Gigira Development Corporation Limited and Others v Stanis Talu and Others

• Jurisdiction: Papua New Guinea
• Judge: Anis J
• Judgment Date: 28 November 2022
• Neutral Citation: N10051
• Citation: N10051, 2022-11-28
• Counsel: D Bidar, for the Petitioners,G Manda, for the Respondents
• Hearing Date: 16 November 2022,28 November 2022
• Docket Number: MP (COMM) NO. 19 OF 2020 (IECMS) (NO. 3)
• Court: National Court

N10051

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

MP (COMM) NO. 19 OF 2020 (IECMS) (NO. 3)

In the Matter of the Companies Act 1997, Section 152(1)(2)(3) & (4)(g) and in the Matter of the Companies Rules, Rule 14(c)

and:

In the Matter of Petroleum Exploration Joint Venture Limited (1-35304)

Between:

Gigira Development Corporation Limited

First Petitioner

and

Tukupa Development Corporation Limited

Second Petitioner

and

Kewapa Development Corporation Limited

Third Petitioner

v.

Stanis Talu

First Respondent

and

Pukula Hereba

Second Respondent

and

Daniel Nere

Third Respondent

Waigani: Anis J

2022: 16^th & 28^th November

NOTICE OF MOTION — Application to set-aside ex parte order — Order 12 Rule 8(3) — National Court Rules — whether judgment irregular or regular — whether allegation of fraud should warrant setting aside of judgment — Division 4 — Order 12 Rules 37 and 38, and Order 10 Rule 9A(15) of the National Court Rules considered — whether failure by party to inform court and for court to caution itself sufficient basis to assume or perceive improper exercise of discretion thus should warrant setting aside of ex parte order — consideration — ruling

Cases Cited:

Gigira Development Corporation Ltd and Ors v. Stanis Talu and Ors (2021) N8852

Lord & Company Ltd v Inapero [2014] SC1624

National Fisheries Authority v Tipi [2012] N4836

Kalang Advertising Ltd v Visvanathan Kuppusamy (2008) SC924

David Lambu v Paul Paken Torato (2008) SC953

Peter Dixon Donigi v. Base Resources Ltd [1992] PNGLR 110

Leo Duque v Avia Andrew Paru [1997] PNGLR 378

Tom Rangip v. Peter Loko (2009) N3714

South Pacific PNG Sea Foods Co Ltd v National Executive Council (2017) N6888

Nelulu Land Group Inc v Rimbunan Hijau (PNG) Ltd (2018) N 7994

Gigira Development Corporation Ltd and Ors v Stanis Talu and Ors (2021) N9027

Counsel:

D Bidar, for the Petitioners

G Manda, for the Respondents

Goodwin Bidar Nutley: Lawyers for the Petitioners

Greg Manda Lawyers: Lawyers for the Respondents

RULING

28^th November 2022

1. Anis J: On 16 November 2022, the respondents applied to set-aside an ex parte order I made on 31 August 2022. The application was contested. I heard and reserved my ruling to a date to be advised.

2. I rule on it now.

BACKGROUND

3. I had set-out the background of the matter at [3] to [7] in my earlier decision Gigira Development Corporation Ltd and Ors v. Stanis Talu and Ors (2021) N8852. I restate them herein as follows:

3. The 3 petitioners (the petitioners) are companies created under the Companies Act 1997 (the Companies Act). They are landowner companies of one of the oil and gas rich provinces of Papua New Guinea, the Hela Province. They represent more than 6,000 landowners from the area where Petroleum Development License One (PDL 1) is situated. In May of 1999, the petitioners entered into a joint venture agreement (JV) amongst themselves. From the JV, they established an umbrella company, the subject of this proceeding, called Petroleum Exploration Joint Venture Limited (PEJVL or the company). The petitioners hold equal shares in PEJVL.

4. The petitioners file this petition as shareholders, pursuant to s. 152 of the Companies Act. They argue or assert their rights as shareholders of PEJVL in their petition to allege that the affairs of the company have been, or are being, or are likely to be, conducted in a manner that is, or any act or acts of the company have been, or are, or are likely to be, oppressive, unfairly discriminatory, or unfairly prejudicial to them as shareholders.

5. In the petition, and I will paraphrase, the petitioners allege that the respondents, in their executive capacities (1st and 2nd respondents as chairman and director) and purported position (3rd respondent as general manager) of the company at the material time, acted against its interest. They say monies that had been provided by the Government to the company to the tune of K18 million, which was for the beneficiaries (i.e., landowners of the area where PDL 1 is situated) whose interests the petitioners (as shareholders of the company) represent, had been unlawfully dealt with by these respondents. They say the company or PEJVL operates a Bank South Pacific Limited account which is its original and only account. They say the respondents deceitfully or illegally opened a separate account purportedly for the company with the ANZ bank. They say the first K10 million had been paid by the State on 6 December 2011, which was accepted by these respondents and paid to the company's said illegitimate or unauthorized ANZ bank account. They say the respondents then used up the K10 million that was deposited in the ANZ account for their own purposes or outside the interest of the company, within weeks from the date of deposit. They say in April of 2013, they had learnt that the remaining balance of the K18 million, that is, K8,000,000 was paid into the ANZ account. They say in the petition that PEJVL then took steps to commence proceeding in the National and Supreme Courts, that is, WS No. 375 of 2013 — Petroleum Joint Venture Limited and Ors v. Stanis Talu and Ors, and SCA 24 of 2019 — Petroleum Joint Venture Limited v. Stanis Talu & Ors v. (earlier proceedings). It is not disputed that similar allegation or claims had been made by PEJVL against the respondents. Restraining orders were obtained and the K8 million was ordered and paid into the National Court Trust Account. On 11 March 2019, the National Court dismissed the proceeding after a hearing. PEJVL appealed the decision to the Supreme Court. On 28 October 2020, the Supreme Court dismissed the appeal as incompetent. The petitioners claim that on 22 February 2021, the K8,300,000 from the National Court Trust Account was paid into the trust account of the respondents' lawyers Greg Manda Lawyers.

6. The petitioners were aggrieved by the actions or inactions of the respondents and or PEJVL and filed the present petition. In summary, they say in the petition that the actions and omissions by the respondents amount to unlawful, deceitful, and fraudulent conducts and an unlawful conversion of the funds and property of the company and the petitioners. They also say that the actions and omissions by the respondents were performed collectively and severally, and that they conspired with full intent and knowledge to defraud the company and the petitioners and cause them financial loss.

7. On 26 February 2021, interim ex parte orders were granted by this Court in favour of the petitioners against the respondents and their lawyers, amongst others, against the use of K8,300,000 that had been paid by the National Court Trust Account into the trust account of Greg Manda Lawyers.

MOTION

4. The notice of motion by the respondents was filed on 11 October 2022 (NoM). Relief 3 and 4 were conceded by counsel for the respondents as unfounded, that is, they seek relief that have, amongst others, not been pleaded, thus, I will refrain from dealing with them herein.

5. The contentious relief were relief 1 and 2, and I restate them herein as follows:

1. Pursuant to Order 12 Rule 8(3) of the National Court Rules, the Orders of the National Court per Anis J of 31st August 2022 entered on 02nd September 2022 be set aside.

2. The proceedings herein be dismissed pursuant to Order 12 Rule 40 of the National Court Rules on the following basis;

(a) no reasonable cause of action is disclosed, and or

(b) the proceedings are frivolous or vexatious, and or

(c) the proceedings are an abuse of the process of the Court.

……

COMMON GROUND

6. Counsel for the respondents informed the Court at the outset that the ex parte decision of the Court of 31 August 2022 (ex parte order/Court Order of 31 August) was regularly entered. As such, his submission was made premised on that.

7. However, towards the end of the submission, which is captured at [46], [47] and [48] of the respondents' written submission, counsel raised the argument that fraud had been pleaded in the petition and as such counsel submitted that the petitioners should have alerted the Court of the same. In support of this argument, the respondents rely on the case Lord & Company Ltd v Inapero [2014] SC1624. Briefly, the Supreme Court therein found merit in Kariko J's decision in National Fisheries Authority v Tipi [2012] N4836 where His Honour had observed at [11], and I quote:

11. The rationale why a claim should not be summarily determined where it is founded on allegations of fraud is that fraud is a serious allegation and may amount to a criminal offence, so in the interest of justice the claim should be properly tried. For the same reasons, this court has held that default judgement should not be granted where the statement of claim raises serious allegations of fraud and deceit, as the interests of justice require those allegations to be proved by evidence in a trial before judgment is given on the merits; Bala Kitipa v Vincent Auali, Supply and Tenders Board of Western Highlands Provincial Government and Others (1998) N1773.

8. The Supreme Court in Lord & Company at [59] and [60] stated, and I quote,

59. In our view the cautious approach adopted by Kariko J in National Fisheries Authority v Tipi had merit. Certainly this Court has previously cautioned that care needs to be taken in giving default judgment where fraud or deceit are alleged: Lambu v Torato [2008] SC953 at [119], Kunton v Junias and the Independent State of Papua New Guinea (2006) SC929 at [21] and Kewakali v Independent State of Papua New Guinea [2011] SC1091 at [23]. In our view similar principles are applicable in cases involving summary disposal, even those outside the scope of Order 12 Division 4 of the National Court Rules.

60. Because it is clear that his Honour did not have regard to a material consideration in determining whether to exercise his discretion, namely the fact that serious allegations of fraud were pleaded in both statements of claim, we consider...