Ngusu Glan Ltd v Waowao [2022] PGNC 566; N10092 (20 December 2022)

N10092

PAPUA NEW GUINEA
[IN THE NATIONAL OF JUSTICE]

OS NO. 168 OF 2022

BETWEEN:
NGUSU GLAN LIMITED
First Plaintiff

AND:
CHARLES LESLEY in his capacity as a SHAREHOLDER AND CHAIRMAN OF THE NGUSU GLAN LTD
Second Plaintiff

AND:
STEVEN WAOWAO
First Defendant

AND:
OSCAR BATAEK
Second Defendant

AND:
ABRAHAM KATNAM
Third Defendant

AND:
DOMINIKUS KARIGAM
Fourth Defendant

AND:
JACKSON ALLAN
Fifth Defendant

AND:
DOUGLAS KUKULO
Sixth Defendant

Kokopo: Dingake J
2022: 18^th November

PRACTICE AND PROCEDURE – application to dismiss proceedings – grounds of – proceedings is abuse of court process – second plaintiff failed to obtain leave of the court before issuing this court proceedings – second plaintiff acted contrary to s 143 Companies Act 1997 – proceedings commenced despite a stay order granted by the Supreme Court not to commence any proceedings until pending supreme court appeal has been decided - Proceedings in OS No. 168 of 2022 (or any other application related thereto) before this Court not to be progressed further pending the finalization of the appeal lodged by the Defendants

Cases Cited:

Mark Philip v Ken Tiliyago [2019] SC1783
Luke Lupia as Chief of Palitokola Clan of Imenga Tribe v ExxonMobil PNG Ltd and Nabor Drilling [2016] N6484
Vincent Kaupa and Hon Charles Abel as Minister for Culture & Tourism v Simon Poraituk and Trustees of the National Museum & Art Gallery (2008) SC955

Counsel:

Mr. Emmanuel Issac, for the Plaintiffs
Mr. Rakatani Raka, for the Defendants

RULING

20^th December, 2022

1. DINGAKE J: This is my ruling with respect to the application by the Defendants filed with this Court on the 2^nd of September 2022 in which they sought to dismiss the proceedings for abuse of Court process, pursuant to Order 12 Rule 40 (1) (c) of the National Court Rules (NCR) on the grounds that the Second Plaintiff failed to obtain leave of Court required under Section 143 of the Companies Act.
   
2. The material facts for purposes of determining this application bears stating briefly. The Plaintiff is a landowner company incorporated to represent the interests of the landowners.
   
3. On the 15^th of August 2019, the Plaintiff and VJ Holdings Ltd entered into a Memorandum of Understanding (MOU) and thereafter on the 3^rd of March 2020, entered into a Logging and Marketing Agreement (LMA).
   
4. On the 20^th of April 2021, the First Plaintiff terminated the MOU and LMA.
   
5. On or about the 22^nd of June 2021, the First Plaintiff instituted proceedings OS No. 204 of 2021 – Ngasu Glan Limited v VJ Holdings Limited & Steven Waowao (“OS No. 204 of 2021”) seeking to enforce the termination of the aforesaid Agreements.
   
6. The propriety of the termination of the Agreements was determined by this Court on the 6^th of June 2021. The Court held that the Plaintiff duly terminated the Agreements entered with VJ Holdings Ltd effective the 7^th of May 2021.
   
7. On the 14^th of June 2022 this Court granted ex parte Orders in OS No. 204 of 2021. The order issued was in the following terms:
   
   • (1) Pursuant to Order 1 Rules 7 and 15, Order 4 Rule 38(2)(a), (c) and (d) of the National Court Rules, the requirement for the service of the Notion of Motion is dispensed with and the Plaintiff is allowed to move this application ex parte.
     
   • (2) The Plaintiff shall serve this order and all documents on Steven Waowao as soon as possible and by 15 June 2022.
     
   • (3) Ngusu and Charles Lesley and all Directors and Secretaries shall issue fresh proceedings against Steven Waowao and all persons purporting to be shareholders and Directors in Ngusu Glan Limited.
     
   • (4) Pursuant to Order 12 Rule 1 of the National Court Rules and Section 155(4) of the Constitution, until further orders of the Court, the Second Defendant and his agents and/or associates are restrained from:
     1. Calling or holding any meetings in the name of the Plaintiff either as shareholders, directors or otherwise;
     2. The proposed meeting of 15 June 2002 shall not be held; and
     3. Interfering with the functions of the Plaintiff Chairman Mr. Charles Lesley and his management team.
        
   • (5) Pursuant to Order 12 Rule 1 of the National Court Rues and Section 155(4) of the Constitution, the Second Defendant shall produce to the court all documents that were lodged with the Investment Promotion Authority, including Form 10 and any other purported meeting minutes of the Plaintiff and resolutions.
     
   • (6) The matter shall return for inter-partes hearing on 11 July 2022 at 9am.
     
   • (7) Costs shall be addressed by this Court on 11 July 2022.
     
8. Significantly, for the purposes of this application, the Court also ordered that “Ngusu & Charles Lesley and all Directors and Secretaries shall issue fresh proceedings against Steven Waowao and all persons purporting to be Shareholders and Directors in Ngusu Glan Limited”.
   
9. The matter was then scheduled for inter-parte hearing on the 11^th of July 2022 at 9:00am.
   
10. On the 28^th of June 2022, Defendants filed a Notice of Appeal against the decision of this Court dated 6^th of June 2022, in OS No. 204 of 2021 and an application for stay in appeal proceedings SCA No. 91 of 2022 VJ Holdings Limited & Steven Waowao v Ngusu Glan Limited (“SCA No. 91 of 2022”).
    
11. The Defendants’ grounds of appeal run into several pages focusing mainly on the validity of the termination of the Agreements. More significantly, for the purposes of this Ruling, is the ground that this Court erred in law and in fact in failing to find that: “there was no proper, duly executed company resolution to institute proceedings in the Court below as a condition precedent to commencing any action or litigation in the name of the Respondent company”. (Emphasis mine).
    
12. On the 1^st of July 2022, the Plaintiff’s filed proceedings OS No. 168 of 2022 – Ngusu Glan Limited & Another v Steven Waowao & 5 Others (“OS No. 168 of 2022, ostensibly pursuant to Term 3 of the exparte Orders of the 14^th of June 2022.
13. On the 13^th of July 2022, the Supreme Court stayed proceedings OS No. 204 of 2021. The Court ordered that:
    
    1. “The requirement for service be dispensed with pursuant to Order 12 Rule 1(h) of the Supreme Court Rules, Order 1 Rule 7 of the National Court Rules, Order 4 Rule 38 and 42 of the National Court Rules and Order 13 Rule 14(1) and 14(7) of the Supreme Court Rules 2012 and Section 155(4) of the Constitution.
       

2. That pursuant to Section 19 of the Supreme Court Act and Section 155(4) of the Constitution, the entire proceedings and the judgment and orders of His Honour Justice Kassman made on 6 June 2022, at Kokopo in National Court proceedings OS No. 204 of 2021 – Ngusu Glan Ltd v VJ Holdings Limited & Steven Waowao are stayed forthwith pending the hearing and determination of this appeal.
   

iii) Costs be in the appeal.”

14. On the 1^st of August 2022, this Court heard OS No. 168 of 2022 in relation to the Plaintiff’s Notice of Motion seeking restraining orders. The Court granted the Orders sought.
    
15. The Orders issued by the Court on the 1^st of August 2022, in OS No. 168 of 2022 were that:
    
    1. Steven Waowao, Oscar Bataek and Abraham Karigam are restrained from holding themselves out as Directors of Ngugu Glan Limited, pending determination of this proceeding.
       
    2. All six (6) Defendants (except Jackson Allan) are restrained from holding themselves out as Shareholders of Ngusu Glan Limited, pending determination of this proceedings.
       
    3. The meeting and resolution of a purported meeting of Ngusu Glan Limited held on 15 June 2022, are stayed form taking effect pending determination of this proceedings.
       
16. When this matter was called for hearing on the 18^th of November 2022, the Defendants in their submissions asked the Court to determine the question whether given the Stay Order of the Supreme Court reproduced earlier this matter is properly before the Court. The Defendants submitted that the matter was not properly before this Court as the appeal referred to earlier is still pending.
    
17. As is plain from the chronology of events set out earlier, this application (the Notice of Motion) filed on the 2^nd of September 2022, by the Defendants) sought to dismiss the proceedings for failure by the Second Plaintiff to obtain leave to issue these proceedings pursuant to Section 143 of the Companies Act 1997.
    
18. In order to appreciate the full import of the argument that this matter is improperly before this Court it should be recalled that the appeal filed by VJ Holdings Ltd and the First Defendant against the judgment and or orders of the National Court in National Court proceedings OS No. 204 of 2021, questions amongst others, the right of the First Plaintiff to issue the said proceedings in the National Court. This issue is yet to be determined by the Supreme Court.
    
19. In my view the issue of standing that looms large in the appeal and which goes to the standing of the First Plaintiff is important and cannot be ignored. This is so because if the Supreme Court finds that the First Plaintiff has no standing, the proceedings can’t be progressed further – as they would be no proceedings to progress. (Mark Philip v Ken Tiliyago [2019] SC1783 and Luke Lupia as Chief of Palitokola Clan of Imenga Trive v ExxonMobil PNG Ltd and Nabor Drilling [2016] N6484.
    
20. The standing of the Plaintiff goes to the issue of jurisdiction of the Court and failure to demonstrate it would render the proceedings invalid.
    
21. In my respectful view, it was improper and a violation of the effect of the Supreme Court Stay Order that whilst the appeal is pending before the Supreme Court the Plaintiffs have gone ahead and filed this proceeding pursuant to ex parte Orders granted on 14 June 2022.
    
22. It is important to note that the Stay Order said the proceedings are stayed, “forthwith”. The Order stayed the entire National Court proceedings OS No. 204 of 2021 and the judgment and orders of the National Court.
    
23. I agree with the submissions of the Defendants that since the question of standing of the Plaintiff in OS No. 204 of 2021 in issuing the said proceedings is before the Supreme Court and a Stay Order staying the said proceedings was granted, and was to take effect, “forthwith” this court cannot progress this matter without risking undermining the authority of the apex court.
    
24. In my considered opinion this Court has inherent powers to stop or protect its processes from being abused. I am of the view that to proceed with this current application in the face of a Stay Order referred to above would amount to an abuse of court process.
    
25. The effect of stay order is obviously to preserve the status quo (Vincent Kaupa and Hon Charles Abel as Minister for Culture & Tourism v Simon Poraituk and Trustees of the National Museum & Art Gallery (2008) SC955. It is trite learning that a stay order puts to a hold permanently or temporarily the continuation of legal proceedings.
    
26. I am therefore of the considered opinion that in the face of the Supreme Court Stay Order, proceeding OS No. 168 of 2022, or any other application related thereto, cannot be proceeded with as this would undermine the authority of the Supreme Court and the Stay Order it issued.
    
27. In the result it is declared/ordered as follows:
    
    • (1) Proceedings in OS No. 168 of 2022 (or any other application related thereto) before this Court shall not be progressed further pending the finalization of the appeal lodged by the Defendants.
      
    • (2) There is no Order as to costs.
      

Emmanuel Lawyers: Lawyers for the Plaintiffs
Nelson Lawyers: Lawyers for the Defendants