Ome Ome Forests Ltd v Ray Cheong, Jackson Whong and Bill Garey (2002) N2289

• Jurisdiction: Papua New Guinea
• Court: National Court
• Date: 08 October 2002
• Citation: (2002) N2289
• Docket Number: Andrew Daiva and Ome Ome Forests Ltd v Lawrance Pukali and Benedict Waede
• Year: 2002

Full Title: Andrew Daiva and Ome Ome Forests Ltd v Lawrance Pukali and Benedict Waede; Ome Ome Forests Ltd v Ray Cheong, Jackson Whong and Bill Garey (2002) N2289

National Court: Kandakasi J

Judgment Delivered: 8 October 2002

1 CONTEMPT OF COURT—PRACTICE AND PROCEDURE—Contempt Proceedings—Motion for demurrer filed on day of hearing—Treated as alleged contemnors' response to charge and evidence against them—No need to give it a separate hearing on grounds of late filing and in any case the motion is the alleged contemnors' response to the charge.

2 CONTEMPT OF COURT—PRACTICE AND PROCEDURE—Orders subject of contempt proceedings must be clear and unambiguous to alleged contemnor—Issue taken on service of orders by two out of three defendants—Service or notice of existence of orders communicated by single mode—Numerous requests and follow ups made for compliance of orders—No issue taken—Service deemed to have been effected on all.

3 CONTEMPT OF COURT—PRACTICE AND PROCEDURE—Court Orders made and directed against companies—Contempt proceedings arising due to company officials' conduct—Companies being only separate persons legally but have no independent mind—Exceptions to rule in Foss v Harbottle extended to include action against company officials responsible for breaching and being in contempt of Court pursuant to Sch2.3 of the Constitution—Company officials proper defendants in contempt of Court cases as a company has no separate mind from that of its officers—Corporate veil lifted to allow for prosecution against company officials in the interest of justice in all of the circumstances to do so.

4 CONTEMPT OF COURT—Orders made for payment of monies due under a contract by two companies—The companies through their relevant officers failed to comply with the Court Orders and made payments contrary to Court Orders—No argument as to meaning and effect of orders—Not being served and being under pressure to pay only argument raised—Orders found to have been served on all of the defendants—Even after service of contempt proceedings no step taken to comply with Court orders—Being under pressure is not reasonable excuse for failing to take appropriate steps to comply or to avoid being in contempt of Court—Failure to comply and acting contrary to orders found to be deliberate and continuing—Verdict of guilty returned.

5 COMPANY LAW—Court orders directing companies to retain and make payments of monies due to the another company—Court orders once made and served or brought to notice of responsible company official, the orders must be complied with—If a company wishes not to comply with the Court order, it must apply for a variation, setting aside, stay or a quashing of the orders as the case may be within the period for compliance of the orders under the Rules or within such period as the Court may fix—failure by a company official to comply with a Court order that has not been varied, stayed or quashed despite repeated requests for compliance and acts contrary to orders amounts to contempt of Court—Responsible officers of company in contempt—appropriate defendants as company does not have mind of its own except only through that of its proper officials—The proper plaintiff rule in Foss v Harbottle does not apply—Exceptions to that rule extended to include contempt of Court cases against company officials because contempt of Court is serious and criminal in nature—Corporate veil no protection for company official in contempt of Court in the interest of justice in all of the circumstances.

6 Ross Bishop v Bishop Bros Engineering Pty Ltd [1988–89] PNGLR 533, Concord Pacific Ltd v Thomas Nen [2000] PNGLR 47, Soso Tumu v The State [2002] PNGLR 250, Odata Ltd v Ambusa Copra Oil Mill Ltd (2001) N2106, SCR No 4 of 1990; Re Meeting of Parliament [1994] PNGLR 141, SCR No 4 of 1980; Re Petition of MT Somare [1981] PNGLR 265, AGC (Pacific) Ltd v Woo International Pty Ltd [1992] PNGLR 100, Peter Aigilo v The Independent State of Papua New Guinea (2001) N2102, Neville v Privatization Commission (2001) N2184, Miller v Knox (1838) 4 Bing NC 574; 6 Scott 1; 132 ER, 910, Re Sheppard and Sheppard (1976) 67 DLR (3d) 592, Stancomb v Trowbridge UDC [1910] 2 Ch 100, Fairclough v Manchester Ship Canal Co [1897] NN 7, Hadkinson v Hadkinson [1952] 2 All ER 567, Salomon v Salomon & Co Ltd [1897] AC 22, Floyd (1909) 53 Sol Jo 790, Foss v Harbottle [1843] 2 Hare 461; Ch 12 LJ 319, Russell v Wakefield Waterworks Co [1875] LR 20 Eq 474, Burland v Earle [1902] AC 83, Johnson v Lyttle's Iron Agency (1877) 5 Ch D 687, Atwool v Merryweather (1867) LR 5 Eq 464n, Cotter v National Union of Seamen [1929] 2 Ch 58 and Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] 1 All ER 354, Nyali Ltd v The A–G of Kenya [1956] 1 QB 1 and Packer v Packer [1954] P 15 referred to

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Kandakasi J: The Second Plaintiff ("Ome Ome") is a land owner company. It entered into a forestry development contract with another company, Hugo Sawmilling Limited ("HSL"), the contractor for the extraction and marketing of Ome Ome's timber products. HSL was obliged under the contract with Ome Ome to pay royalties and premiums for every timber or log extracted and exported. HSL subcontracted its contractual obligations to another company called, Kerawara Limited ("KL"). For all intents and purposes, the parties understood HSL to be the contractor and KL as the subcontractor.

Following problems in the management of Ome Ome, the matter came to Court. On 22 May 2001, certain interim orders by consent were made. One of those orders ordered KL to continue with its practice of withholding the payment of premiums and royalties to Ome Ome pending a resolution of the latter's management problem, or until the Court otherwise orders. Subsequently, the Court ordered by consent on 13 July 2001, that all premium moneys and operation costs withheld since December 2000 to the date of the order, be released by the contractor and the subcontractor to Ome Ome. There were futher orders made for HSL and KL to pay legal costs incurred for and on behalf of Ome Ome's actions.

Ome Ome claims those orders have not been complied with despite both HSL and KL being served and numerous requests and reminders for them to comply with the orders were made. It is further alleged that, the companies have in fact made payments to various individuals claiming to be the shareholders of Ome Ome. Contempt charges have therefore being laid against the relevant officers of both HSL and KL, namely Bill Garey, operations manager for HSL, Jackson Hwong and Ray Cheong, managing director and an officer of KL respectively (collectively "the defendants").

The defendants have denied the charges against them and claim in their defence that they are not the correct parties because they are not named as defendants in the proceedings and the orders are not directed at them personally. This they accept can be corrected by amending the charges by substituting their names to that of KL and HSL. In addition to that, Messrs Jackson Hwong and Ray Cheong claim the orders were not served on them and as such they are therefore not aware of the existence of the orders. Additionally, on Mr Bill Garey's part he claims he was under pressure to make payments to the shareholders of Ome Ome and not Ome Ome itself and as such he is not in contempt. No issue is taken as to the clarity or otherwise of the orders.

Furthermore, Messrs Jackson Hwong and Ray Cheong filed a notice of motion on the day set for a hearing of the charges seeking to, what they call, "move the Court on a demurrer." Rather than giving that motion a separate hearing, I decided to deal with it, with their consent as their response to the charges against them.

No issue is taken by any of the defendants in relation to the clarity of the orders and the charges. Similarly, there is no issue in relation to the relevant procedure for successfully bringing a contempt proceeding against a contemnor. So the issues and principles discussed in Ross Bishop v Bishop Bros Engineering Pty Ltd [1988–89] PNGLR 533 do not arise here. Hence, there will be no consideration of any of these issues, though they may be referred to occasionally in the course of the judgment.

The issues for this Court's determination are these:

1. Whether the defendants are guilty of contempt of the orders of this Court made on 22 March 2001 and 13 July 2001?

2. Whether the defendants who were not named as parties in the proceedings or in the orders but responsible officers of the companies HSL and KL are correctly named as defendants in the contempt charge?

Facts

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