Cragnolini v Nosrida Ltd [2024] PGSC 120; SC2647 (30 October 2024)

SC2647

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA. NO. 62 OF 2021

BETWEEN:
YUMEI NI CRAGNOLINI as a DIRECTOR
OF L & A ILB (PNG) LIMITED (In Liquidation)
Appellant

AND:
NOSRIDA LIMITED
First Respondent

AND:

ANDREW PINI OF PINI ACCOUNTANTS & ADVISORS as Court Appointed Liquidator of L & A ILB (PNG) LIMITED

Second Respondent

AND:
L & A CONSTRUCTION LIMITED
Third Respondent

Waigani: Batari, J., Manuhu, J. & Geita, J.
2023: 27^th April
2024: 30^th October

SUPREME COURT – Practice and procedure – Objection to competency of appeal – Leave to appeal - Appellant not a party in the National Court – Whether the appellant requires authorization by the board of directors to file the appeal on behalf of the company – Supreme Court Act ss. 4(2), 14(1)(c) and 17.

Held:

(1) An objection to competency is an objection to the jurisdiction of court to entertain a point of law and the objection may be upheld on that ground alone while the other grounds would proceed to substantive hearing: Coca Cola Amatil v Kennedy (2012) SC1221 (Manuhu J)
(2) A person has standing and the right to institute an appeal against liquidation orders of the National Court if he or she has sufficient interest in the business and affairs of the Company, or is genuinely aggrieved by the orders of the National Court and might have been joined as a party to the National Court proceedings: Kitogara Holdings v NCDIC [1988-89] PNGLR 346 (Batari J, Manuhu J, Geita J)
(3) A company director has standing to file an appeal without leave against a winding up order and/or appointment of liquidators if it is shown that he or she is not acting against the wishes of the company (Batari J, Manuhu J, Geita J).

(4). A question of fact and the conclusion of facts referred to under s. 14 (1) (c) of the Supreme Court Act are exclusive to matters pertaining and intrinsic to the trial proceedings. (Batari J)

Cases Cited:
Coca Cola Amatil v Kennedy (2012) SC1221.
Hegele v Kila [2011] SC1143.
Independent State of Papua New Guinea v Peter Gaian & 82 Ors (2019) SC1879.
James Lovika v Carl Mapo as Commander of PNG Defence Force & The State (2019) SC1895.
Jeffrey Turia v Gabriel Nelson (2008) SC949.
Ken Norae Mondiai v Wawoi Guavi Timber Co. Ltd (2007) SC886.
Kitogara Holdings Ltd v NCDIC [1988-89] PNGLR 346.
Michael Kuman v Digicel (PNG) Ltd (2017) SC1638.
Porgera Joint Venture & Anor v Joshua Siapu Yako (2008) SC916.
Re: Quan Resources Pty Ltd v ANZ Banking Group (PNG) Limited [1997] PNGLR 687.
Tamali Angoya v Tugupa Association Inc. (2009) SC978.
Waghi Savings and Loan Society Ltd v Bank of South Pacific Ltd (1980) SC185.

Counsel:
Peter Allan Lowing, for the Appellant
Noel Larupa Ako, for the First Respondent

30^th October 2024

1. BATARI, J: I have read the draft judgment of my brother Justice Manuhu, and I agree with the reasonings, and conclusions reached. I only have this to add.
   
2. The pivotal grounds to the objection to competency of the appeal before this Court are in the first two paragraphs. I have no issue dismissing the second ground for the same reasons alluded to in the draft judgment of Manuhu J. The first ground questions the standing of the Appellant to appeal. It is couched in this way:
   

“The Appellant does not have the automatic right to lodge this appeal as she was not a party to the National Court Proceedings described as MP. 08 of 2020 – In the matter of the Companies Act 1997 and In the matter of L&A ILB (PNG Limited) (the National Court Proceedings) as this is a fact where leave is required before the Notice of Appeal is filed in accordance with Section 14 (1) ( c ) and section 17 of the Supreme Court Act.”

3. This raises two propositions. The first contends the Appellant having no standing because it (she) was not a party to the proceeding in the court below. The Appellant concedes the fact to the extent, that she was not a party before the National Court proceedings.
   
4. The second part claims that where an appellant was not a party in the proceedings before the primary court, its standing to appeal is a question of fact which required leave.
   
5. The respondent’s contentions are absurd and misconceived.
   
6. The starting point to guide the discussions on what constitutes a question of fact requiring leave, and whether locus standi is a question of law or fact is, s. 14 (1) of the Supreme Court Act (Ch.27). It reads:

“(1). Subject to this section, an appeal lies to the Supreme Court from the National Court-
(a) on a question of law; or
(b) on a question of mixed fact and law; or
(c) with the leave of the Supreme Court, on a question of fact.”

7. The phrase, “with leave of the Supreme Court, on a question of fact” in s. 14 (1) (c) clearly envisages the requirement to be observed within the time to lodge a document which sets forth in clear terms, what conclusions of facts are disputed and why and how.
   
8. A question of fact and the conclusions of facts are plainly, in my view, exclusive to matters pertaining and intrinsic to the trial proceedings. The opening phrase, an “...appeal lies to the Supreme Court from the National Court”, lends support to this view.
   
9. Common sense would then dictate the appropriate application for leave and distinguish this from those which disputes one of law or mixed law and fact.
   
10. Support for this view is gained from the observation by Lord Denning, MR in, British Launderer’s Research Association v. Central Middlesex Assessment Committee and Hendon Rating Authority [1949] 1 ALL ER 21 adopted by Kearney DCJ in, Waghi Savings and Loan Society Ltd v Bank of South Pacific Ltd (1980) SC185, that:
    

“Primary facts are facts which are observed by witnesses and proved by oral testimony, or facts proved by the production of a thing itself, such as an original document. Their determination is essentially a question of fact for the tribunal of fact and the only question of law that can arise on them is whether there was any evidence to support the finding.........” (underlining, mine).

11. In this case, the question of standing was not a primary fact before the National Court for determination and from which conclusions, leave to appeal is required under s.14(1) (c) of the Supreme Court Act.
    
12. Furthermore, in respect of the entitlement to appeal under s. 17 of the Supreme Court Act, it is trite law that a person need not be a party in the primary court proceedings to be able to appeal against a decision or orders of the primary court. Any person whose interests are affected by or who is genuinely aggrieved by the orders of the National Court and who might have been joined as a party to the National Court proceedings has a right of appeal: Kitogara Holdings v NCDIC [1988-89] PNGLR 346; Porgera Joint Venture & Anor v Joshua Siapu Yako (2008) SC 916; Tamali Angoya v Tugupa Association Inc (2009) SC978.
    
13. There may be a situation where the question of standing was raised and determined in the primary court and the question is raised on appeal pertaining to the facts and conclusions reached on the evidence supporting the ruling on standing. In that scenario, leave to appeal is required under s 14 (1) of the Supreme Court Act. That is not the situation in this case.
    
14. I would dismiss the objection to competency of the appeal with costs to be taxed if not agreed.
    
15. MANUHU, J.: This appeal is against the National Court decision dated 17 June 2021 in proceeding MP 8 of 2020 from which the following orders were made:
    

(a) L&A ILB (PNG) Ltd be placed into liquidation pursuant to section 291 of the Companies Act 1997.

(b) Andrew Pini of Pini Associates & Advisors of section 14 allotment 1 (PO Box 6070) Boroko NCD be appointed official liquidator of the company of the Company.

(c) The Petitioner’s costs of and incidental to the petition be paid by the Company.

16. Aggrieved by the decision, the Appellant filed the Notice of Appeal on 23 June 2021. The Notice of Objection to Competency was filed on 30 June 2021. A Supplementary Notice of Appeal was filed on 2 July 2021. An amended Notice of Objection to Competency was filed on 2 July 2021. A Further Amended Notice of Objection to Competency was filed on 7 July 2021. The Further Amended Notice of Objection to Competency was not included in the Objection Book. I note from the First Respondent’s submissions that the document is in the Appeal Book Vol 3 Tab 22. No issue was raised on these filings.
    
17. There are two lines of thought on how to approach an objection to competency of an appeal. In the oft-cited case of Waghi Savings and Loan Society Ltd v Bank of South Pacific Ltd (1980) SC185), it was held that a proper ground of objection to competency “is really an objection to the jurisdiction of a Court to entertain the point, and objections to jurisdiction may be made at any time”: per Kearney DCJ. It was considered and followed in a long line of cases including, Talibe Hegele v Tony Kila (2011) SC 1124; and James Lovika v Carl Mapo as Commander of PNG Defence Force & The State (2019) SC1895.
    
18. However, it was held in Coca Cola Amatil v Kennedy (2012) SC1221, that if a notice of appeal contains at least a valid ground, the appeal is competent and must proceed to a substantive hearing of all the grounds. Thus, an appellant is accorded maximum latitude to have a decision reviewed by the final court of appeal. There is a growing support for this line of thought. See Independent State of Papua New Guinea v Peter Gaian & 82 Ors (2019) SC1879; and Michael Kuman v Digicel (PNG) Ltd (2017) SC1638.
    
19. Be that as it may, I must deal with the merits of objection grounds.
    
20. The first ground of objection is that the appeal is incompetent in that the Appellant did not obtain leave to appeal. It was submitted firstly that as the Appellant was not a party in the National Court, she has no right of appeal without leave. Secondly, in the absence of a board of directors’ resolution, she, in her capacity as director, does not have the authority to represent the Company in the appeal without leave.
    
21. It was argued that section 4 (2) of the Supreme Court Act provides that an appeal lies in any civil or criminal proceedings, to the Supreme Court from a Judge of the National Court sitting on appeal on a question of law; on a question of mixed fact and law; or with the leave of the Supreme Court, on a question of fact. Section 14 (1)(c) states that an appeal lies to the Supreme Court from the National Court with leave of the Supreme Court on a question of fact. Without leave, it was submitted that the Appellant did not comply with section 17.
    
22. Section 17 provides:
    

“Where a person desires to appeal to or to obtain leave to appeal to the Supreme Court, he shall give notice of appeal, or notice of his application for leave to appeal, as the case may be, in the manner prescribed by the Rules of Court within 40 days after the date of the judgement in question, or within such further period as is allowed by a Judge on application made to him within that period of 40 days.”

23. The Appellant in her capacity as director was not a party in the National Court. The issue therefore is whether she is permitted under s. 17 to appeal against the decision. In Kitogara Holdings Ltd v NCDIC [1988-89] PNGLR 346 it was held that under section 17, “a person” means anybody who is affected or aggrieved by a decision. In Hegele v Kila [2011] SC1143, the court succinctly summarized Kitogara Holdings, thus:

“A person does not have to be a party to the National Court proceedings to be able to appeal against a judgment of the National Court. Section 17 refers to "a person [who] desires to appeal". Any person whose interests are affected by or who is aggrieved by the order of the National Court and who might have been joined as a party to the National Court proceedings has a right of appeal.”

24. Kitogara Holdings was confirmed in Ken Norae Mondiai v Wawoi Guavi Timber Co. Ltd (2007) SC886; Jeffrey Turia v Gabriel Nelson (2008) SC949; and Tamali Angoya v Tugupa Association Inc. (2009) SC978. I have no reason to depart from Kitogara Holdings.
    
25. In this appeal, it is not disputed that the Appellant is a director of the Company. Ordinarily, a company’s business and affairs are managed by a director or board of directors. Prima facie, the Appellant has sufficient interest in the business and affairs of the Company. As such, she has standing and the right to institute an appeal against the liquidation orders of the National Court.
    
26. Therefore, the contention that the Appellant required leave to appeal is misconceived and unmeritorious.
    
27. The second argument is that the Appellant does not have the authority to represent the Company as there is no board resolution authorizing her to appeal. Reliance is placed on Re: Quan Resources Pty Ltd v ANZ Banking Group (PNG) Limited [1997] PNGLR 687. In that case, it was argued that the appellant company did not have the legal capacity to appeal when it was in liquidation.
    
28. The court decided that the appellant company was competent to appeal. The rationale for reaching that conclusion is that:
    

“.... a liquidator cannot assume to have any power to challenge a winding-up order when the validity of the order that appointed him is under challenge. In our view the power to challenge a winding-up order is a residuary power of the company, which in the first place is used through the Board to instruct lawyers to oppose a petition or wind-up order. If a winding-up order is made over the opposition, the company is entitled to appeal against that order.”

29. In this case, the appeal could have been filed by the Company, but it didn’t. The appeal was filed by the Appellant in her capacity as a director. It would appear that without a resolution, the Appellant lacks standing to file an appeal against the decision in question.
    
30. However, in the same case, the court also said:
    

“We understand the status of a director in a company, which is winding-up. He may lose his power when a winding up order is made but he does not necessarily lose his office. See Country Traders Distributors (1974) 2 NSWLR 135. On this state of the law the company may not lose out if it cannot appeal against a winding-up order; it can benefit from an appeal by a director if the grounds of such an appeal are relevant to the wishes of the company. We however question why a company itself cannot appeal against a winding-up order soon or immediately after that order has been made where for any reason the liquidator is put in a situation where he cannot act on behalf of the company.” (my underlining)

31. In this case, the Company has been placed under liquidation by a court order. The liquidators have already been appointed by the National Court. Any meeting of the board of directors to authorise a director to appeal on behalf of the company bears the risk of instigating further conflict with the liquidator and the creditor. Thus, it may not be practical for the Board of Directors of a company under liquidation to convene a meeting to pass a resolution to authorize a director to file an appeal against a winding-up order.
    
32. Secondly, a company is an artificial person. Company decisions are made by a director or board of directors. In my view therefore, a director of a company under liquidation should be permitted to file an appeal against a winding-up order and or the appointment of a liquidator. Unless it is shown that he is acting against the wishes of the company, a director does not have to be authorized by the board to appeal on behalf of the company against a winding-up order and or appointment of liquidators.
    
33. I am of the view therefore the Appellant as a director is competent to file the appeal without leave.
    
34. The remaining arguments are in categories described by the First Respondent as “No evidence to sustain grounds of appeal”, and “Response to the grounds of notice of appeal.” Prima facie, these are not valid objection grounds. We have read the relevant arguments under these categories. Clearly, the arguments under each category relate to the merits of the Appeal.
    
35. Therefore, without a doubt, the remaining grounds are not competent objection grounds.
    
36. In all the circumstances, the Objection to the Competency of the Appeal is unmeritorious and is dismissed with costs which, if not agreed, shall be taxed.
    
37. GEITA, J.: Predicated on the Kitogara Holdings case as good law as it provides the much-needed relief to person(s) who have been left by the wayside, to no fault of theirs, especially in this case where the Appellant who holds 25% shares in the Company, now in liquidation, is greatly prejudiced. To my mind lots of questions remain unanswered. I concur with my brothers Justice Batari and Justice Manuhu.
    

Orders accordingly.
__________________________________________________________________
Leahy Lewin Lowing Sullivan Lawyers: Lawyers for the Appellant
Warner Shand Lawyers: Lawyers for the First Respondent