVL in their petition to allege that the affairs of the company have been, or are being, or are likely to be, conducted in a manner that is, or any act or acts of the company have been, or are, or are likely to be, oppressive, unfairly discriminatory, or unfairly prejudicial to them as shareholders.

5. In the petition, and I will paraphrase, the petitioners allege that the respondents, in their executive capacities (1^st and 2^nd respondents as chairman and director) and purported position (3^rd respondent as general manager) of the company at the material time, acted against its interest. They say monies that had been provided by the Government to the company to the tune of K18 million, which was for the beneficiaries (i.e., landowners of the area where PDL 1 is situated) whose interests the petitioners (as shareholders of the company) represent, had been unlawfully dealt with by these respondents. They say the company or PEJVL operates a Bank South Pacific Limited account which is its original and only account. They say the respondents deceitfully or illegally opened a separate account purportedly for the company with the ANZ bank. They say the first K10 million had been paid by the State on 6 December 2011, which was accepted by these respondents and paid to the company’s said illegitimate or unauthorized ANZ bank account. They say the respondents then used up the K10 million that was deposited in the ANZ account for their own purposes or outside the interest of the company, within weeks from the date of deposit. They say in April of 2013, they had learnt that the remaining balance of the K18 million, that is, K8,000,000 was paid into the ANZ account. They say in the petition that PEJVL then took steps to commence proceeding in the National and Supreme Courts, that is, WS No. 375 of 2013 - Petroleum Joint Venture Limited and Ors v. Stanis Talu and Ors, and SCA 24 of 2019 - Petroleum Joint Venture Limited v. Stanis Talu & Ors v. (earlier proceedings). It is not disputed that similar allegation or claims had been made by PEJVL against the respondents. Restraining orders were obtained and the K8 million was ordered and paid into the National Court Trust Account. On 11 March 2019, the National Court dismissed the proceeding after a hearing. PEJVL appealed the decision to the Supreme Court. On 28 October 2020, the Supreme Court dismissed the appeal as incompetent. The petitioners claim that on 22 February 2021, the K8,300,000 from the National Court Trust Account was paid into the trust account of the respondents’ lawyers Greg Manda Lawyers.

6. The petitioners were aggrieved by the actions or inactions of the respondents and or PEJVL and filed the present petition. In summary, they say in the petition that the actions and omissions by the respondents amount to unlawful, deceitful, and fraudulent conducts and an unlawful conversion of the funds and property of the company and the petitioners. They also say that the actions and omissions by the respondents were performed collectively and severally, and that they conspired with full intent and knowledge to defraud the company and the petitioners and cause them financial loss.

7. On 26 February 2021, interim ex parte orders were granted by this Court in favour of the petitioners against the respondents and their lawyers, amongst others, against the use of K8,300,000 that had been paid by the National Court Trust Account into the trust account of Greg Manda Lawyers. The balance of the petitioners’ application and this application may be heard at a later date, that is, subject to the outcome of what is now before me.

MOTION

8. What I am asked to consider at this juncture is part of the first relief sought in the respondents’ notice of motion filed on 18 May 2021. That part of the relief seeks to dismiss the petition for abuse of court process. Two reasons relied on are (i) the doctrine of res judicata and (ii), issue estoppel. The respondents argue that the issues or cause of action which the petition is based on, had been dealt with and determined by both the National and Supreme Courts, in proceedings WS No. 375 of 2013 - Petroleum Joint Venture Limited and Ors v. Stanis Talu and Ors, and SCA 24 of 2019 - Petroleum Joint Venture Limited v. Stanis Talu & Ors (earlier proceedings).

9. The petitioners contest the claim that the proceeding is an abuse of court process. They argue that the doctrine of res judicata or issue estoppel do not apply because they were not parties to the earlier proceedings. Secondly, they argue that the issues that they now raise are different and are based on a different cause of action which is not the same as that in the earlier proceedings. And they also argue in the alternative that even if this matter is similar to the earlier proceedings, the issues raised in the earlier proceedings were never heard and determined on their merits; that it was dismissed in the National Court on competency or preliminary reason, and the appeal that was lodged in the Supreme Court, was dismissed on jurisdictional or competency reason and not on the merits or on findings on the appealed grounds.

ISSUES

10. The main issues are, (i), whether the petitioners were parties to the earlier proceedings, ((ii), whether the cause of action and the issues herein are the same as the earlier proceedings, (iii), whether a court of competent jurisdiction had finally determined issues or questions of facts and law which are or may be raised herein, and (iv), whether the Court should exercise its discretion and dismiss the proceeding.

PETITIONERS AS SHAREHOLDERS

11. The respondents do not raise any challenge to the standing and shareholding status of the petitioners in this proceeding. The petitioners hold equal shares in PEJVL.

12. At the hearing, I asked counsel whether the petitioners were parties to the related proceedings, and if not, whether counsel had considered the fact that PEJVL was and is a legal person separate from its shareholders, and that the petitioners (as shareholders) were entitled to exercise their rights or seek relief as provided for under s. 152 of the Companies Act which are pleaded in this proceeding. Counsel appeared to concede that the petitioners were not parties to the related proceedings and of their legal status as shareholders of PEJVL. But counsel submitted that the petitioners were fully aware of the related matters. Counsel submitted that evidence that had been adduced in the related proceeding were provided with the knowledge or assistance of the petitioners. I note, however, that counsel did not refer to any law or case law to address the Court’s 2 queries except maintain his clients’ claims or arguments as summarized.

13. The petitioners responded by pointing to s. 16 and s. 152 of the Companies Act, plus case law that they cite in their written submission.

14. Sections 16 and 152, state:

16. Separate legal personality.

A company is a legal entity in its own right separate from its shareholders and continues in existence until it is removed from the register.

...... (Underlining mine)

152. Prejudiced shareholders.

(1) A shareholder or former shareholder of a company, or any other entitled person, who considers that the affairs of a company have been, or are being, or are likely to be, conducted in a manner that is, or any act or acts of the company have been, or are, or are likely to be, oppressive, unfairly discriminatory, or unfairly prejudicial to him in that capacity or in any other capacity, may apply to the Court for an order under this section.

(2) Where, on an application under this section, the Court considers that it is just and equitable to do so, it may make such order as it thinks fit including, without limiting the generality of this subsection, an order—

(a) requiring the company or any other person to acquire the shareholder's shares; or

(b) requiring the company or any other person to pay compensation to a person; or

(c) regulating the future conduct of the company's affairs; or

(d) altering or adding to the company's constitution; or

(e) appointing a receiver of the company; or

(f) directing the rectification of the records of the company; or

(g) putting the company into liquidation; or

(h) setting aside action taken by the company or the board in breach of this Act or the constitution of the company.

(3) No order may be made against the company or any other person under Subsection (2)unless the company or that person is a party to the proceedings in which the application is made.

(4) Failure to comply with any of the following sections is conduct which is unfairly prejudicial for the purposes of this section:—

(a) Section 45;

(b) Section 47;

(c) Section 51;

(d) Section 57;

(e) Section 63;

(f) Section 98;

(g) Section 110.

(5) The signing by the directors of a company of a certificate required by this Act without reasonable grounds existing for an opinion set out in it is conduct that is unfairly prejudicial for the purposes of this section.

15. The law on company being a legal person or entity is settled. Section 16 is express. Case law on point include the following: Maip v. Moge Nambuga Milinb Investment Ltd (2020) SC1908, Niugini Building Supplies Ltd v. National Housing Estate Ltd (2020) SC1985, Sunset Rentals Ltd v. Pacific View Apartments Ltd (2020) SC 1994 and Gawan Kuyan v. Andrew Salle; Andrew Sallel v. Gawan Kuyan (2008) N3376.

16. As stated above, there is no serious dispute by the respondents on the status of the petitioners as shareholders of PEJVL. And I note that there is prima facie evidence that supports this claim. It may or may not be a contested issue at trial but for this purpose or at this juncture, evidence tend to support the petitioners’ claim in that regard.

ABUSE OF PROCESS

17. I ask myself this main query, that is, whether this proceeding constitutes abuse of process. The earlier proceedings, namely, WS 357 of 2013, was commenced by PEJVL against the respondents herein, based on civil fraud which was the tort of deceit. The amended writ is attached as annexure C to Mr Pipi’s affidavit filed on 6 November 2020. This fact is not disputed. So right there, the cause of action and the type of relief that is sought therein, appears different to the present proceeding, that is, in terms of the petitioners in their capacities as shareholders, their cause of action, and type of relief which they seek under s. 152 of the Companies Act.

18. The next fact, which was not seriously contested by the respondents, is this. The facts show that the proceeding was dismissed after a hearing, but it was not dismissed on its merits. The trial Judge’s written decision may be found at annexure M to Mr Pipi’s same affidavit. The trial Court only dealt with the preliminary issue, and upon being satisfied that no proper resolution had been passed by PEJVL for it to commence the proceeding, dismissed it without deliberating on the merits of the matter. PEJVL lodged an appeal in proceeding SCA No. 24 of 2019. The Supreme Court dismissed the appeal upon a successful objection to competency application that had been filed by the respondents. A copy of the Supreme Court’s decision is located at annexure N2 to Mr Pipi’s affidavit. SCA 24 of 2019 was dismissed as incompetent. The Supreme Court found that PEJVL had failed to validly invoke the Court’s jurisdiction in the appeal.

19. So, in summary, the material issue(s) or cause of action, was never determined in the earlier proceedings. PEJVL could have filed afresh its claim, if it had wanted to, soon after the matter was dismissed at the National Court level. But that aside and regardless, the petitioners herein are at liberty to file the proceeding in this manner. The background facts herein are similar to the related proceedings. However, although it may be said that the allegations of fact and law that are raised herein may be similar or the same, they have not been determined at all by a court of competent jurisdiction.

20. In GR Logging Limited v. David Dotaona and Ors (2018) SC1690, the Supreme Court states the meaning and distinctions of the doctrine res judicata and issue estoppel. And there are numerous other cases in this jurisdiction on point. I have considered them. I must say that I find Justice Sheehan’s definition or summary of the doctrine, in Tulom Abai and 765 others v The State (1995) N1402 simple and easy to understand. His Honour stated, and I quote:

“It is simple law that a claim that has been tried in a Court of Law and a decision lawfully made on it cannot be tried again in respect of the same matters.

The legal term for this is res judicata which means ‘the matter is decided’. That is, a final judgment by a competent Court on the merits of a claim has been made and is conclusive – final – as to the rights of the parties and those claiming through them. Such a decision is a bar to any new action involving the same claim or cause of action.”

21. In regard to issue estoppel, again there are various case law on point in this jurisdiction. In this case, I find Justice Cannings’ explanation, in Mark Ekepa & Ors v. William Gaupe & Ors (2004) N2694 to be precise. His Honour stated:

“The principle of issue estoppel is closely related to res judicata. It is a sub-set of res judicata. To establish the defence of issue estoppel a party only has to show that an issue of fact or law or mixed fact and law has been authoritatively and finally determined in a previous case. The cause of action does not have to be the same. Nor do the parties.”

22. In my view, when I apply these interpretations to the present case and submissions particularly by the respondents, I make the following findings. The respondents’ submissions on res judicata and issue estoppel and their applications to the present case, are misconceived and I dismiss them. I find that the petitioners were at liberty to commence this proceeding as they have. The National Court’s decision in the earlier proceedings, although it may be argued to be a final decision, did not, and if I may add, never finally determined the material issues that had been raised by PEJVL in the proceeding. And the appeal that had arose from that was limited to the preliminary findings by the trial Court. The Supreme Court’s dismissal of the appeal, in addition to the fact that it was an appeal that was based only on the preliminary findings of the trial judge, was based on competency ground rather than on the merit of the appeal. None of the material issues that had been raised in the earlier proceedings had been finally decided by a court of competent jurisdiction that could prevent the petitioners from raising them now.

SUMMARY

23. I therefore dismiss part of relief 1 of the respondents’ notice of motion filed on 18 May 2021. I refuse to dismiss the proceeding.

COST

24. The issue of cost in this type of application is discretionary. I will reserve my ruling on cost which will be determined at the hearing and conclusion of the balance of the present notice of motion as well as after also hearing the balance of the petitioners’ notice of motion filed on 26 February 2021. I will hear submissions from both counsel after this, on a time and date that they may propose for such hearing to take place.

ORDERS OF THE COURT

25. I make the following orders:

(1) Part of relief 1 of the respondents’ notice of motion filed on 18 May 2021, seeking dismissal of this proceeding, is dismissed.

(2) The balance of the relief sought in the respondents’ notice of motion filed on 18 May 2021, and the balance of the petitioners’ notice of motion filed on 26 February 2021, unless not resolved, shall be set down for hearing.

(3) Costs of the application is reserved to the joint hearing of the 2 motions.

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

The Court orders accordingly
________________________________________________________________
Goodwin Bidar Nutley: Lawyers for the Petitioners
Greg Manda Lawyers: Lawyers for the Respondents