Tzen Niugini Limited v Benny Dengo, Rhynold Gubara & Kevin Guba, as Executives & Representatives of Shareholders of Yema Gaiapa Developers Lmited and Yema Gaiapa Developers Limited and Kendel Gegera, John Guba, Lucas Bidapie, Bathol Mokare, Benedick Boebae, Alban Adari, Davis Towebae, Ian Borere, Helen Collin, Aston Yaviro, David Barigi, John David Orere as Registered Directors of Yema Gaiapa Developers Lmited and Leslie Kari and Victor Eu and Kanawi Pouru (2016) SC1512

• Jurisdiction: Papua New Guinea
• Judge: Injia CJ, Makail & Bona, JJ
• Judgment Date: 06 July 2016
• Court: Supreme Court
• Citation: (2016) SC1512
• Docket Number: SCA No 121 of 2011
• Year: 2016
• Judgement Number: SC1512

Full Title: SCA No 121 of 2011; Tzen Niugini Limited v Benny Dengo, Rhynold Gubara & Kevin Guba, as Executives & Representatives of Shareholders of Yema Gaiapa Developers Lmited and Yema Gaiapa Developers Limited and Kendel Gegera, John Guba, Lucas Bidapie, Bathol Mokare, Benedick Boebae, Alban Adari, Davis Towebae, Ian Borere, Helen Collin, Aston Yaviro, David Barigi, John David Orere as Registered Directors of Yema Gaiapa Developers Lmited and Leslie Kari and Victor Eu and Kanawi Pouru (2016) SC1512

Supreme Court: Injia CJ, Makail & Bona, JJ

Judgment Delivered: 6 July 2016

SC1512

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA NO 121 OF 2011

BETWEEN

TZEN NIUGINI LIMITED

Appellant

AND

BENNY DENGO, RHYNOLD GUBARA & KEVIN GUBA, as Executives & Representatives of Shareholders of YEMA GAIAPA DEVELOPERS LMITED

First Respondent

AND

YEMA GAIAPA DEVELOPERS LMITED

Second Respondent

AND

KENDEL GEGERA, JOHN GUBA, LUCAS BIDAPIE, BATHOL MOKARE, BENEDICK BOEBAE, ALBAN ADARI, DAVIS TOWEBAE, IAN BORERE, HELEN COLLIN, ASTON YAVIRO, DAVID BARIGI, JOHN DAVID ORERE as registered directors of YEMA GAIAPA DEVELOPERS LMITED

Third Respondents

AND

LESLIE KARI

Fourth Respondent

AND

VICTOR EU

Fifth Respondent

AND

KANAWI POURU

Sixth Respondent

Waigani: Injia CJ, Makail & Bona, JJ

2015: 26th October

2016: 6th July

SUPREME COURT – Practice & Procedure – Appeal against dismissal of contempt proceedings – Frivolous and vexatious – Failure to disclose reasonable cause of action – Abuse of process – Sufficiency of pleadings – National Court Rules – Order 12, rule 40

CONTEMPT OF COURT – Breach of Court Order – Order restraining interference with project and operations of Appellant – National Court Rules – Order 14

Cases cited:

Andrew Daiva & Ome Ome Forests Limited v. Ray Cheong & Ors (2002) N2289

Mt Hagen Local-level Government v. Sek (2009) SC1007

Paias Wingti v. Kala Rawali & Ors (2010) N3982

Tzen Pacific Limited v. Innovest Limited & Ors (2015) SC1454

Counsel:

Mr. G. Purvey with Ms. Gubag, for Appellant

Mr. L. A. Kari, for First, Second, Third, Fourth & Fifth Respondents

Mr. I. R. Molloy, for Sixth Respondent

JUDGMENT

6th July, 2016

1. BY THE COURT: The Appellant Tzen Niugini Limited (“Tzen Niugini”) appeals against a dismissal of its contempt proceedings brought under Order 14 of the National Court Rules.

Background Facts

2. The facts are, on 29th October 2004 Tzen Niugini entered into a Logging and Marketing Agreement with the Second Respondent (“Yema Gaiapa”), whereby Yema Gaiapa contracted Tzen Niugini to undertake the harvesting and extraction of timber for export and to convert some logs into sawn timber (“the 2004 LMA”).

3. Soon thereafter in 2004, Tzen Niugini commenced its operations under the 2004 LMA. On 14th December 2006 the First and Second Respondents filed proceedings OS No. 901 of 2006. It was a result of a dispute between Tzen Niugini and the First, Second and Third Respondents over what these Respondents alleged was primarily under payment of premium and levies by Tzen Niugini under the 2004 LMA. The other aspects were the control of Yema Gaiapa by shareholders and proper recipients of the premium and levies.

4. The Sixth Respondent was the Managing Director of the PNG Forest Authority. Neither he nor the Forest Authority were parties to these proceedings or referred to in the Court Order of 13th April 2007. On 5th June 2007 the 2004 LMA was reviewed and superseded by a further LMA between Yema Gaiapa and Tzen Niugini, which had duration of four years from 5th June 2007 (“the 2007 LMA”).

5. On 13th April 2007 the Court issued Orders inter alia providing for the premiums and levies to be paid to Yema Gaiapa and ordered the First and Second Respondents and others “restrained from interfering with the project and operations of” Tzen Niugini “either within the project area or outside of same”.

6. On 25th February 2008 Yema Gaiapa purported to issue a termination notice of the 2007 LMA to Tzen Niugini while the Court Order of 13th April 2007 was in force and effect. Furthermore, while the Court Order was in force and effect, on 19th November 2010, Yema Gaiapa signed another Logging and Marketing Agreement with a third party, Uni Rise Limited (“the 2010 LMA”).

7. On 19th November 2008 Yema Gaiapa and others commenced proceeding OS No. 708 of 2008. All of the same parties to the proceedings OS No. 901 of 2006 were parties to the proceeding OS No 708 of 2008, together with the Managing Director, PNG Forest Authority, and the Registrar of Companies.

8. On 24th September 2010 consent Orders were made in proceedings OS No. 708 of 2008, including that certain persons be appointed to run the affairs of Yema Gaiapa on an interim basis “...... to appoint a new contractor then conduct elections.”

9. On 4th April 2011 Tzen Niugini filed contempt proceedings against the Respondents for breaching the Court Order of 13th April 2007, by signing and facilitating the 2010 LMA between Yema Gaiapa and Uni Rise Limited that interfered with Tzen Niugini’s operations.

10. On 14th April 2011 the lawyers for the Sixth Respondent filed a motion to dismiss the contempt proceedings under Order 12, rule 40 of the National Court Rules. On 31st August 2011 Davani J, upheld the Sixth Respondent’s motion and dismissed the contempt proceedings on the ground that the contempt proceedings were “plainly frivolous or vexatious or untenable.”

Termination of 2007 LMA

11. The primary judge came to this conclusion after finding that “the orders of 13 April 2007 have long ceased. I do not see how Tzen Niugini can maintain that the orders of 13 April 2007 have been breached. I say this because Tzen Niugini did not challenge the termination of the LMA. Although, it did take out restraining orders, it withdrew the case. The Consent Orders in OS 708 of 2008 allowed or permitted Yema Gaiapa to secure the services of a new developer. When it did that, the Orders of 13 April 2007 were not current. The plaintiff need not have taken steps to vary orders because there was no need to.”

12. Tzen Niugini contends that this finding is erroneous. The 2007 LMA was never terminated. At the same time, the Court Order of 13th April 2007 was in force and effect when Yema Gaiapa purported to terminate the 2007 LMA on 25th February 2008. Further and subsequently, Yema Gaiapa signed the 2010 LMA with Uni Rise Limited on 19th November 2010.

13. According to the First to Fifth Respondents events have taken over the contempt proceedings which rendered them unnecessary, hence untenable. First, the Court Order of 13th April 2007 entered by consent of the parties had concluded the proceedings OS No. 901 of 2007. This is because the terms of the Court Order are in identical terms as the orders sought orders in the originating summons. Secondly, by reason of this, it paved the way for Yema Gaiapa to engage or contract a new contractor – Uni Rise Limited.

14. In the case of the Sixth Respondent, it was submitted that the Court Order did and could not restrain Yema Gaiapa from exercising its right pursuant to clause 23 of the 2007 LMA. In Paias Wingti v. Kala Rawali & Ors (2010) N3982 the Court said that it must look at the purpose of the Orders. In this case the purpose was to reconfigure the benefits payable under the LMA in exchange for Tzen Niugini to continue the project.

15. It further contends, however, the implied condition is that the project would only continue in accordance with the terms of the LMA which required compliance with various provisions including those of the Forestry Act. It cannot be said that the parties, particularly, Yema Gaiapa waived the requirement for compliance with the LMA or the relevant statutory provisions. Thus, the termination of the LMA for good reason could not possibly be interpreted as a breach of the Court Order.

16. In a case of an application to dismiss proceedings for failing to disclose a reasonable cause of action under Order 12, rule 40 of the National Court Rules, the primary consideration is whether the procedural requirements on pleading of a cause of action have been met. The question is one of sufficiency of pleadings for the judge to consider. Its determination is primarily based on a consideration of the statement of claim. The onus is on the Applicant to establish that the statement of claim does not plead all necessary facts and legal elements or ingredients to establish or prove the claim. The Supreme Court stated these principles in Mt Hagen Local-level Government v. Sek (2009) SC1007.

17. In the context of this case the Respondents were obliged to establish that the statement of charge did not plead all necessary facts and legal elements or ingredients to establish or prove the charge. It was not for the primary judge to delve into the merits of the allegation of contempt. In that respect, we note that there were eighteen alleged contemnors and a statement of charge has been preferred against each one of them.

18. The gist of the alleged contemptuous conduct is that these persons purportedly terminated the 2007 LMA between...