Investment Promotion Authority v James Sinton Spence (2001) N2104

• Jurisdiction: Papua New Guinea
• Judge: Kandakasi J
• Judgment Date: 03 August 2001
• Court: National Court
• Citation: (2001) N2104
• Docket Number: Investment Promotion Authority v Niugini Scrap Corporation Pty Ltd
• Year: 2001
• Judgement Number: N2104

Full Title: Investment Promotion Authority v Niugini Scrap Corporation Pty Ltd; Investment Promotion Authority v James Sinton Spence (2001) N2104

National Court: Kandakasi J

Judgment Delivered: 3 August 2001

N2104

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS NO: 617 of 1998

BETWEEN:

INVESTMENT PROMOTION AUTHORITY

Prosecutor

AND:

NIUGINI SCRAP CORPORATION PTY LTD

Defendant

OS NO: 620 of 1998

BETWEEN:

INVESTMENT PROMOTION AUTHORITY

Prosecutor

AND:

JAMES SINTON SPENCE

Defendant

WAIGANI: KANDAKASI J

2001: 12 April

3 August

FOREIGN INVESTMENT — Need for certification as a foreign enterprise under the Investment Promotion Authority Act 1992 (IPA Act) — Carrying on business without first obtaining certificate under the IPA Act — Contravention of s. 41(1)(a) of the IPA Act — Guilty plea to charge — Conviction on guilty plea.

Foreign enterprise conducting business in an activity reserved for citizens only — Contravention of s. 41(1)(b) of the IPA Act — Guilty plea to charge — Conviction on guilty plea.

SENTENCE - On guilty plea to charge under s. 41(1)(a) and (b) of the IPA Act — Factors for consideration before penalty — Intent of Parliament — Purpose of prohibition and penalty — Penalty to be severe, punitive and deterrent in nature — Other purposes of sentencing inapplicable — Guilty plea effect of — Guilty plea and no prior conviction factors for consideration in offenders mitigation — Level of gain during period of illegal operations relevant — Onus on offender to mitigate penalty — Failure to mitigate may justify imposition of maximum prescribed penalty — IPA Act s. 41(1)(a) and (b) and s. 41(3)

Cases Cited:

Arthur Ageva v. Bobby Gaigo [1987] PNGLR 12

R v. Davey [1980] 2 A Crim R 254

The State v. Abel Airi N2007

Inakambi Singorom v. John Kalaut [1985] PNGLR 238 at 241, per Kidu CJ.

PLAR No. 1 of 1980 [1980] PNGLR 326.

Norah Mairi v. Alkan Tololo & Ors [1976] PNGLR 125 at 136.

SCR No. 1 of 1978: Re Ombudsman Commission Investigations of the Public Prosecutor [1978] PNGLR 345 at page 389, per Pritchard J.

Counsel:

Mr. S. Nutely for the Prosecutor

Mr. W. Frizzell for the Defendants

Judgement on Sentence

3rd August 2001

KANDAKASI J: By consent of the parties, these matters were dealt with together on 12th April 2001, after a number of adjournments. The hearing was by affidavits, again with consent of the parties. After the hearing, I adjourned for submissions of the parties and thereafter a decision.

The defendants pleaded guilty to one charge each respectively under Section 41(1)(a) and 41(1)(a) and (b) of the Investment Promotion Act 1992 (the IPA Act) for carrying on business without certification as a foreign enterprise and in an activity reserved only for citizens. The information charging them were presented with leave of the Court granted on 14th June 1999. On the available material I was satisfied that there was sufficient evidence to support the guilty pleas. I therefore accepted the guilty pleas and proceeded to convict the defendants of the charges against them. As these were the first ever cases to be dealt with under the IPA Act, I asked counsel to assist me with relevant local (if any) and oversees authorities in the determination of an appropriate sentence for the defendants.

The parties' submissions have now been received. Unfortunately, they offer no real assistance. They make submissions on the facts and the provisions of section 41 (1)(a) and (b) without any suggestion has to how I should determine what penalty is appropriate. They do not even suggest the principals or factors I should take into account before arriving at a decision. The only exception there is that, they both submit that I should take into account the fact that the defendants have plead guilty and that operates in their mitigation. I am proceeding to this judgement therefore, without much assistance from counsel.

The relevant facts can be ascertained from the various affidavits, that were admitted into evidence with the consent of the parties. The facts are therefore not in issue. Niugini Scrap Corporation Pty Limited (the company) was incorporated under the Companies Act (Chapter 146) on 28 May 1996. Its shareholders were Ronald M. Wanless (Australian) with 51 shares and John Lari (Papua New Guinean) with the remaining 49 shares. The officers of the company were Ronald M. Wanless (Director) and John Lari (Director). James Sinton Spence was the company's secretary and his office was the registered office of the company. It was situated at 2nd Floor, Brian Bell Plaza, Turumu Street, Boroko, National Capital District.

On 21st May 1996, a complaint was made to the Registrar of Companies that the company was a foreign company carrying on business with a foreign director and its majority shareholder was also a foreigner. The Registrar of Companies conducted a search of its records and found that the complaint was true.

By an undated letter, received by the Registrar of Companies on 21st May 1996, from LNJ Consultants Pty Ltd, notice was given that an application would be made to the Investment Promotion Authority (IPA) for certification of the company has a foreign enterprise. Simultaneously, the IPA received an application by the shareholders for a certification of the company, as a foreign enterprise.

On 8th August 1996, the IPA rejected the application for certification as a foreign enterprise and communicated that to the company and its officers by letter of the same date. The rejection was on the basis that the activities for which the company sought certification were reserved activities for citizen companies and individuals. The company and its officer's appealed against that rejection by letter dated 6th September 1996. However, the appeal was out of time and without the payment of the required appeal fees. So by letter dated 25th September, the IPA informed the company that the appeal could not be considered. At the same time, the IPA expressed concern that the company was still carrying on reserved activities and without proper certification and asked the company and its officers to rectify the situation within two weeks.

The company responded through its lawyers, Joseph S. Aaoae who wrote on 3rd of October 1997, to the IPA informing that, the shares held by the foreigners would be transferred to a citizen to comply with the requirements of the IPA Act. On the same day, the IPA wrote to the company's lawyers requiring the indicated restructuring of the company to be completed by or before 9th of October 1997. The IPA reminded the company that the activities it was involved in were reserved for citizens and warned that, if the company did not restructure as indicated and still carries on the activities, prosecution would follow.

On 9th October 1997, the company's lawyers wrote to the IPA and informed that the shares held by the foreigners would be transferred to a Papua New Guinean. The IPA responded by a letter dated 10th October 1997 requesting the company to provide evidence of the shares being transferred and informed that foreigners should not control the business. The company failed to reply to that letter and that attracted a further letter from the IPA to the company on 1st December 1997 warning of prosecutions under the Act unless a reply was received within 14 days. A response from the company's lawyers was then communicated by letter dated 17th of December 1997. In that response, the company claimed that it had been in contact with three officers of the IPA and that there was a misunderstanding which resulted in the application for certification being made under the wrong provisions and that an application under the correct provisions was being lodged.

Then on 11th of November 1997, the company lodged its second application, which was the one mentioned in its lawyers' letter of 17th December 1997. This time the application was for manufacturing of basic iron and steel. That application was rejected on 17th June 1998, after asking for and receiving technical inputs to determine whether the companies proposed activity was different from recycling scrap metal, which is a reserved activity for citizens. In the same rejection letter, the IPA informed the company of its right of objection to the rejection. Prior to that, the only national partner in the business, Mr. John Lari, wrote to the IPA on 9th of June 1998 stating that the company was still carrying on business but he did not receive what he was entitled to receive from the business. The company continuing to operate was confirmed by a listing of the company in the 1998 yellow pages of Papua New Guinea Telephone directory. By 27th...