Investment Promotion Authority v James Sinton Spence (2001) N2104

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

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

1 FOREIGN INVESTMENT—Need for certification as a foreign enterprise under the Investment Promotion Act 1992—Carrying on business without first obtaining certificate under the Investment Promotion Act 1992—Contravention of s41(1)(a) of the Investment Promotion Act 1992—Guilty plea to charge—Conviction on guilty plea.

2 FOREIGN INVESTMENT—Foreign enterprise conducting business in an activity reserved for citizens only—Contravention of s41(1)(b) of the Investment Promotion Act 1992—Guilty plea to charge—Conviction on guilty plea.

3 SENTENCE—On guilty plea to charge under s41(1)(a) and s41(1)(b) of the Investment Promotion Act 1992—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—Investment Promotion Act 1992 s41(1)(a) and s41(1)(b) and s41(3)

4 Arthur Ageva v Bobby Gaigo (1987] PNGLR 12, R v Davey (1980] 2 A Crim R 254, The State v Abel Airi (2000) N2007, Inakambi Singorom v John Kalaut (1985] PNGLR 238, PLAR No 1 of 1980 (1980] PNGLR 326, Norah Mairi v Alkan Tololo (No 2) (1976] PNGLR 125 and Constitutional Reference No 1 of 1978; Re Ombudsman Commission Investigations of the Public Solicitor (1978] PNGLR 345 referred to

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Kandakasi J: By consent of the parties, these matters were dealt with together on 12 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 s41(1)(a) and s41(1)(a) and (b) of the Investment Promotion Act 1992 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 14 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 Investment Promotion Act 1992, 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 s41(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 judgment 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 (Ch146) 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 21 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 21 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 Investment Promotion Authority received an application by the shareholders for a certification of the company, as a foreign enterprise.

On 8 August 1996, the Investment Promotion Authority 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 6 September 1996. However, the appeal was out of time and without the payment of the required appeal fees. So by letter dated 25 September, the Investment Promotion Authority informed the company that the appeal could not be considered. At the same time, the Investment Promotion Authority 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 Aoae who wrote on 3 October 1997, to the Investment Promotion Authority informing that, the shares held by the foreigners would be transferred to a citizen to comply with the requirements of the Investment Promotion Act 1992. On the same day, the Investment Promotion Authority wrote to the company's lawyers requiring the indicated restructuring of the company to be completed by or before 9 October 1997. The Investment Promotion Authority 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 9 October 1997, the company's lawyers wrote to the Investment Promotion...