WS No. 1144 of 2016 (CC4); T.T. Angore Noa Hai Investment Limited (Plaintiff/Cross-defendant) v Kau Buna (Defendant/Cross-claimant) (2019) N7881

• Jurisdiction: Papua New Guinea
• Judge: David, J
• Judgment Date: 24 May 2019
• Court: National Court
• Citation: (2019) N7881
• Year: 2019
• Judgement Number: N7881

Full Title: WS No. 1144 of 2016 (CC4); T.T. Angore Noa Hai Investment Limited (Plaintiff/Cross-defendant) v Kau Buna (Defendant/Cross-claimant) (2019) N7881

National Court: David, J

Judgment Delivered: 24 May 2019

N7881

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS No. 1144 of 2016 (CC4)

BETWEEN:

T.T. ANGORE NOA HAI INVESTMENT LIMITED

Plaintiff/Cross-defendant

AND:

KAU BUNA

Defendant/Cross-claimant

Waigani: David, J

2018 : 11 & 26 September

2019 : 24 May

COMPANY LAW – redemption of shares – demand by shareholder for company to redeem his shares – company has no constitution since incorporation – in the absence of constitution, provisions of Companies Act 1997 regulate affairs of company – shareholder driver and employee of company – demand for redemption of shares not actioned so company’s truck retained and used without authority of company - Companies Act 1997, Sections 16, 17(2), 27, 29, 31, 32(2), 33, 56, 57, 59, 60, 61 and 62.

DAMAGES – claim for damages for conversion by detention - assessment of damages.

Cases Cited:

Papua New Guinea Cases

The Government of Papua New Gunea & Ors v Stanley Parker (1979) PNGLR 53

Cheong Supermarket Pty Ltd v Pery Muro (1987) PNGLR 24

Abel Kopen v The State [1988-89] PNGLR 655

Graham Mappa v ELCOM (1992) N1093

Jonathan Mangope Paraia v The State (1995) N1343

Enga Enterprises Pty Ltd v Danny Pokali (1995) N1359

RH Trading Limited v Damansara Forest Products (PNG) Limited & Ors (1999) N1904

Julian Paul Leach v Commissioner General of Internal Revenue Commission and Lazarus Sapoli (2000) SC 631

Odata Ltd v Ambusa Copra Oil Mill Ltd & National Provident Fund Board of Trustees (2001) N2106

PNGBC v Jeff Tole (2002) SC694

William Mel v Coleman Pakalia (2005) SC790

Steven Naki v AGC (Pacific) Ltd (2006) N5015

Eliab Buka v Henry Uramete (2009) N3905

Leeway East Enterprise Ltd v Daniel Danaben (2013) N4951

Helen Jimmy v Paul Rookes (2013) N5360

Henganofi Development Corporation Ltd v Public Officers Superannuation Fund Board (2014) SC1356

Overseas Cases

Rushworth v Taylor (1841) 3 QB 699

Salomon v Salomon & Co. Limited (1897) AC 22

Clayton v Le Roy (1911) 2 KB 1031

Penfolds Wines Pty Ltd v Elliot (1946) 74 CLR 204

Macaura v Northern Assurance Co. (1925) AC 619 (HL)

Lee v Lee’s Air Farming Ltd (1961) NZLR 325

Treatises Cited:

Osborn’s Concise Law Dictionary, Tenth Edition, Sweet & Maxwell, London, 2005

Paul Vout, Torts, The Laws of Australia, Second Edition, 2007, Thompson Lawbook Co.

Counsel:

Justin Haiara, for the Plaintiff/Cross-Defendant

Jerry Kama, for the Defendant/Cross-Claimant

JUDGMENT

24 May, 2019

1. DAVID, J: INTRODUCTION: This case is about a dispute between the plaintiff/cross-defendant company (TTANHIL) and the defendant/cross-claimant (Kau) who is one of TTANHIL’s shareholders and who had requested that his shares in TTANHIL be redeemed. TTANHIL has more than 600,000 issued shares and of those shares, the defendant holds 6,798 ordinary shares. As TTANHIL did not immediately action Kau’s request, he took possession of a truck belonging to TTANHIL namely, a white Isuzu, twin-steer, cargo truck bearing registration number HAS 558 (the truck) that was purchased in December 2015 from Boroko Motors, Mt. Hagen Branch, Western Highlands Province for K440,000.00 as security until TTANHIL redeemed his shares. The purchase of the truck was partly financed by Bank South Pacific (BSP Finance (PNG) Limited) through a loan it granted to TTANHIL in the sum of K240,000.00. Since the purchase of the truck, Kau was employed by TTANHIL to drive it. Kau continued to retain possession of the truck despite various demands given to him by TTANHIL to return it until impounded through the intervention of the police in Mt. Hagen.

2. This is a decision after a trial was conducted on the issues of liability and quantum of damages.

PLEADINGS

Statement of claim

3. On 14 September 2016, TTANHIL filed a writ of summons endorsed with a statement of claim claiming, among others, an order that Kau forthwith return the truck to it, special damages calculated at K6,000.00 per day from August 2016, and general damages. On the face of the pleadings, the claim is based on a tort to chattels namely, conversion by detention. As the truck was impounded with the intervention of the police in Mt. Hagen after these proceedings were instituted, TTANHIL has only pursued the balance of the relief sought in the prayer for relief.

Defence and cross-claim

4. On 24 October 2016, Kau filed his defence and cross-claim.

5. In the averments contained in his defence, Kau generally denies liability and states that TTANHIL was not entitled to any of the relief sought in the statement of claim. He denies:

1. Having any knowledge of a loan of K240,000.00 obtained by TTANHIL from the Bank South Pacific to purchase the truck.

2. Although employed as the driver of the truck, he was not paid on a full time fortnightly basis, but paid allowances as he was part-owner of TTANHIL as a shareholder, TTANHIL had no back up finance to employ drivers in the initial stages, and he did not demand to be paid on a fulltime fortnightly basis.

3. That TTANHIL has any command or control over him as to the custody and use of the truck while the truck is in his custody and control as he was part-owner of TTANHIL as a shareholder, is not paid on a fulltime basis, and he has custody and use of the truck in good faith as he contemplates reaping the benefits of his contribution from TTANHIL when it grows big.

4. (a) Demanding that the shares he holds in TTANHIL be redeemed, but requested TTANHIL to redeem the shares because the Chairman and Manager-Logistics were mismanaging TTANHIL, never called any shareholders meeting since its inception, and no financial reports were shown to the shareholders;

(b) Forcefully taking possession of the truck as he was the only authorized driver of the truck, he has never been paid any fortnightly wages for driving and operating the truck, and he is still a shareholder of TTANHIL; and

(c) Hiring out the truck without the authorization of TTANHIL at the rate of K6,000.00 per day as the truck is in his custody as security for his shares and sweat equity in starting the company to be settled forthwith.

6. That TTANHIL has demanded the return of the truck, that he is illegally keeping the truck, and hiring it out and collecting cartage fees for his own use.

6. He admits that:

1. TTANHIL is a company duly incorporated under the Companies Act 1997 (Companies Act);

2. TTANHIL has more than 600,000 issued shares out of which he has 6,798 ordinary shares;

3. He was an employee of TTANHIL;

4. TTANHIL purchased the truck in December 2015 from Boroko Motors, Mt. Hagen Branch;

5. TTANHIL was the owner of the truck and entitled to the possession and use of the truck; and

6. He had the custody and use of the truck.

7. In the averments contained in his cross-claim, Kau states, among, others, that:

1. He is from Togoba in the Western Highlands Province and was approached by several directors of TTANHIL for assistance to set up TTANHIL.

2. He initially met one Eric Ekanda who was then the Logistics Manager of TTANHIL and who later introduced him to one Michael Kuku, Chairman of TTANHIL and other directors.

3. The Chairman and directors of TTANHIL informed him that they were in the process of setting up TTANHIL, but were short of money and requested assistance from him with finance and materials and in return for his contribution, they promised to include him as a shareholder and become a part-owner of TTANHIL.

4. The terms of the agreement were:

(a) He to support the directors to initially set up TTANHIL in any way he could;

(b) The support would be by way of finance and materials to set up its base at the current location;

(c) In return, TTANHIL would make an offer for him to purchase shares in TTANHIL and ultimately being recognised as part-owner of TTANHIL.

5. Relying on the agreement struck, at various times from 2011 onwards, he performed his side of the bargain by providing finance and supplying materials/goods.

6. At around that time, he was permanently engaged by a transport company as a driver of a cargo truck so in the process of doing the company runs, he would load kaukau bags and vegetables to be sold at Moro to make money on the side for TTANHIL.

7. With the assistance of his family and himself for which he believed he would be rewarded by TTANHIL by way of sweat equity, TTANHIL was established and started to expand and contemplated reaping the benefits of his labour later on.

8. Particulars of his contributions and sweat equity from early 2011 and onwards are:

(a) At various times from 2011 to 2013, he and his family contributed money to set up the company.

(b) He bought kaukau bags and other vegetables at Mt. Hagen and had them sold by his wife at local markets in Tari and Moro to make money for the company.

(c) Over a period of five years from 2011 to 2016, he was never put on payroll as the driver of the truck and only received allowances as he contemplated that he would reap the benefits of his contributions and...