PNGBC Ltd v Tasion [2013] PGSC 58; SC1296 (1 November 2013)

SC1296

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO 116 OF 2012

BETWEEN:

PNGBC LIMITED (NOW BANK OF SOUTH PACIFIC LIMITED)
Appellant

AND:

SAM TASION also known as SAMSON TASION also known as SAMSON MASAKUMAN TASION
First Respondent

AND:

MOTI TASION also known as MOTI KERRO TASION
Second Respondent

AND:

NCD WATER & SEWERAGE SERVICES LIMITED T/A EDA RANU
Third Respondent

AND:

MASAKUMAN LIMITED
Fourth Respondent

Waigani: Salika, ACJ, Kariko, J and Collier, J
2013: 28th October & 1st November

GARNISHEE – first respondent appointed as Executive Chairman of third respondent – agreement purportedly entered between first, third and fourth respondents – "services" of first respondent purportedly offered by fourth respondent – garnishee notice serviced by appellant on first, third and fourth respondents – whether third or fourth respondent "debtor" of first respondent for purposes of garnishee notice – whether appointment of first respondent as Executive Chairman a personal appointment – whether monies owed by third respondent properly payable to first or fourth respondent
PRACTICE AND PROCEDURE – conduct of trial – whether appellant failed to give evidence – cross-examination of witness by Counsel for appellant – whether abuse of process – power of Trial Judge to control procedure in Court hearing

Facts

The first and second respondents were debtors of the appellant. The first respondent was appointed the Executive Chairman of the third respondent by Board resolution and approval of relevant Minister. The first, third and fourth respondents purported to enter a contract whereby the "services" of the first respondent as Executive Chairman were offered to the third respondent. The appointment of the first respondent was terminated and a settlement deed was entered between the first, third and fourth respondents in respect of entitlements owing as a result of the termination. The appellant claimed that the monies payable under the settlement deed were properly payable to the first respondent and that it was entitled to receive those monies pursuant to a garnishee order served on the first, third and fourth respondents. The trial judge found that the proper payee of the monies under the settlement deed was the fourth respondent, and that the appellant had conducted itself in the trial in a manner to constitute an abuse of process.

Held

(1) The proper payee of the monies under the settlement deed was the first respondent.

(2) The appointment of the first respondent as Executive Chairman was a personal appointment.

(3) There was no abuse of process in the conduct of the trial by the appellant.

Legislation cited

Companies Act 1997, s. 129
Constitution, s. 155
National Court Rules, O 13
Supreme Court Act, s. 16

Cases cited

Gamester Pty Ltd v Lockhart [1993] HCA 79
Karl Paul v Aruai Kispe & anor (2001) N2085
Nicholson v Secretary of State for Energy (1977) 76 LGR 693
Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics [1971] 2 QB 711
R v Morley [1988] QB 601
Torato, United Party Inc v Sir Tei Abal [1987] PNGLR 403

Counsel

Mr E Andersen & Ms L Tepu, for the appellant
Mr A Furigi, for the first respondent
Mr J Poeya, for the fourth respondent

1st November, 2013

1. BY THE COURT: Introduction: This is an appeal from the judgment of the National Court in proceeding WS 109 of 2001. In that decision his Honour the primary judge made the following orders:

1. The moneys owed by Eda Ranu were funds due and owing to Masakuman Limited and not Mr Tasion in his personal capacity.
2. The garnishee proceedings are dismissed with costs.
3. The Registrar of Court is to pay the money in trust to Masakuman Limited forthwith.
4. Time is abridged to the time of sealing of the orders by the registry which should take place forthwith.
   

2. It appears to be uncontested that the appeal lies without leave as it relates to questions of law and mixed fact, and that leave was granted on 28 February 2013 so far as it relates to questions of pure fact. A consolidated notice of appeal was filed on 6 March 2013 containing numerous grounds of appeal.

Only the first and fourth respondents appeared at the hearing of the appeal.

The appellants contend that the primary issue in contention between the parties concerns ownership of money paid by the third respondent ("Eda Ranu") pursuant to a settlement deed with the first respondent Mr Tasion and the fourth respondent ("Masakuman"), and in particular whether the money in question belongs to Mr Tasion or Masakuman. If the relevant monies were properly payable by Eda Ranu to Masakuman, it is clear that a garnishee notice issued at the instance of the appellant to Eda Ranu on account of Mr Tasion's debt to the appellant was properly dismissed by his Honour. Having heard the parties in this appeal we accept these contentions.

3. The appellants contend further that subsidiary issues for decision by the Court are:

1. Whether the trial judge erred in failing to lift the corporate veil of Masakuman and have Mr Tasion responsible for the debt owed by Mr Tasion to the appellant (grounds of appeal 3 (b), (c), (d), (g) and 4 (a), (b), (c), (d), (e), (f), and 5 (a) to (o)).
   
2. Whether Mr Tasion's appointment as the Executive Chairman of Eda Ranu was a personal appointment and not in the name of Masakuman (grounds of appeal 3 (e), (f), (i) and 4 (c), (d), (f)).
   
3. Whether the filing and hearing of the application and lengthy cross-examination by the appellant's Counsel of witnesses at the hearing were unnecessary and irrelevant, and whether the failure of the appellant to give direct evidence amounted to an abuse of process (grounds of appeal 3 (a), (h) and 6 (a) to (h)).
   

4. Mr Andersen for the appellant submitted further that if the Court accepts the appellant's submissions in relation to the second and third sub-issues, it is unnecessary for the Court to decide whether the corporate veil between Masakuman and Mr Tasion should have been lifted by his Honour. We accept this submission.

Background

5. In summary, this case concerns whether certain monies paid by Eda Ranu to Masakuman ought to have been properly paid to Mr Tasion. The interest of the appellant in this matter arises from the fact that the appellant is a judgment creditor of Mr Tasion, and, having served a garnishee notice on Eda Ranu and Mr Tasion pursuant to Order 13 of the National Court Rules, is entitled to those monies if Mr Tasion was the proper payee of those monies.

6. The background to this appeal is, in summary, as follows:

• Mr and Mrs Tasion controlled a company, Stapak Ltd ("Stapak"). In 1998 the appellant loaned funds to Stapak, which loans were guaranteed by the Tasions. It is not in dispute that considerable sums of money were involved – indeed Mr Andersen informed this Court from the bar table that more than K2million in loans were guaranteed.
  
• On 3 June 1999 the Board of Eda Ranu resolved that Mr Tasion be appointed Executive Chairman of the company.
  
• By letter dated 4 June 1999 the Acting Minister for Treasury & Planning informed Mr Tasion that the Minister had appointed Mr Tasion as the Executive Chairman of Eda Ranu.
  
• On 22 July 1999 Mr Tasion's position as Executive Chairman was terminated. Mr Tasion and Masakuman commenced proceedings in the National Court against the State in respect of lost entitlements following termination of the appointment. It is not in dispute that, during the course of those proceedings, Mr Tasion claimed that he was the sole owner of Masakuman.
  
• On 5 September 2000 the appellant served a formal demand on Mr and Mrs Tasion as guarantors of Stapak.
  
• On 4 March 2002 the National Court found in favour of the appellant against Mr and Mrs Tasion in respect of their guarantee of the debts of Stapak.
  
• On 28 October 2002 Eda Ranu, Mr Tasion and Masakuman entered into a settlement deed in relation to entitlements of Mr Tasion concerning his terminated appointment as Executive Chairman.
  
• An application for leave to file and serve a garnishee notice on Eda Ranu was filed by the appellant on 26 November 2002.
  
• On 27 November 2002 the National Court ordered that a garnishee notice be served upon Eda Ranu as garnishee and Mr Tasion as the judgment debtor.
  
• On 29 November 2002 the National Court ordered an injunction restraining Eda Ranu from paying any funds on account of Mr Tasion to any other entity.
  
• On 3 December 2002 the National Court ordered that Eda Ranu pay the sums set out in the settlement deed to the Registrar of the National Court, and that the Registrar place all such funds on Interest Bearing Deposit pending trial.
  
• On 13 December 2002 Masakuman filed a notice of motion seeking an order that it was the true owner of the sum the subject of the garnishee notice.
  
• On 25 March 2003 Masakuman filed a notice of motion seeking an order that the appellant's ex parte orders of 27 and 29 November 2002, and the appellant's application for garnishee proceedings instituted on 26 November 2002, be struck out as an abuse of process.
  
• On 28 March 2003 the appellant filed a notice of motion seeking the following orders:
  
  1. That the amounts nominally owing from NCD Water and Sewerage Limited trading as Eda Ranu, pursuant to the Deed of Settlement dated the 2nd day of October 2002 are declared to be the true property of the first defendant.
     
  2. That the amounts nominally owing to the plaintiff from NCD Water and Sewerage Limited trading as Eda Ranu, pursuant to the Deed of Settlement dated the 2nd day of October 2002 are subject to the Garnishee Orders made by this Court on 3 December 2002 and entered on 4 December 2002.
     
  3. That the sums paid to Court by NCD Water Sewerage Limited trading as Eda Ranu pursuant to the garnishee Order entered on 4 December 2002 forthwith be paid by the Registrar of the National Court of Justice to the plaintiff in reduction of the defendants debt to the plaintiff.
     
  4. That all further payments by NCD Water and Sewerage Limited trading as Eda Ranu are to be paid directly to the plaintiff in reduction of the debt owing to them by the defendants.

Decision of the Trial Judge

7. The notices of motion filed by the appellant on 28 March 2003 and by Masakuman on 13 December 2002 and 25 March 2003 were before his Honour at the trial.

8. In an oral judgment delivered on 19 October 2012 the trial judge found, in summary, that:

• The monies paid into Court properly belonged to Masakuman.
  
• The relationship between Eda Ranu, Mr Tasion and Masakuman was properly that of a consultant (Masakuman) providing the consultancy services of its employee, Mr Tasion, to Eda Ranu.
  
• Mr Tasion had entered the agreement with Eda Ranu as a director of Masakuman and on behalf of Masakuman.
  
• The proceeding commenced by the appellant was flawed in that the appellant had sought garnishee orders under Order 13 of the National Court Rules against an entity which was not a debtor of Mr Tasion. In fact, the true debtor of Mr Tasion was Masakuman.
  

9. Materially, his Honour said as follows:

Now, in my discussion of the issues that are raised which, with respect, were issues that did not have any direct pertinence to what order 13 of the National Court Rules; rules 56 onwards are about, for instance, the plaintiff raised in its – in support of its arguments that are matters of incorporation; company law matters, how the company was set up, who was directors, the shareholdings, et cetera, directorship, transfer of shares and then also included arguments in relation to tax matters. Matters which, with respect, Mr Furigi quite properly characterized as matters within the direct responsibility of firstly, IPA, company law to be administered by IPA, in relation to tax matters then it is the IRC, Internal Revenue Commission and that the plaintiff's efforts in relation to raising these matters had nothing direct or rather had no direct relevance to the issue of garnishee proceedings whether or not funds, monies were due and owing from the garnishee to the judgment debtor.

The judgment debtor that the plaintiff had to be interested in to invoke the powers of the court under order 13 could be Mr Tasion, not the company. And as I have said, the defendants' argument was that monies due and owing from Eda Ranu were monies that were coming to the company of which Mr Tasion was an officer under the Companies Act and in that respect, adverting to discussions on the doctrine of ostensible authority that a company – matters that I discussed in a decision of mine in 1992, which was AOC v Woo Textiles, discussion about the doctrine of ostensible authority that accompanied by its very nature depends on human beings to do what needs to be done. The agents, it needs agents, human agents. The company is an inanimate body so it cannot, for instance, go out and talk and negotiate and enter into agreements and, et cetera, et cetera. It needs human element. That is what officers of the company are about. So, they have ostensible authority to do things on behalf of the company, incur liabilities and create benefits. So, the doctrine of ostensible authority was raised to support the argument that what Mr Tasion did was on behalf of the company that was engaged by Eda Ranu and so the funds that were due and owing coming from Eda Ranu were company funds, Masakuman Limited's funds, and so would not under these circumstances be the personal funds of Mr Tasion, which would become a subject of – under order 13, subject of a garnishee proceedings.

I pause there to note in respect of what I said about trying to turn order 13, garnishee proceedings ton its head. Interlocutory applications were made simultaneously or before the order 13 proceedings. And the judgment creditor, that is, the plaintiff dealing directly with Eda Ranu, the intended garnishee in relation to how those funds should be moved, such that one of the interlocutory applications was granted whereby funds were ordered to be kept in the trust account of the registrar of the National Court. That, of course, subverts in my respectful opinion the procedures that are intended to be followed under order 13, garnishee proceedings commenced to their logical conclusion.

Now the central issue apart from those distractions, with respect, the issues of transfer of shares, incorporation and then arguments about the honesty or otherwise, the integrity or otherwise of Mr Tasion's dealings with these various businesses and companies in that group of companies that he owns had nothing to directly with what order 13 requires to be done. I, with respect, characterize them as red herrings, distractions and that characterization in my respectful opinion was well demonstrated when Mr Tasion was in the witness box, and he was subjected to severe and long cross-examination. Severe and long cross-examination in mattes that really did not touch on the matters that order 13 is all about, I keep repeating myself.

And it appeared to me, even after this lapse of time, as if it were yesterday, with respect, that the plaintiff was trying to make its case through cross-examination of Mr Tasion in the way that it was conducted. The plaintiff did not call any evidence on its part and, with respect, it appeared as if the plaintiff was on a fishing expedition through the severe cross-examination of Mr Tasion to create issues that had nothing to do with order 13, garnishee proceedings. As I said from the beginning, is there a judgment debt? Has the judgement debt been settled?

Now, how can that judgment debt be settled? Does anybody owe the judgment debtor some monies or does the judgment debtor have monies coming to him or it? Simple, with respect.

...

In the end result, I am satisfied confining myself to what is and is not required to be done under order 13 of the National Court Rules, rules 56 on to 63 that the monies owed by Eda Ranu, owed formerly by National Capital District Water and Sewerage Services Limited trading as Eda Ranu were funds that were due and owing to Masakuman Limited and not to Mr Tasion in his personal capacity. Mr Tasion was the director of that company. The engagement of Mr Tasion to head that public corporation was through agreement with the company.

And in today's business commercial and even political constitutional activities, companies go into consultancies with government agencies with other corporate entities, consultancies. Rarely these days do you have one person in a consultancy. There is always a company formed and it maybe for the advantage of having a company from which you can operate, some of which they benefit the consultants for reasons of tax, maybe for other reasons but that is not my concern to delve into why but anecdotal evidence does satisfy me that more often than not people doing consultancies for different kinds of activities or professional or business or whatever, form companies. It is probably better for companies to deal with other organisations than individuals.

In this instance, the matter before me – in this instance Masakuman Limited was an incorporated party to the agreement with Eda Ranu through Mr Tasion, its director, was involved in relation to the furnishing of management and professional services by holding the Chief Executive Officer's position. And in Mr Tasion's evidence before the cross-examination it was his evidence that in agreement with Eda Ranu, the funds that were due and owing from Eda Ranu would go to the company.... The question that was asked there in my judgment is, was there anything wrong with this?

This was not demonstrated – this was not demonstrated to me except to make suggestions that it was diversion of funds to keep it out of the reach of creditors as was suggested in, firstly, through the cross-examination and secondly, in the written submissions. And Eda Ranu does not appear to have had any problems or complaints about this and that would, with respect, come from the fact that it was dealing with Masakuman Limited in relation to the provision of services that Mr Tasion was engaged in directly and of course going a bit further, Masakuman Limited could not go into Eda Ranu and do what Mr Tasion did...

...

So, the only crucial question for this court to determine from all of that was whether or not the funds from Eda Ranu were the funds of the company, Masakuman Limited, or they were the funds private and personal to Sam Tasion. And it is the judgment of this court that those funds that were due and owing, benefits and entitlements pursuant to the engagement of Mr Tasion were monies or funds due and owing to Masakuman – were the funds of the company. The company is not a judgement debtor. The company is not a judgement debtor of the plaintiff/applicant and thus the company is not subject to proceedings for enforcement of the judgement debt.

10. At the hearing before his Honour Masakuman pressed its notices of motion filed on 13 December 2002 and 25 March 2003 (transcript 23 October 2003 page 12 lines 10-25).

11. Accordingly, his Honour upheld Masakuman's notices of motion and dismissed the notice of motion filed by the appellant.

Consideration

12. In our view the appellant has substantiated its case that his Honour's decision should be quashed. The appeal against his Honour's decision should be allowed. We have reached this decision primarily because, in our view:

• The garnishee notice issued by the Court at the instance of the appellant was not flawed. The facts clearly demonstrated that monies payable by Eda Ranu in respect of Mr Tasion's terminated appointment as Executive Chairman were payable to Mr Tasion, not Masakuman.
  
• We do not agree that the conduct of the appellant or its Counsel in relation to the conduct of the trial constituted an abuse of process as found by his Honour.
  

Monies payable to Mr Tasion

13. The key evidence before his Honour of the existence of an arrangement whereby Masakuman was in a primary contractual relationship with Eda Ranu to provide consultancy services of Mr Tasion as Executive Chairman was an agreement headed "Consulting Agreement for the Provision of the Executive Chairman", executed by Eda Ranu, Masakuman (defined as "the Consultant") and Mr Tasion (defined as "the Executive Chairman"). The Agreement is dated 8 June 1999. The Recitals to the Agreement state:

1. Eda Ranu carries on the business of the provision of water and sewerage services and wishes to obtain consultancy services to continue to develop its business.
   
2. Eda Ranu wishes to engage the Consultant to perform consultancy services and the Consultant wishes to be engaged by Eda Ranu to provide those services on the terms and conditions set out in this agreement.
   

14. Materially, clause 2.1 of the agreement provides:

Eda Ranu engages the Consultant to perform the Services through the Executive Chairman for Eda Ranu in the Location. The Consultant shall make available the Services to Eda Ranu on a full time basis subject to the provision of Schedule 1.

"Services" are defined as meaning:

All services reasonably necessary to enable Eda Ranu to achieve the objectives specified in clause 3.1 including, without limitation, the services described in Schedule 1.

15. Clause 3.1 defines the Objective of the agreement as follows:

The Consultant must provide the Services to Eda Ranu with the intention of enabling Eda Ranu to carry out the efficient provision of water and sewerage services in the National Capital District in accordance with the Act.

16. Schedule 1 defines "Services" as follows:

The Services shall include the following:

1. To do all things reasonably necessary to expand and promote the business of Eda Ranu including the following:
   
   1. To attend in the offices of Eda Ranu in accordance with clause 2.1 of this agreement;
      
   2. To actively seek and obtain revenue and other like benefits for Eda Ranu;
      
   100. To assist the management of Eda Ranu as and when required; and
        
   4. To do all other things as reasonably necessary requested by Eda Ranu to achieve the objects of Eda Ranu.
      
2. The provision of the full time and attention of the Executive Chairman as Executive Chairman to the affairs of Eda Ranu subject to the following:
   
   1. The Executive Chairman may, in addition to serving as Executive Chairman of Eda Ranu, also serve in any other capacity to which the State or a public authority of the State may appoint him and, concurrently with his responsibilities under this agreement also serve as chairman of FREEWAY MOTORS LIMITED (not to occupy more than two hours per week).
      
   2. The leave entitlements of the Executive Chairman referred to in clause 4.3.
      

17. The Common Seals of both NCD Water & Sewerage Limited (Eda Ranu) and Masakuman were applied in execution of the agreement. Curiously it is not clear that Mr Tasion actually signed the agreement, although no issue of this was made in the appeal.

18. Before the Court in support of this agreement is an affidavit of Mr Michael Ame sworn 16 December 2003. Mr Ame deposed that, at the relevant time, he was the financial controller and company secretary of NCDC Water & Sewerage Limited, and materially:

1. ...
2. ...
3. I confirm that the Consultancy Agreement was between Eda Ranu and Masakuman Limited and it has always been my understanding that Mr Sam Tasion was an employee of Masakuman Limited while providing the services of Executive Chairman of Eda Ranu.
4. Given this position, Eda Ranu has consistently paid all consultancy fees due and payable to Masakuman Limited to Masakuman Limited from the period of the formal engagement of Masakuman Limited in 1999 to now including the two instalment payments under the Settlement deed.
5. I confirm that no payments were made to Mr Sam Tasion or other individuals or corporate entity from fees due and payable to Masakuman Limited other than the cost of purchasing a car for the Executive Chairman which was made payable to Freeway Motors.
6. ...
   

19. The respondents submitted, and his Honour found, that Mr Tasion's relationship with Eda Ranu must, in effect, be viewed through the prism of the contractual agreement between Mr Tasion, Masakuman, and Eda Ranu signed 8 June 1999, and that accordingly the proper claimant of any monies payable to Mr Tasion in respect of his position of Executive Chairman of Eda Ranu was Masakuman. In our view, however, such a position is not sustainable.

20. First, even assuming the validity of the agreement of 8 June 1999 between these parties, the material before the Court clearly indicates that the appointment of Mr Tasion as Executive Chairman was a personal appointment and not in his capacity as a "consultant" or employee of Masakuman. Any monies which were payable by Eda Ranu in respect of that appointment were payable to Mr Tasion. Any arrangements Mr Tasion sought to make – and which were made – in respect of the direction of payment of his entitlements to Masakuman constitutes a side agreement which did not affect the base position, namely that Mr Tasion was entitled to be paid those entitlements. That this is so is clear from the following documents before the Court:

• The decision of the National Executive Council dated 4 June 1999, being Decision No. 121/99 in Meeting No. 25/99. This decision was as follows:
  

On 03rd June 1999, Council:-

1. Within the Articles of Association of Eda Ranu directed the Minister for Treasury & Planning to:
   
   • 1.1 revoke and terminate the appointment of Mr Jamie Graham as Director and Executive Chairman of Eda Ranu; and
     
   • 1.2 appoint Mr Sam Tasion as the new Director and Executive Chairman for Eda Ranu.
     

• The letter from the Acting Minister for Treasury & Planning dated 4 June 1999 to Mr Tasion, which read as follows:
  

Dear Mr Tasion

SUBJECT: APPOINTMENT AS NEW EXECUTIVE CHAIRMAN AND DIRECTOR OF EDA RANU

In accordance with the resolution of the Board of 3rd June 1999, a copy of which had been provided to me as well as in line with recent deliberations by the National Executive Council, I am pleased to advise that I have approved your appointment as the new Executive Chairman and Director of Eda Ranu.

I look forward to working closely with you in strengthening the work of Eda Ranu in the National Capital District.

• The letter from the Deputy Prime Minister, Treasurer and Minister for Planning to Mr Tasion dated 15 June 1999 which read as follows:
  

Dear Mr Tasion

I acknowledge receipt of your appreciation letter of 10 June 1999.

I am sure that your appointment as the Executive Chairman of Eda Ranu will indeed meet the Company's obligation and standard requirements.

I look forward to meeting and working closely with you.

• The letter from Mr Tasion to the Minister dated 21 June 1999 which read as follows:
  

I enclose a draft Contract for my employment as Executive Chairman of NCD Water & Sewerage Limited, pursuant to the provisions of Section 61 of the Public Finances (Management) Act 1995.

The contract provides for:

1. A salary of K288,000.00 per annum;
2. Provision of a Motor Vehicle, for my use;
3. Term of 4 years.
   

I look forward to receiving your approval.

For the record of the company, I also enclose a Minute of the members of the Company in order that the Company's Minute Book properly reflects the current position in accordance with the requirements of the Companies Act. I would be glad if you could sign that minute and return it to me.

• The letter from the Deputy Prime Minister, Treasurer and Minister for Planning to Mr Tasion dated 21st June 1999 which read as follows:
  

I refer to your letter of 21st June 1999. Pursuant to the provisions of Section 61 of the Public Finances (Management) Act, I approve the terms of contract contained in the draft Contract submitted to me under cover of your letter of 21st June 1999.

21. In relation to this documentation we note the following points:

• All of these documents refer to Mr Tasion in his personal capacity. There is no reference to Masakuman, or Mr Tasion's services being "provided" as a consultant by Masakuman. This material is quite inconsistent with the appointment of Mr Tasion being an employee of Masakuman, and Mr Tasion acting in that capacity as Executive Chairman of Eda Ranu.
  
• We note that despite the letters of 21 June 1999 and 28 June 1999 making reference to the terms of a contract of appointment, there is no evidence that those terms are the same as those in the agreement dated 8 June 1999. Indeed, Mr Tasion's letter of 21 June 1999 makes reference to the terms of "his" appointment and to key features of the contract being his salary, the provision of a motor vehicle for his use, and the term of appointment being 4 years. These terms in no way mandate a contract in the form submitted by the respondents to this appeal.
  

22. Further, and in any event, we consider that little if any weight should be accorded to the affidavit of Mr Ame, who at material times was an officer of Eda Ranu but did not purport to give his evidence on behalf of the Board of the company and had only limited authority in respect of the affairs of the company: Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics [1971] 2 QB 711; Torato, United Party Inc v Sir Tei Abal [1987] PNGLR 403.

23. Secondly, even had the agreement of 8 June 1999 been executed as alleged by the respondents, we do not accept that the agreement was a valid appointment by Eda Ranu of Masakuman to provide the services of Mr Tasion as Executive Chairman, in substitution for the direct appointment of Mr Tasion as Executive Chairman. This is because:

• Section 129 (3) of the Companies Act 1997 provides, in summary, that only a natural person can be a director of a company. To that extent it is not possible for Masakuman to in any way have been legally "appointed" a director of Eda Ranu.
  
• To the extent that the parties to the agreement of 8 June 1999 may have purported to enable Masakuman to have in turn appointed Mr Tasion, in our view such an arrangement potentially constituted an invalid delegation of the power of the Board (and the relevant Minister) to appoint the Executive Chairman of Eda Ranu. Such a delegation would, on its face, have contravened clauses 103 and 110 (a) of the Constitution of Eda Ranu.
  
• Materially, clauses 103 and 110 (a) of the Constitution of Eda Ranu provide:
  

103. There shall be an office of Executive Chairman, the holder shall be Chairman of the Board of Directors and Chief Executive Officer of the Company.... The Executive Chairman shall only be appointed by and in accordance with a resolution of the Board of Directors.

110 (a). The purpose of this Paragraph is to reflect the fact that the Company has commenced operations as a State owned Company and that the appointment and removal of Directors is subject to the direction and approval of the Minister in accordance with Paragraph 110 (b).

• Two Board resolutions of Eda Ranu are relevant. First, the resolution of the Board at the meeting of 3 June 1999 was as follows:
  

Resolution 1

That the Board, as directed by the Acting Minister for Treasury & Planning, Hon. Thomas Pelika MP, resolved to terminate the appointment of Jamie ... Graham as Director and Executive Chairman of Eda Ranu and hereby endorse the appointment of Mr Sam Tasion as Director and Executive Chairman of Eda Ranu....

24. The second Board resolution at the meeting of 25 June 1999 was as follows:

Item 7

Endorsement of Executive Chairman's Contract

The Chairman advised that he had received approval for his contract under S 61 of the Public Finances (Management) Act 1999 and requested the Board to endorse his contract as tabled.

Mr Tasion then absented himself from the meeting to enable members to consider the contract....

• There is no evidence of any "appointment" of Masakuman by the relevant Minister in substitution of the appointment of Mr Tasion.
  

25. Thirdly, we note the observations of his Honour that, in the business environment, the interpolation of a corporate entity into an employment relationship is not an unusual phenomenon. No evidence of such practices appeared to be produced to his Honour, however even assuming that such a practice is commonplace:

• Simply because the agreement of 8 June 1999 purported to create a relationship between the relevant parties whereby Masakuman was a contractor providing to Eda Ranu the services of Mr Tasion as Executive Chairman does not, in the absence of a valid appointment, create such a relationship as claimed.
  
• Assuming the purported validity of the agreement, a proper interpretation is that it makes provision for payment arrangements for Mr Tasion in his role as Executive Chairman. However merely because Mr Tasion clearly sought to have his salary paid directly to Masakuman rather than to his private account for his own private reasons does not, in our view, subvert the true nature of his appointment, which was a direct appointment of Mr Tasion as Executive Chairman for which he was personally entitled to be paid. To that extent, we consider that this agreement was, at its highest, a side agreement executed by the parties for the convenience of Mr Tasion in respect of his financial affairs.
  

26. The entitlement to receive monies from Eda Ranu at all times remained with Mr Tasion.

27. Accordingly, in our view the garnishee notice served by the appellants on Eda Ranu pursuant to Order 13 of the National Court Rules was, contrary to his Honour's findings, properly served, because Eda Ranu was clearly a debtor of Mr Tasion in relation to payment of his entitlements following his termination as Executive Chairman.
28. Fourth, we do not accept his Honour's observations concerning the impropriety of the appellant commencing interlocutory proceedings to ensure that funds purportedly payable under the settlement deed in respect of Mr Tasion's entitlements would be paid into Court. Indeed, we consider that this was merely a prudent step taken by the appellant to protect its position in the circumstances of this case, and to prevent dissipation of funds to which the appellant was entitled.

Conduct of the trial and abuse of process

29. Finally, we do not agree with the observations of his Honour concerning the alleged abuse of process of the appellant in failing to call evidence and in respect of the nature and extent of the cross-examination of Mr Tasion at the hearing.

30. First, the appellant filed affidavit evidence in support of its case, including in relation to the judgment debt owed to it by Mr Tasion and the representations allegedly made by Mr Tasion to representatives of the appellant. Further, it is clear that a great deal of documentary evidence was read into the record by the appellant at the hearing. It cannot be said with any accuracy that the appellant failed to give evidence in its own cause.

31. However second, and more importantly, it is clear from the transcript of the hearing before his Honour that the purpose of the cross-examination by Mr Andersen of Mr Tasion was intended to elicit evidence as to:

• the control by Mr Tasion of Masakuman at the time of Mr Tasion's appointment as Executive Chairman. This related in particular to the claim by the appellant that the corporate veil between Mr Tasion and Masakuman should be lifted to allow the appellant to claim funds payable by Eda Ranu if the Court found that Masakuman was contractually entitled to those funds;
  
• the identity of the real "owner" of the funds payable by Eda Ranu, in particular to support the appellant's claim that the funds were actually payable by Eda Ranu to Mr Tasion and that accordingly the garnishee notice had been properly issued to Eda Ranu in respect of the debt owed by Mr Tasion to the appellant; and
  
• Mr Tasion's credit as a witness, in particular in respect of the clear falsification of documents by Mr Tasion (which falsification Mr Tasion conceded under cross-examination: transcript 6 November 2003 page 130 line 18 – page 131 line 43) and to prove that he had represented to the appellant that he was the real owner of funds payable by Eda Ranu, whereas in Court he had denied that entitlement.
  

32. Thirdly, we do not accept that the appellant had abused Court processes in relation to the nature of Counsel's cross-examination of Mr Tasion. We note that a trial judge retains an inherent right to control processes in the Courtroom, including cross-examination of witnesses: Karl Paul v Aruai Kispe & anor (2001) N2085; R v Morley [1988] QB 601; Nicholson v Secretary of State for Energy (1977) 76 LGR 693. Had his Honour considered that the cross-examination of Mr Tasion was irrelevant or constituted harassment, it would not have contravened the rules of natural justice for his Honour to have intervened to limit the cross-examination: Gamester Pty Ltd v Lockhart [1993] HCA 79. However there is no material before the Court to suggest that his Honour did so intervene at the time of the hearing. In the absence of such intervention it is difficult to see how, in retrospect, the appellant could be seen to have abused the process of the Court.

Conclusion

33. In our view, and contrary to the decision of his Honour, the garnishee notice served on Eda Ranu by the appellant pursuant to Order 13 of the National Court Rules was validly served. Eda Ranu was a debtor of Mr Tasion, who was in turn a debtor of the appellant. Mr Tasion was personally entitled to receive funds purportedly payable by Eda Ranu to Masakuman pursuant to the settlement deed dated 28 October 2002. In substance, the appellant sought orders to this effect in its notice of motion dated 28 March 2003. In our view the appellant is entitled to those orders.

34. We do not consider it necessary to make any findings in respect of whether the corporate veil between Mr Tasion and Masakuman should be lifted in these circumstances.

35. The appeal should be allowed with costs.

36. The court orders that:

1. The Appeal be allowed.
   
2. The Judgment and Orders of the National Court handed down on 19 October 2012 in proceeding WS 109 of 2001 be quashed.
   
3. Pursuant to Section 16 (c) of the Supreme Court Act (Chapter No. 37) and Section 155 (4) of the Constitution, the Court makes orders as per the Notice of Motion filed by the Appellant on 28 March 2003.
   
4. Pursuant to section 16 (c) of the Supreme Court Act (Chapter No. 37) and Section 155 (4) of the Constitution, the Court dismisses the Fourth Respondent's Notices of Motion filed 13 December 2002 and 25 March 2003.
   
5. The First and Fourth Respondents pay the costs of and incidental to this Appeal proceeding and the National Court proceedings WS 109 of 2001.
   

__________________________________________________________
Gadens Lawyers: Lawyers for the Appellant
Furigi Lawyers: Lawyers for the First Respondent
Liria Lawyers: Lawyers for the Fourth Respondent