Salvation Army (PNG) Property Trust v Ivar Jorgensen and Rex Vagi (also known as Vevao Pyama)

• Jurisdiction: Papua New Guinea
• Judge: Woods J
• Judgment Date: 20 November 1997
• Citation: (1997) N1644
• Court: National Court
• Year: 1997
• Judgement Number: N1644

National Court: Woods J

Judgment Delivered: 20 November 1997

N1644

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

WS 157 OF 1996

SALVATION ARMY (PNG) PROPERTY TRUST

PLAINTIFF

V

IVAR JORGENSEN

FIRST DEFENDANT

REX VAGI (ALSO KNOWN AS VEVAO PYAMA)

SECOND DEFENDANT

Waigani

Woods J

12 November 1997

13 November 1997

20 November 1997

MASTER AND SERVANT — breach of fiduciary duty — profits obtained by an employee dishonestly by virtue of employment — use of a bogus company and bank account to increase costs of goods procured for the company and increased amounts retained by employee — right of employer to profits.

Cases Cited

Reading v Attorney-General [1951] 1 AER 617

Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488

Counsel

M Wright for the Plaintiff

K David for the Defendants

20 November 1997

WOODS J: This matter is a claim for certain declarations over profits and monies said to have been converted and for damages for breaches of the fiduciary relationship the defendants had with the plaintiff.

The claim is that the plaintiff is a corporation which owned and operated a printing business known as Salpress or Salvationist Press and in such business it employed the defendants as the General Manager and the Financial Controller respectively and that the defendants in those capacities breached their fiduciary relationship as employees and procured monies to themselves by wrongfully profiting from business dealings entered into purportedly for the benefit of Salpress.

The following is not disputed:

The Plaintiff is a corporation under Statute and able to sue,

The Plaintiff owned and operated a printing business known as Salpress or Salvationist Press,

The First Defendant was employed by the plaintiff in the position of General Manager of Salpress,

The Second Defendant was employed by the plaintiff as the Financial Controller of Salpress,

The Defendants in these positions were responsible for and had effective control of the management of Salpress.

Evidence has been presented to the court of certain dealings involving the purchase of paper for Salpress from overseas suppliers. The evidence is that Salpress purchased its paper supplies from certain companies in Australia namely Paper House and Raleigh Paper Co Pty Ltd. These purchases were done by the two defendants in their capacity as General Manager and Financial Controller of Salpress. However the evidence reveals that instead of making the purchases direct from Paper House and Raleigh the defendants created a bank account under the title of 'IVI Group' and channelled the paper purchases through that name and bank account. This was done by ordering the paper needs through the name of Salpress, the invoices for these orders would go to IVI Group who would raise a separate invoice to Salpress for an amount greater than the original invoice. The defendants would then arrange for payment to be made to IVI from Salpress for this inflated invoice, the money would go into the IVI account and then a separatecheque would be raised from the IVI account to raise an overseas bank draft to pay the Raleigh or Paper House invoice. This final bank draft would be forwarded to the Australian Company under cover of a Salpress letter. At all times the Australian companies believed they were dealing directly with Salpress. However in fact the cost of the paper supplies to Salpress was being inflated by the loading going into the IVI bank account. The two defendants were the only signatories to this IVI account. IVI had no corporate or registered name existence, it appears to be merely a name placed on a bank account operated by the two defendants. There was no evidence of any company documents or company or business records or tax returns or otherwise for the operation of any entity called IVI or IVI Group. It appears at the end of the evidence to be merely a scam bank account to cream off...