Pinpar Development Pty Limited v TL Timber Development Pty Limited (1999) N1857

• Jurisdiction: Papua New Guinea
• Judge: Kapi DCJ
• Judgment Date: 01 April 1999
• Court: National Court
• Citation: [1999] PNGLR 139
• Year: 1999
• Judgement Number: N1857

National Court: Kapi DCJ

Judgment Delivered: 1 April 1999

N1857

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS No. 1088 of 1996

BETWEEN:

PINPAR DEVELOPMENT

PTY LIMITED

Plaintiff

AND:

T L TIMBER DEVELOPMENT

PTY LIMITED

Defendant

Waigani: Kapi DCJ.

29th March, 1st April 1999

Practice and procedure – Parties to action – adding cross-defendant – Principles to be applied – Proposed cross-defendant parent company of cross-defendant company – Lifting corporate veil.

S. Soi for the defendant/cross-claimant

S. Bradshaw with W. Neill for the plaintiff/cross-defendant, Rimbunan

Hijau (PNG) Ltd & Timbers PNG Ltd.

1st April 1999

KAPI DCJ: In a writ of summons (WS 1088 of 1996) Pinpar Developmer Pty Ltd (plaintiff) sued T. L. Timber Development Pty Ltd (defendant) for damages for breach of contract. The cause of action arises out of a logging and marketing agreement in respect of logs and sawn timber from Ormand Lako Timber Permit Area in the Central Province. In accordance with clause 34 of the agreement, the plaintiff agreed to finance and build a sawmill for the defendant. It was agreed that the defendant should repay the cost of construction of the sawmill within 3 years without any interest. The plaintiff claims that it built the sawmill at the cost of K751, 280.00 and the defendant breached the contract by failing to repay the money.

The defendant (cross-claimant) has filed a defence and has brought a counter-claim against the plaintiff. The cross-claim is based on clause 14 of the agreement that the plaintiff (cross-defendant) failed to reimburse the earnings generated from the logging operations to the cross-claimant. The cross-claimant claims that the cross-defendant stopped operating the sawmill and removed the equipment and as a result it suffered damages.

Counsel for the cross-claimant seeks to join Rimbunan Hijau (PNG) Pty Ltd (Rimbunan) as a party on the basis that it has financial control over the cross-defendant.

In support of the application to join Rimbunan, counsel for the cross-claimant, rely on evidence that Rimbunan and 15 other companies have taken out insurance cover as a group of companies with Mbf Assurance Pty Ltd in respect of legal liability to third party bodily/property damage arising out of operations as logger/timber merchants.

Counsel for the cross-claimant also relies on evidence that Rimbunan has acted on behalf of cross-defendant in respect of workers compensation for workers employed by the cross-defendant.

Counsel for the cross-defendant also relies on evidence that Rimbunan paid royalties in respect of operations in this particular timber permit area.

In addition, he relies on evidence that during the negotiations of the logging and marketing agreement, the premises of Rimbunan was used for meetings.

Counsel submits that all these factors go to prove that Rimbunan has financial control of the plaintiff and therefore it should be joined as a cross-defendant.

Counsel for Rimbunan does not dispute that the cross-defendant is a subsidiary company of Rimbunan. He...