CIA 189 of 2008; Hi Tech Industries Limited v Papua New Guinea Institute of International Affairs Inc. and: Ivan Pomaleu, Acting Registrar of Companies and: Raga Kavana, Registrar of Titles (2012) N4585

• Jurisdiction: Papua New Guinea
• Judge: Hartshorn, J.
• Judgment Date: 19 January 2012
• Court: National Court
• Citation: (2012) N4585
• Year: 2012
• Judgement Number: N4585

Full Title: CIA 189 of 2008; Hi Tech Industries Limited v Papua New Guinea Institute of International Affairs Inc. and: Ivan Pomaleu, Acting Registrar of Companies and: Raga Kavana, Registrar of Titles (2012) N4585

National Court: Hartshorn, J.

Judgment Delivered: 19 January 2012

N4585

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

CIA 189 OF 2008

BETWEEN:

HI TECH INDUSTRIES LIMITED

Appellant

AND:

PAPUA NEW GUINEA INSTITUTE OF INTERNATIONAL AFFAIRS INC.

First Respondent

AND:

IVAN POMALEU, Acting Registrar of Companies

Second Respondent

AND:

RAGA KAVANA, Registrar of Titles

Third Respondent

Waigani: Hartshorn, J.

2011: 5th September,

2012: 19th January

An Appeal from a decision of the Registrar of Companies pursuant to s. 408 Companies Act - whether property of a deregistered company held in trust - whether Registrar of Companies entitled to deal with property of a deregistered company held in trust

Facts

This is an appeal from a decision of the Registrar of Companiesto transfer a property for K1.00 to the Papua New Guinea Institute of International Affairs Inc. The transfer was purportedly pursuant to the Registrar's powers under sections 372 and 373 Companies Act. Hi Tech Industries Ltd was granted leave to appeal the Registrar's decision on 3rd November 2008. The Institute and the Registrar oppose the appeal. The grounds of appeal are that the Registrar did not have authority to sell the Property to the Institute as he held it in trust for HiTech, that the Registrar did not comply with sections 372 and 373 Companies Act, that no notice was given to Hi Tech of the Registrar's intention to transfer the property to the Institute and that the Registrar did not exercise his statutory powers in a bone fide manner.

Held:

1. Longreach, prior to its deregistration, held the state lease to the Property on trust for Hitech.

2. The decision of the Registrar to purport to sell the Property to the Institute pursuant to sections 372 and 373 Companies Act was a breach of sections 373 and 374 and was wrong.

Cases Cited:

Papua New Guinea Cases

Mudge v. Secretary for Lands [1985] PNGLR 387

Emas Estate Development Pty Ltd v. Mea [1993] PNGLR 215

Papua Club Inc v. Nusaum Holdings Ltd (No. 2) (2004) N2603

Papua Club Inc v. Nusaum Holdings Ltd (2005) SC812

Dumal Dibiaso Incorporated Land Group v. Kola Kuma (2005) SC805

Koitachi Ltd v. Walter Schnaubelt (2007) SC870

Commissioner General of Internal Revenue v. Bougainville Copper Ltd [2008] SC920

Overseas Cases

Assets Company Ltd v. Mere Roihi and Others [1905] AC 176

Austin Nichols & Co v. Stiching Lodestar [2007] NZSC 103

Crossco No. 4 Unlimited & Ors v. Jolan Ltd & Ors [2011] EWCA Civ 1619

Davidson v. Registrar of Companies [2010] NZHC 1497

Paragon Finance Plc v. D.B. Thakerar & Co (A Firm) [1998] EWCA Civ 1249

Counsel:

Mr. I. R. Shepherd, for the Appellant

Mr. R. J. Mann-Rai, for the First Respondent

Mr. M. Miningi, for the Second Respondent

19th January, 2012

1. HARTSHORN, J: This is an appeal from a decision of the Registrar of Companies, the second respondent (Registrar), to transfer a property for K1.00 to the Papua New Guinea Institute of International Affairs Inc., the first respondent (Institute). The transfer was purportedly pursuant to the Registrar's powers under sections 372 and 373 Companies Act. Hi Tech Industries Ltd, the appellant (HiTech) was granted leave to appeal the Registrar's decision on 3rd November 2008. The Institute and the Registrar oppose the appeal. The property in question is known as Allotment 12 Section 54 Hohola contained in State Lease Volume 13 Folio 56 (Property).

2. Hi Tech appeals on the grounds that the Registrar did not:

a) have authority to sell the Property to the Institute as he held it in trust for HiTech.

b) comply with sections 372 and 373 Companies Act when he sold the Property to the Institute as those provisions did not permit him to dispose of property that he holds on trust.

c) give notice to Hitech of his intention to transfer the Property to the Institute, contrary to the principles of natural justice.

d) exercise his statutory powers in a bona fide manner by not advertising the Property for sale either by public auction or tender, and his conduct was tantamount to fraud.

3. The Institute submits that, there is no evidence that the Property was held in trust for Hitech, either by Longreach Clothing Co Ltd the registered proprietor (Longreach) or the Registrar, the lease agreement between Hitech and Longreach was void and so there was no restriction on the Registrar selling the Property to the Institute. Further, the Registrar did comply with the Companies Act, was not obliged to give notice of his intention to sell the property to the Institute to Hitech, was not fraudulent in the transfer and that the Institute has an indefeasible title to the Property.

4. The Registrar submits that the Property was not held in trust and that the Registrar was not a trustee as alleged. The Registrar had the appropriate authority to deal with the property as he saw fit. The Registrar complied with sections 372, 373 and 374 Companies Act and there is no evidence of any trust. The Registrar dealt with the head lease only and not the sublease. The Registry acted in good faith in transferring the Property and he was not required to give notice to HiTech. Any interest that Hitech has is confined to the sublease.

5. The appeal is brought pursuant to s. 408 Companies Act, which is as follows:

“(1) A person who is aggrieved by an act or decision of the Registrar under this Act may appeal to the Court within one month after the date of notification of the act or decision, or within such further time as the Court may allow.

(2) On hearing the appeal, the Court may approve the Registrar’s act or decision or may give such directions or make such determination in the matter as the Court thinks fit.”

6. No decisions were referred to this court concerning an appeal under s. 408 Companies Act, but it is evident that the appeal falls into what the Supreme Court in Commissioner General of Internal Revenue v. Bougainville Copper Ltd [2008] SC920 described as the fourth category of appeal; that is, it is an appeal from the decision of an administrative or executive decision-making authority.

7. Here, no issue has been taken concerning the hearing of the appeal being either a rehearing or a hearing de novo and it has proceeded on the latter basis. Given the wording of s. 408 (2) Companies Act, this would appear to be the correct approach.

8. Specifically as to an appeal from an act or decision of the Registrar of Companies, s.408 Companies Act, apart from the time limit in s. 408 (1), is identical to s. 370 Companies Act 1993 of New Zealand. Indeed, it is from where s. 408 was sourced. Decisions of the New Zealand Courts are persuasive in this jurisdiction and decisions concerning s. 370 Companies Act 1993 of New Zealand are likely to be of assistance when applications are made to this court under s. 408 Companies Act.

9. In the New Zealand High Court decision of Davidson v. Registrar of Companies [2010] NZHC 1497, it was agreed by counsel that under s. 370, the Court hearing an appeal from an act or decision of the Registrar of Companies, must come to its own view of the merits, giving such weight to the decision or act appealed as the Court thinks fit. The New Zealand Supreme Court case of Austin Nichols & Co v. Stiching Lodestar [2007] NZSC 103 was cited in support. That case concerned an appeal from the Commissioner of Trade Marks. Such an appeal is similar to an appeal from the Registrar of Companies in that it is not limited by statute and so is a general appeal on fact and law. In such a case the appellant bears the onus of satisfying the appeal court that it should differ from the decision under appeal. It is only if the appellate court considers that the appealed decision is wrong that it is justified in interfering with it. It is on this basis that this appeal should be determined.

Grounds of appeal

Lack of authority - property held on trust for HiTech

10. Hitech contends that the Registrar lacked the necessary authority to sell the Property as he held the Property in trust for Hitech pursuant to s. 373 (3) Companies Act. This is because at the time of its’ deregistration, Longreach held the Property in trust for Hitech.

11. Hitech contends that when Longreach’s application pursuant to s. 71 Land Act Ch. 185 that applied at the time and which is now s. 130 Land Act, for approval to subdivide the land comprised in State Lease Volume 19 Folio 4524 was approved, the new state lease in respect of the Property that was granted, State Lease Volume 13 Folio 56, reserved the rights of Longreach and Hitech in respect of the Property, substantially in the same terms and of the same kind as those in the surrendered State Lease Volume 19 Folio 4524 and in the surrendered lease no. 70400 to Hitech. This is pursuant to s. 71 (7) Land Act Ch. 185, now s. 130 (7) Land Act. This, together with the content of the letters and documentation passing between Longreach, Hitech and the Department of...