Toselde v Deri [2023] PGNC 440; N10585 (24 November 2023)

N10585

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 196 OF 2023

BETWEEN:
PETER TOSELDE & LAWRENCE WANA (Deceased) by His Next Friend JIM BALTAPRE
Plaintiffs

V

ALBERT DERI, JOHN GALIA, NOEL TOSELDE, AILEEN MARKETE, BETTY WALU, CHRIS MILA, ELIAKIM RONGIRE, JACK BALIAU, LEO PESKALDE and THOMAS TOSELDE
First to Tenth Defendants

AND
HARRIET KOKIVA, Acting Registrar of Companies, Investment Promotion Authority
Eleventh Defendant

AND
GAMUPA OIL PALM DEVELOPMENT LIMITED
Twelfth Defendant

AND
HARGY OIL PALM LIMITED
Thirteenth Defendant

AND
BSP FINANCIAL GROUP LIMITED
Fourteenth Defendant

Waigani: Anis J
2023: 23^rd & 24^th November

ORIGINATING SUMMONS – hearing premised on challenges raised concerning changes made to company records kept by Investment Promotion Authority and Registrar of Companies – whether changes made to remove directors, shareholders and company secretary were made following the due processes and provisions under the Companies Act 1997 – challenge raised by former directors and shareholders of the company.

PRELIMINARY CHALLENGE – whether action may be premised on Order 12 Rule (1) of the National Court Rules and or s.155(4) of the Constitution – consideration – ruling.

Case Cited:
Steven Wembut and Ors v. Ok Tedi Fly River Development Foundation Ltd (2020) N8192

Counsel:
B Takua, for the Plaintiffs
P Mokae, for the First to the Tenth Defendants

JUDGMENT

24^th November 2023

1. ANIS J: This was a hearing concerning claims made under the Companies Act 1997 (CA). The plaintiffs claim that the 1^st to the 10^th Defendants have violated mandatory provisions of the CA including s.102 when they appointed themselves to be included as directors and shareholders of the 12^th Defendant.

2. At the closing submissions, Mr Mokae raised a preliminary issue, that is, concerning the jurisdictional basis for the cause of action including the mode of proceeding. I heard submissions on that together with the main submissions and reserved my ruling to a date to be advised.

3. This is my ruling.

BACKGROUND

4. The first plaintiff is a former director and shareholder of the 12^th defendant. The second plaintiff, who is suing by his next friend, is the other former director and shareholder of the 12^th defendant. They were the original executives of the 12^th Defendant since its inception in 2013. On 16 May 2023, the plaintiffs learnt that they were no longer exclusive directors and shareholders of the 12^th defendant.

5. Aggrieved by the changes made to the company records, they filed this proceeding. The main relief they seek in the Originating Summons filed 3 August 2023, are as follows:

1. A declaration pursuant to Order 12 Rule 1 of the National Court Rules and Section 155(4) of the Constitution that changes made as of 16^th May 2023 to the twelfth defendant’s registration records with the Investment Promotion Authority by change of directors, secretaries and shareholders from the plaintiffs to the first to the tenth defendants respectively is unlawful hence null and void and of no legal effect.
   
2. A declaration pursuant to Order 12 Rule 1 of the National Court Rules and Section 155(4) of the Constitution that the plaintiffs remain the only legitimate shareholders, secretaries, and directors of the twelfth defendant company to date for purpose of the Companies Act, Wills, Probate and Administration Act and or any other relevant laws applicable to the affairs of the twelfth defendant.
   
3. A declaration pursuant to Order 12 Rule 1 of the National Court Rules and Section 155(4) of the Constitution the first to the tenth defendants’ conduct and actions in interfering with the attempts to access the properties, finances and or other interests vested with the twelfth defendant company which is lawfully owned by the plaintiffs is unlawful and amounts to criminal conducts and in violation of the plaintiffs’ human rights under section 53 of the Constitution.
   
4. An order pursuant to Section 131(1) and (2) of the Companies Act 1997 that the representative of the second plaintiff on Jim Baltapre be appointed as a director of the twelfth defendant in place of the deceased director Lawrence Wana.
   

......

MODE OF PROCEEDING

6. The preliminary issue raised is whether Order 12 Rule 1 and s. 155(4) of the Constitution may be invoked in the manner as has been done herein by the plaintiff to bring this proceeding.

7. The simple answer to that is, “no, they may not”. The fundamental reason is this. Challenges by current or former directors or shareholders of companies who are seeking to assert their rights and interests in a company, in the manner as is done here, are pursued under the relevant provisions of the CA. They are required to invoke the provisions therein to commence proceedings either by an Originating Summons or Petitions under MP proceedings. See case: Steven Wembut and Ors v. Ok Tedi Fly River Development Foundation Ltd (2020) N8192.

8. Section 155(4) of the Constitution cannot be invoked where there are express legal processes that are available where a party may invoke to pursue his or her claim.

SUMMARY

9. As such, I will uphold the preliminary submission by the first to the 10^th defendants. This proceeding will be struck out for want of proper mode and jurisdiction.

10. The plaintiffs, however, is at liberty to file the proceeding using a correct mode.

11. I must make this remark for clarity. Although this proceeding will now be struck out, I note that I have not dealt with the merits of the claim by the plaintiffs and the defence raised by the defendants. I observe there are serious concerns and matters that were raised which cannot be decided by this proceeding.

12. This may be left to the correct forum or Court at a later stage, if the matter is further pursued by the plaintiffs, to determine.

COST

13. An order for cost 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

14. I make the following orders:

1. The proceeding is struck out in its entirety.
   
2. The plaintiffs shall pay the 1^st to the 10^th defendants’ costs of the proceedings on a party/party basis to be taxed if not agreed.
   
3. Time for entry of these orders is abridged to the date and time of settlement by the Registrar of the National Court which shall take place forthwith.
   

The Court orders accordingly
________________________________________________________________
Public Solicitors: Lawyers for the Plaintiffs
Don Wapu Lawyers: Lawyers for the First to the Tenth Defendants