Komkaeli Holdings Ltd v Wamp [2022] PGSC 84; SC2285 (8 August 2022)

SC2285

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA 102 OF 2022

BETWEEN:
KOMKAELI HOLDINGS LIMITED
First Appellant

AND:
STEVEN PUP
Second Appellant

AND:
PATE WAMP
First Respondent

AND:
CANOPUS NO. 101 LIMITED
Second Respondent

AND:
MELPA PROPERTIES LIMITED
Third Respondent

AND:
PAUL TIMBI
Fourth Respondent

AND:
NATHAN WANTEPE
Fifth Respondent

Waigani: Hartshorn J.
2022: 4^th & 8^th August

Application for a stay and for interim restraining orders

Cases Cited:
Papua New Guinean Cases

Gary McHardy v. Prosec Security [2000] PNGLR 279
Yama Group of Companies Ltd v. PNG Power Ltd (2005) N2831
Canopus No.16 Ltd v. Maisi Trust Co (2008) N3401
Ombudsman Commission v. Gabriel Yer (2009) SC1041
Evan Paki v. Don Polye (2011) SC1095
Mobil Oil New Guinea Ltd v. Yakainga Business Group (Inc) (2014) N6661
Talisman Energy Niugini Ltd v. Bismark Maritime Ltd (2015) N6800
Kawari Fortune Resources Ltd v. Louis Limbo Apurel (2015) SC1614
Behrouz Boochani v. State (2017) SC1566
William Duma v. James Puk (2019) SC1754
Peter O’Neill v. Cosmos Bidar (2019) SC1899
Independent State of Papua New Guinea v. Kalaut (2021) SC2067

Overseas Cases

Films Rover International Ltd v. Canon Films Sales Ltd [1987] 1 WLR 670

Counsel:

Mr. D. Mel, for the Appellants
Mr. C. Joseph, for the First and Second Respondents
Mr. C. Kos, for the Third, Fourth and Fifth Respondents

8^th August, 2022

1. HARTSHORN J: This is a decision on a contested application for a stay of National Court orders the subject of an appeal and for interim restraining orders. The application is made by the two appellants and is supported by the third, fourth and fifth respondents. The application is opposed by the first and second respondents. A stay is sought of the National Court orders dated 7^th June 2022 (Orders appealed) which were made after the Court had found in favour of the petitioner, now first respondent, Mr. Pate Wamp.

Background

2. The dispute arises out of the conduct of the affairs of the second respondent Canopus No. 101 Ltd (Canopus). The major asset of Canopus is the Rui Coffee Plantation located in Dei District, Western Highlands Province. When the National Court petition was commenced by Mr. Wamp, 80% of the issued shares of Canopus were owned by the first appellant, Komkaeli Holdings Ltd (Komkaeli) and 20% were owned by Mr. Wamp. Komkaeli had purchased its shares from the third respondent, Melpa Properties Ltd (Melpa) in 2013.

3. On 7^th June 2022 after a trial, the National Court made the Orders appealed which amongst others, awarded compensation of K3 million to Mr. Wamp to be paid within three months, ordered the removal of the second appellant Mr. Pup as a director of Canopus, ordered the reinstatement of Pais Kar Tiki as a director of Canopus, ordered the cancellation of the purchase of shares by Komkaeli in Canopus and detailed the consequences of non-payment of the K3 million compensation within three months.

Application

4. The appellants seek a stay and interim restraining orders pursuant to s. 19 and s. 5(1) (a) and (b) Supreme Court Act and s. 155(4) Constitution.

5. The appellants submit that the stay should be granted as amongst others, the appellants will otherwise suffer more prejudice than the respondents and in particular, will have to pay a significant sum of money to Mr. Wamp by 7^th September 2022 or bear the consequences. Further, as the appellants have an arguable case which is likely to succeed on appeal, it is necessary for a stay to be granted to maintain the status quo as damages are not an adequate remedy. It is in the overall interests of justice and the balance of convenience favours a stay to be granted to preserve the appellant’s rights, it is submitted.

6. The first and second respondents submit that a stay and interim restraining orders should not be granted as amongst others, the board of Canopus and the Registrar of Companies have already made the changes to the records of Canopus as required by the primary judge; Mr. Wamp is entitled to the benefit of the judgment of the primary judge; leave to appeal is required for some of the grounds of appeal as they are questions of fact but leave has not been obtained; there has been delay in making this application; the appellants have not demonstrated that they will suffer any hardship, inconvenience or prejudice if a stay is not granted; the appellants do not have an arguable case on the substantive appeal and have not demonstrated that they have the financial ability to pay the subject compensation; damages are an adequate remedy and the balance of convenience and interests of justice do not favour a stay or interim restraining orders being granted.

Consideration

7. As to the reliance upon s. 155(4) Constitution, it is settled law that this section may only be relied upon to protect primary rights in the absence of other relevant law. I refer to Evan Paki v. Don Polye (2011) SC1095 and Behrouz Boochani v State (2017) SC1566 - two judgments amongst many, which are on point.

8. In the instance, s.19 Supreme Act provides the jurisdiction to grant a stay and s.5(1)(b) Supreme Court Act provides the jurisdiction to grant an interim order such as an injunction.

9. So in this instance, there is not an absence of other relevant law. Consequently s.155(4) Constitution may not be relied upon.

10. I consider the application for a stay first. As referred to, application is made pursuant to s. 19 Supreme Court Act. Section 19 Supreme Court Act provides that unless otherwise ordered by the Supreme Court or any Judge, an appeal, or an application for leave to appeal, to the Supreme Court does not operate as a stay of proceedings.

11. In Gary McHardy v. Prosec Security [2000] PNGLR 279, the Supreme Court found that it had unlimited jurisdiction to do justice and should exercise its discretionary power depending on the factors and circumstances of a particular case. Factors to consider when deciding whether to grant a stay include:

a) whether leave to appeal is required and whether it has been obtained;

b) whether there has been a delay in making the application;

c) possible hardship, inconvenience or prejudice to either party;

d) the nature of the judgment sought to be stayed;

e) the financial ability of the applicant;

f) a preliminary assessment about whether the applicant has an arguable case on the proposed appeal;

g) whether on the face of the record of the judgment there may be indicated apparent error of law or procedure;

h) the overall interests of justice;

i) the balance of convenience;

j) whether damages would be a sufficient remedy.
12. I make reference to the following passage of Injia CJ (as he then was) in Ombudsman Commission v. Gabriel Yer (2009) SC1041. His Honour was considering a stay application under s. 19 Supreme Court Act:

“The grant or refusal of stay is discretionary. The principles on grant of stay are set out in McHardy v Prosec Security and Communication Ltd [2000] PNGLR 279 (McHardy case)..... In McHardy the Court said the starting point is the basic premise that the judgment creditor is entitled to enjoy the fruit of the judgment. There are ten (10) other considerations which are enumerated in that case which may be considered. The Court said the list is not exhaustive. In my view, it is not intended that the discretion should be exercised on all or selected consideration(s). The circumstances of a particular case may warrant greater or less or even no weight at all to be given to a particular consideration(s). It is open to the Supreme Court to expound on those considerations or introduce new considerations as necessitated by the circumstances of the case before it. In a case where a number of considerations are relevant, the Court must take into account the totality of those considerations in order to dispense substantive justice in the circumstances of the case before it. The onus is on the applicant to persuade the Court to exercise its discretion in his or her favour.”

13. Further, s. 19 does not impose any fetter on the discretion of the Court to grant a stay.

14. In William Duma v. James Puk (2019) SC1754 the Court, of which I was a member, said at [13]:

“13. As referred to, in determining whether a stay should be granted this Court must consider what is necessary to do justice in the circumstances of a particular case. There is no fetter on this Court’s discretion apart from this consideration. We are reminded in this regard of the oft cited statement of Bowen LJ in Gardner v. Jay (1885) 29 Ch 50, at 59:

“When a tribunal is invested by Act of Parliament or by Rules with a discretion, without any indication in the Act or Rules of the grounds upon which the discretion is to be exercised, it is a mistake to lay down any rules with a view of indicating the particular grooves in which the discretion should run, for if the Act or the Rules did not fetter the discretion of the Judge why should the Court do so?””

15. The appellant cited and relied upon the judgment of Dingake J in Secretary, Department of Mineral Policy and Geohazard Management v. Manton Group Ltd (2018) SC1703 in which at [16] His Honour said:

“16. I have also found the remarks of Sakora J in the case of O’Neil v Eliakim (2016) PGSC 40, at paragraph 69, with reference to the factors outlined in the case of Mc Hardy, cited above, illuminating, when he stated:

“69. Finally, the underlying reason for these tests and operating factors or circumstances has to do with the main concern in the maintenance of the status quo in the circumstances before the actions were taken by either or both parties that purportedly created a legal dispute invoking the jurisdiction of the court. And if the determination of that dispute in the court below is the subject of an appeal, then apart from the requirements of statute and rules of court governing the exercise of appellate jurisdiction, it just makes eminent sense to ensure that nothing is done by way of effecting or executing the challenged judgment before the appellate court exercises its jurisdiction over it.””

16. I now consider some of the factors referred to in McHardy (supra). As to whether leave to appeal is required, the appellants submit that leave is not required as the judgment appealed is final. The first and second respondents submit however, that in respect of some of the grounds of appeal, leave is required as they are questions of fact and the requisite leave has not been obtained. Therefore, the appellants do not have an arguable case that is likely to succeed.

17. As to whether the appellants have an arguable case, the submissions of the appellants and first and second respondents diverge. In regard to these two factors, whether leave is required and whether the appellants have an arguable case, I will not consider them in detail and will proceed for present purposes only, on the basis that the appellants do have an arguable case. It is not to be taken however, that I have considered the merits or otherwise of this appeal in anyway.

18. As to any hardship, inconvenience or prejudice to a party, it is submitted by the appellants that they will be required to comply with the Orders appealed and particularly the order for the payment of compensation whilst the appeal is pending. They will have to pay a significant sum of money to Mr. Wamp by 7^th September 2022, they submit. If this order is not complied with, consequential orders ensue and Mr. Wamp will be at liberty to enforce the Orders appealed. This will render the current appeal futile, nugatory, of no utility and a mere academic exercise it is submitted.

19. The evidence on behalf of the appellants is given by the second appellant, Mr. Pup. He deposes amongst others, that as to prejudice he is advised and believes that the respondents will rely on the judgment of the primary judge to take steps with the objective of managing and controlling Canopus and this will likely be prejudicial to the rights of the appellants in the current appeal. Mr. Pup does not depose how the managing and controlling of Canopus by the respondents will be prejudicial to the rights of the appellants in the current appeal. Similarly, as to the order for payment of compensation which is to be complied with, there is no evidence given of any hardship, inconvenience or prejudice which will or is likely to be suffered by the appellants.

20. As to the order for payment of compensation, it is to be noted that it is made against other entities as well as the appellants. One of those entities is Melpa. As referred to, Melpa supports this application for a stay and restraining orders. Melpa has not however, appealed the Orders appealed and is now the major shareholder of Canopus. By not appealing, Melpa may be taken as accepting that it either has to pay K3 million by 7^th September 2022 to keep its shares in Canopus or lose those shares and pay K2 million at a later date. The only consequences for the appellants if the K3 million is not paid by 7^th September 2022 is that they will be joint and severally liable for a debt of K2 million together with Canopus and Melpa.

21. There is no evidence that Mr. Wamp would enforce that debt of K2 million. As to whether Mr. Wamp is likely to enforce such a debt, this eventuality should be viewed in the context that in that scenario, Mr. Wamp would be the sole shareholder of Canopus and Canopus would also be jointly and severally liable to Mr. Wamp for the K2 million debt.

22. I am not satisfied upon the evidence and when considering the orders appealed that it has been made out that, or that the appellants will or are likely to suffer hardship, inconvenience or prejudice if a stay is not granted.

23. In regard to the rights of the appellants in the appeal being affected, as referred to, there is no evidence of which rights it is claimed will be affected and how they will be affected. In submissions, reference was made that the subject State lease and part of the plantation may be sold. This is unlikely in my view, given that as referred to, Melpa is now the majority shareholder of Canopus and supports this application and has not appealed.

24. As to whether damages would be an adequate remedy, the appellants and first and second respondents again diverge. To my mind, if the appellants are successful in this appeal, any damage suffered would be able to be quantified. There is no evidence to the contrary or to the effect that the respondents would not be able to pay damages or that damages would not be an adequate remedy.

25. As to where the balance of convenience lies, in determining this, I have recourse to the following statement of Hoffman J. in Films Rover International Ltd v. Canon Films Sales Ltd [1987] 1 WLR 670 at 680:

“The principal dilemma about grant of interlocutory injunctions, whether prohibitory or mandatory, is that there is by definition a risk that the Court may make the ‘wrong’ decision, in the sense of granting an injunction to a party who fails to establish his right at the trial (or would fail if there was a trial) or alternatively, in failing to grant an injunction to a party who succeeds (or would succeed) at trial. A fundamental principle is therefore that the Court should take whichever course appears to carry the lower risk of injustice if it turns out to have been “wrong’ in the sense I have described.”

26. The principle contained within this passage has been affirmed in amongst others: Yama Group of Companies Ltd v. PNG Power Ltd (2005) N2831; Canopus No.16 Ltd v. Maisi Trust Co (2008) N3401; Talisman Energy Niugini Ltd v. Bismark Maritime Ltd (2015) N6800; and Mobil Oil New Guinea Ltd v. Yakainga Business Group (Inc) (2014) N6661; Independent State of Papua New Guinea v. Kalaut (2021) SC2067.

27. To my mind, although this statement concerns the grant of interlocutory injunctions, the principles contained therein apply equally to the grant of a stay. The fundamental principle is that the Court should take whichever course appears to carry the lower risk of injustice if it turns out that the appellants are not successful in their appeal.

28. To my mind, the balance of convenience favours a stay not being granted. The various changes to the administration and management of Canopus required by the Orders appealed have already been effected. A stay would adversely affect the operation and management of Canopus. As referred to, the appellants have not shown to my mind, that they will suffer hardship, inconvenience or prejudice if a stay is not granted, the rights of the appellants are protected by the appeal and in my view, damages would be an adequate remedy. The lower risk of injustice if it turns out that the appellants are not successful in their appeal is for the stay sought not to be granted.

29. As to the interests of justice, similar considerations apply as to the balance of convenience.

30. Consequently, I am not satisfied that the appellants have established that the stay sought should be granted.

31. As to the relief sought pursuant to s. 5(1)(a) Supreme Court Act, power is only given to make a direction under s. 5(1)(a). Here, the appellants are seeking an order.

32. As to the application for interim restraining orders sought pursuant to s. 5(1) (b) Supreme Court Act, the considerations which apply are similar to those which apply to an application for a stay. In addition, an applicant for such orders must show that the relief sought is necessary to prevent prejudice to the claims of the parties: Kawari Fortune Resources Ltd v. Louis Limbo Apurel (2015) SC1614; Peter O’Neill v. Cosmos Bidar (2019) SC1899.

33. I am not satisfied that the evidence is to the effect that the relief sought pursuant to s. 5(1)(b) Supreme Court Act is necessary to prevent prejudice to the claims of the appellants. Further, I repeat the remarks that I made in regard to the application for a stay. It has not been made out in my view that the interim restraining orders sought should be granted. Given the above, it is not necessary to consider the other submissions of counsel.

Orders

34. It is ordered that:

a) The application of the appellants’ filed 22^nd July 2022 is dismissed.

b) The appellants shall pay the costs of the first and second respondents of and incidental to the said application, to be taxed if not otherwise agreed.

__________________________________________________________________
Mel and Hennry: Lawyers for the Appellants
Ashurst PNG: Lawyers for the First and Second Respondents
Charles Kos: Lawyers for the Third, Fourth and Fifth Respondents