Pacific Native Timbers (PNG) Ltd v Andrew Donaldson and Shiloh Timbers Ltd (2005) N2933

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 18 November 2005
• Court: National Court
• Citation: (2005) N2933
• Docket Number: WS No 1620 of 2005
• Year: 2005
• Judgement Number: N2933

Full Title: WS No 1620 of 2005; Pacific Native Timbers (PNG) Ltd v Andrew Donaldson and Shiloh Timbers Ltd (2005) N2933

National Court: Cannings J

Judgment Delivered: 18 November 2005

N2933

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO 1620 OF 2005

PACIFIC NATIVE TIMBERS (PNG) LTD

Plaintiff

V

ANDREW DONALDSON

First Defendant

SHILOH TIMBERS LTD

Second Defendant

MADANG : CANNINGS J

9, 18 NOVEMBER 2005

RULING ON MOTION

Injunctions – interim orders – application to set aside or discharge interim injunction made ex parte – jurisdiction of court – considerations to take into account when deciding whether to set aside injunction.

The plaintiff filed proceedings against the defendants for breach of contract, claiming damages and orders for reimbursement of moneys obtained by the defendants allegedly on behalf of the plaintiff and for the transfer of property allegedly owned by the plaintiff and in the possession of the defendants. Soon after the filing of the substantive proceedings the court granted ex parte orders in the nature of an interim injunction. On the return date of the interim injunction the defendants applied to have the injunction discharged. This is a ruling on that application.

Held:

(1) The National Court has jurisdiction to set aside its earlier interim orders. This power exists irrespective of whether the previous orders were made by the same Judge who is dealing with the application to set aside the previous orders.

(2) There are at least six considerations to take into account in deciding whether to set aside an interim injunction. (Mainland Holdings Ltd and Others v Stobbs and Others (2003) N2522 and Mark Ekepa and Others v William Gaupe and Others (2004) N2694 applied.)

(3) Three of those considerations in this case were neutral. The remaining three strongly favoured the setting aside of the interim injunction.

(4) Accordingly the interim injunction was dissolved.

Cases cited

The following cases are cited in the judgment:

Ewasse Landowners Association Inc v Hargy Oil Palms Ltd (2005) N2878

Mainland Holdings Ltd and Others v Stobbs and Others (2003) N2522

Mark Ekepa and Others v William Gaupe and Others (2004) N2694

NOTICE OF MOTION

This was an application made on the return of an interim injunction for the discharge of the injunction.

Counsel

B Meten for the plaintiff

W Akuani for the defendants

CANNINGS J:

INTRODUCTION

This is a ruling on an application by the defendants to discharge an interim injunction.

BACKGROUND

Writ and statement of claim

On 20 October 2005 Narokobi Lawyers filed a writ of summons and statement of claim on behalf of the plaintiff, Pacific Native Timbers (PNG) Ltd. It is claimed that the first defendant, Andrew Donaldson, and the second defendant, Shiloh Timbers Ltd, had breached an oral agreement entered into with the plaintiff in January 2005. The terms of the agreement were that:

· the plaintiff would assist in the incorporation of the second defendant;

· the plaintiff would assist the first defendant secure a permit from the National Forest Authority to mill timbers;

· the plaintiff would provide venture capital to and be the management company for the second defendant;

· timber milled by the second defendant with machines and capital provided by the plaintiff would be exported by the plaintiff and money received by the plaintiff through its parent company, Pacific Native Timbers (NZ) Ltd, would be paid to the second defendant;

· ownership of machines, equipment, motor vehicles etc bought by the plaintiff or its parent company would remain with the plaintiff;

· the second defendant would mill timbers, and income from the sale of timber would be used to repay the loan to the plaintiff and reinvested into the second defendant’s operations.

The plaintiff claims that the defendants breached the agreement by not milling enough timber; incurring exuberant debts; directly receiving money derived from the export of milled timber and paying it into the second defendant’s account at Westpac, Madang and transferring it to a bank account of the wife of the first defendant in New Zealand.

The plaintiff raises breach of contract as its cause of action. It seeks damages and orders for reimbursement of moneys obtained by the defendants allegedly on behalf of the plaintiff and for the transfer of property allegedly owned by the plaintiff and in the possession of the defendants.

Notice of motion

On the same day that the originating summons was filed, 20 October 2005, the plaintiff filed a notice of motion seeking various orders in the nature of an interim injunction, supported by an affidavit by Tim Cronin of Madang, sworn on 20 October 2005, and an undertaking as to damages and costs.

Tim Cronin’s affidavit

Tim Cronin deposed that he is the managing director of the plaintiff and of its parent company in New Zealand. He was personally involved in negotiating the oral agreement with the defendants in January 2005 and relied substantially upon representations and information given by the first defendant. He says that the first defendant was appointed as general manager of the plaintiff in March 2005. He gives details of the alleged breaches of the agreement by the defendants. He refers to the purchase in New Zealand by the plaintiff’s parent company of two Toyota Hilux vehicles, which were imported into PNG and transferred into the possession of the defendants. He claims that in September 2005 he caused sawn timber worth K108,000.00 to be shipped to New Zealand, but the first defendant received the proceeds of this payment and diverted it to his wife’s New Zealand bank account and to the second defendant’s account at Westpac, Madang. As a consequence, the second defendant was taken off the company register and is no longer incorporated in PNG. He says that on 2 October 2005 he sent away another shipment of sawn timber and believed the defendants may try to get the proceeds paid to them.

Hearing and injunction

On 21 October 2005 Mr Meten of Narokobi Lawyers appeared for the plaintiff in the National Court at Madang before Sawong J and applied for the orders sought in the notice of motion. None of the court documents had, at that stage, been served on the defendants and the motion was heard ex parte.

On the same day, 21 October 2005, his Honour made the orders sought in the notice of motion, which relevantly provide:

1 The Court dispenses with the requirements of service …

2 The defendants, their servants or agents be restrained from disposing, including selling or transferring, the title of any of their properties, machinery and other equipment until this case is heard and determined or the court otherwise orders.

3 The defendants, its servants, agents or relatives be restrained from collecting or receiving any payments in relation to the shipment of sawn timber on 2 October 2005 for which the first defendant picked up the bill of lading on 14 October 2005.

4 The second defendant’s account with Westpac Bank Ltd, Madang branch, be frozen until this proceeding is determined or the court orders otherwise.

5 The defendants shall forthwith return to the plaintiff motor vehicles bearing the registration Nos HAH 767 and HAH 768.

6 The first defendant be restrained from interfering with the plaintiff or its business until these proceedings are determined.

First return

The injunction was made returnable on 26 October 2005. By that day: the documents had been served on the defendants; William Akuani Lawyers of Madang had filed an appearance; and the first defendant, Andrew Donaldson, had sworn an affidavit. The matter came before Sawong J who gave directions for the further conduct of the matter and extended the return date of the injunction to 8 November 2005. On that day, it was further extended to 9 November 2005.

There are now two affidavits by the first defendant on file, sworn on 24 and 26 October 2004.

Andrew Donaldson’s affidavits

In the affidavit of 24 October 2005 the first defendant deposes that he is the owner, shareholder and a director (with two others) of the second defendant. He is also a shareholder and director of the plaintiff. Tim Cronin is not a director of the second defendant. The second defendant has a medium-scale sawmilling operation in the Ilia area of Madang Province. He believes Tim Cronin applied to the Investment Promotion Authority to have the second defendant removed from the company register; and if so, he did so without the authority or knowledge of the board of the second defendant. He claims Tim Cronin wrote to Westpac, Madang, asking the bank to freeze the second defendant’s account for various reasons including that it had been struck off the company register. He says that if he has been removed as a director of the plaintiff, this has been done without authority. He believes that Tim Cronin has presented false information to the court. He denies the claims about the two motor vehicles, which he says are the second defendant’s operational vehicles, and the claims about the proceeds of the sale of timber, which he says belonged to the second defendant. He says that the freezing of the second defendant’s bank account will cause great inconvenience, particularly regarding the payment of wages for workers.

In the affidavit of 26 October 2005 he denies that he or the second defendant entered into a management...