Ngusu Glan Ltd v VJ Holdings Ltd [2022] PGNC 383; N9759 (10 August 2022)

N9759

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 204 OF 2021

BETWEEN:
NGUSU GLAN LIMITED
Plaintiff

AND:

VJ HOLDINGS LIMITED
First Defendant

AND:

STEVEN WAWAO and HIS AGENTS AND ASSOCIATES
Second Defendant

Kokopo: Kassman J
2021: 10^th August

PRACTICE AND PROCEDURE – motion by defendants to dismiss plaintiffs proceedings for disclosing no reasonable cause of action and for being frivolous and vexatious under Order 12 rule 40 of National Court Rules - numerous facts in dispute between the parties arising from and surrounding the MOU and LMA and also their obligations under the FCA - Commencement of proceedings by originating summons are appropriate where the principal or sole question at issue is one of construction of an Act or any instrument or contract and in which there is unlikely to be substantial dispute of facts and where the Plaintiff is not claiming damages - the facts and issues are not as simple and minimal - there are numerous factual issues in dispute or contention between the parties - Court may order proceedings to continue on pleadings – order granted for proceedings to continue on pleadings - Order 4 rule 35 of the National Court Rules

Legislations Cited:

National Court Rules O 4 r 35
Companies Act 1997 s. 16
Forestry Act s. 90B(8)

Counsel:

Mr E. Isaac, for the Plaintiff
Mr R. Rakatani, for the First and Second Defendants

RULING

10^th August, 2022

1. KASSMAN J: By a Notice of Motion filed 26 July 2021, the Defendant applies for dismissal of the proceedings for abuse of process of the court citing O.12 r. 40(1)(a)(b) and (c) of the National Court Rules.
   
2. In the Originating Summons filed 22 June 2021, the Plaintiff seeks a number of declarations and consequential orders. The four declarations sought are:
   
   1. Pursuant to section 16 of the Companies Act 1997 and 90B (8) of the Forestry Act 1991 (as Amended 2007), a declaration that the Plaintiff, as the holder of the Forest Clearance Authority FCA No.15-19 over Simbali Tree Plantation Project, Pomio District, East New Britain, is entitled to and is at all times at liberty to partner with any developer it wishes to partner with.
      
2. Pursuant to section 90B (8) of the Forest Act, section 155, (4) of the Constitution and by virtue of being the holder of FCA No. 15-19, the Plaintiff is entitled to terminate all and any agreement it had or has with the First Defendant.
   
3. A declaration that all and any agreement(s) that the Plaintiff had with the First Defendant stands terminated.
   
4. Pursuant to section 16 of the Companies Act 1997, a declaration that the Second Defendant has no right to act for and on behalf of the Plaintiff including calling of meetings of shareholders.
   
3. The Defendants relied on submissions handed up in court and the following affidavits:
   
   1. Chew Pang Heng filed – 26/07/21 [document 18]
   2. Steven Waowao filed – 26/07/21 [ document 19]
   3. Lison Namas filed – 26/07/21 [document 20]
   4. Nason yao filed – 26/07/21 [document 21]
   5. Christopher Dominikus filed – 26/07/21 [document 22]
   6. Jackson Allan filed – 26/07/21 [document 23]
   7. Jeffery Dominikus filed – 26/07/21 [document 32]
   8. Chew Pang Heng filed – 04/08/21 [document 39]
      
4. In response, the Plaintiff relied on submissions handed up in court and the following affidavits:
   
   1. Charles Lesley filed – 22/06/21 [document 4]
   2. Albert Sinn filed – 22/06/21 [document 5]
   3. Ruben Mamong filed – 22/06/21 [document 6]
   4. Otte Kewafa filed – 22/06/21 [document 7]
   5. Joseph Steven filed – 22/06/21 [document 8]
   6. Smelda Nason filed – 22/06/21 [document 9]
   7. Hendrick Awarin filed – 22/06/21 [document 10]
   8. Lukas Sidio filed – 22/06/21 [document 11]
   9. Charles Lesley filed – 26/07/21 [document 15]
   10. Otte Kewaf filed – 26/07/21 [document 16]
   11. Albert Sinn filed – 28/07/21 [document 27]
   12. Emmanuel Isaac filed – 28/07/21 [document 28]
   13. Emmanuel Isaac filed – 28/07/21 [document 30]
   14. Otte Kewaf filed – 03/08/21 [document 37]
   15. Charles Leslie filed – 28/07/21 [document 38]
       
5. The Plaintiff in the Originating Summons cites:
   
   • (a) section 16 of the Companies Act 1997 which provides “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”
     • this is a provision of the law recognising a company’s existence and status until it is deregistered. It does not provide this court with jurisdiction to make the declarations sought. The Plaintiff has misapprehended this provision.
       
   • (b) section 90B(8) of the Forestry Act provides that, in dealing with applications for a forest clearing authority for agriculture or other land use, “(8) The Board shall, on approval of the application, grant to the applicant a forest clearing authority to carry out an agriculture or other land use development which authority shall- (a) be in the prescribed form: and (b) require a performance bond in accordance with section 98 for an amount specified in the authority: and (c) specify such other conditions as are determined by the Board.” This provision speaks for itself. It does not provide this court with jurisdiction to make the declarations sought. I will not make any further comment at this stage for the reasons that follow.
     
6. There exists a Memorandum of Agreement (MOU) executed on 15 August 2019 and a Logging & Marketing Agreement (LMA) between the Plaintiff and the First Defendant executed on 3 March 2020. Apparently, those contractual agreements were duly executed. From that, the PNG Forest Authority issued to the Plaintiff a Forest Clearance Authority (FCA) on 7 October 2020.
   
7. The Plaintiff asserts it has taken steps or has in fact terminated the MOU and LMA with the First Defendant and seeks a declaration that it is at liberty to enter into a contract with another developer in place of the First Defendant.
   
8. The Defendants refute these assertions of the Plaintiff and say the Plaintiff has no lawful authority of its shareholders and directors to take the steps it purports to have taken in terminating the MOU and LMA with the First Defendant as no proper meetings have been called and resolutions passed by the Directors and shareholders of the plaintiff in that regard. Further, the Defendants also say the commencement of these proceedings and the engagement of the lawyers for the Plaintiff are also not authorized by the directors and shareholders of the Plaintiff. Further, the Defendants also say the LMA provides for termination in clause 22 and arbitration in clause 28 and those avenues or processes have not been exhausted and for that reason these actions of the Plaintiff in purporting to terminate the MOU and LMA and commence these court proceedings are premature and contrary to the contractual obligations of the Plaintiff and the First Defendant under the MOU and LMA.
   
9. In response, the Plaintiff says the MOU and LMA were executed many months before issue of the FCA by the PNG Forest Authority and that is unusual. The Plaintiff says it is not bound by the MOU and LMA and is at liberty to enter into an agreement with another developer. The FCA is valid for eight years and over one year has passed with no progress by the First Defendant which has also failed to deliver on critical obligations under the LMA and FCA. In particular, the Plaintiff argues the First Defendant has failed to lodge with PNG Forest Authority a performance bond. I note that annexed to the Affidavit of Chew Pang Heng filed 26 July 2021 is a Performance Guarantee issued by First Investment Finance Limited to PNG Forest Authority dated 9 June 2021 in the sum of K595,000 in respect of the FCA.
   
10. Clearly there are numerous facts in dispute between the parties arising from and surrounding the MOU and LMA and also their obligations under the FCA. Commencement of proceedings by originating summons are appropriate where the principal or sole question at issue is one of construction of an Act or any instrument or contract and in which there is unlikely to be substantial dispute of facts and where the Plaintiff is not claiming damages.
    
11. In this matter, the facts and issues are not as simple and minimal as asserted by the Plaintiff. The significant number of affidavits filed by the parties is an indication that there are numerous factual issues in dispute or contention between the parties. Order 4 rule 35 of the National Court Rules provide the Court may order proceedings to continue on pleadings. I will not dismiss the proceedings. In the exercise of my discretion, I will order that the proceedings continue on pleadings.
    
12. The formal orders of the court are:
    
    1. The Defendants’ application to dismiss the proceedings is refused.
    2. The Plaintiff shall file and serve a Statement of Claim by 17 August 2021.
    3. The Defendants shall file and serve a defence/cross-claim by 24 August 2021.
    4. The Plaintiff shall file and serve a reply/defence to cross-claim by 31 August 2021.
    5. The Plaintiff shall file and serve affidavits and notice to rely by 7 September 2021.
    6. The Defendants shall file and serve affidavits and notice to rely by 14 September 2021.
    7. The Plaintiff shall file and serve statement of agreed and disputed facts and legal issues by 21 September 2021.
    8. The Plaintiff and defendants shall file and serve notice to cross-examine by 21 September 2021.
    9. Parties shall return to court for directions at 9:30am on 11 October 2021.
    10. The interim restraining order issued to the First Defendant is extended until return of the matter for directions on 11 October 2021.
    11. The time for entry of this order is abridged to the date of the settlement by the Registrar which shall take place forthwith.
        

Ruling accordingly

Emmanuel Lawyers: Lawyer for the Plaintiff
Nelson Lawyers: Lawyer for First and Second Defendants