N3654 

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 451 OF 2008

BETWEEN:

HI TECH INDUSTRIES LIMITED
Plaintiff

AND:

PAPUA NEW GUINEA INSTITUTE OF
INTERNATIONAL AFFAIRS INC.
First Defendant

AND:

IVAN POMALEU ACTING REGISTRAR
OF COMPANIES
Second Defendant

Waigani: Hartshorn J.
2008: 14th October,
: 3rd November

PRACTICE AND PROCEDURE - Leave to Appeal – Section 408(1) Companies Act – Notice of Intention to make a Claim – Section 5 Claims by and against the State Act - not necessary for Plaintiff to give notice of its intention to seek leave to appeal decision of second defendant – factors to be considered in an application for leave to appeal pursuant to section 408(1)Companies Act - strong merits of case outweigh unsatisfactory reasons for delay – application for leave to appeal granted

Cases cited: 

Papua New Guinea Cases

Peter Dixon Donigi v. Base Resources Ltd [1992] PNGLR 110 
Mision Asiki v. Manasupe Zurenuoc (2006) SC797 
Was Neimari & Ors v. Maira Iapential & Anor (2008) SCA 9/05 delivered 2/10/08 

Overseas Cases:

Gallow v. Dawson [1990] 93 ALR 479 

Counsel: 

Mr. I.R. Shepherd, for the Plaintiff 
Mr. P. Peraki, for the First Defendant
Mr. M. Miningi, for the Second Defendant

3 November, 2008

1. HARTSHORN J: The Plaintiff, Hi Tech Industries Ltd (Hi Tech) applies for leave to appeal against a decision of the Second Defendant; the Registrar of Companies (Registrar) dated 22 March 2006. That decision was to convey a property to the First Defendant, Papua New Guinea Institute of International Affairs Inc. (PNGIIA) under s. 372 and s. 373 Companies Act.

2. Hi Tech also applies for leave to serve notice of its claim on the Attorney General pursuant to s.5 Claims By and Against the State Act (Claims Act). I will deal with this application first.

Notice of Intention to make a claim

3. Both Defendants oppose this application on the basis that leave should have been obtained to give such a notice before proceedings were issued and that court proceedings have already been issued.

4. The Defendants’ submissions though, relate to other proceedings. Those other proceedings are not before me. I confine my consideration to the application for leave to give notice of a claim in this proceeding as no other claim or proceeding is referred to in paragraph 3 of the Originating Summons.

5. The claim in this proceeding is for Hi Tech to be granted leave to appeal under s. 408(1) Companies Act. Is notice under the Claims Act required to be given for such an application? Section 5(1) Claims Act relevantly is as follows:

No action to enforce any claim against the State lies against the State unless notice in writing of intention to make a claim is given in accordance with this Section ….

6. In this proceeding, Hi Tech is not making a claim against the State; it is seeking leave to appeal a decision. Consequently, notice under s.5 Claims Act is not required to be given. In this regard I refer to Mision Asiki v. Manasupe Zurenuoc (2006) SC797, in which it was held that the notice requirements of the Claims Act apply only to actions that are founded on contract or tort or breaches of constitutional rights.

7. Consequently, the relief sought in paragraph 3 of the Originating Summons is not necessary. For the avoidance of doubt, I order that it is not necessary for Hi Tech to give notice of its intention to seek leave to appeal the decision of the Registrar of Companies; pursuant to s.5 Claims Act.

Leave to appeal Registrar’s decision

8. As to the decision of the Registrar to convey the property to PNGIIA, Hi Tech submits that the Registrar held the property on trust for Hi Tech and it was a breach of that trust for the Registrar to transfer the property to PNGIIA.

9. The Defendants oppose the application for leave to appeal on the grounds that sufficient cause has not been shown for leave to be granted and that there is unexplained delay.

10. Section 408(1) Companies Act is as follows:

A person who is aggrieved by an act or decision of the Registrar under this Act may appeal to the Court within one month after the date of notification of the act or decision, or within such further time as the Court may allow.

11. This court is not aware of any authority in this jurisdiction that has considered this provision.

12. As to the factors that should be considered to determine whether further time should be allowed for a person to appeal, I have had recourse to the recent Supreme Court decision of Was Neimari & Ors v. Maira Iapential & Anor (2008) SCA 9/05 delivered 2/10/08 (Sevua, Batari, Lay JJ). That case was an appeal from a refusal of the National Court to extend time to appeal a District Court decision.

13. The Supreme Court held amongst others, that there are rare cases where strong merits may outweigh unsatisfactory reasons for delay and that there is an arguable case, is a relevant consideration on an application to extend time to appeal.

14. I have also had recourse to the decision of Gallow v. Dawson [1990] 93 ALR 479. In that decision McHugh J. at 480 provided principles as to the matters to be considered in an application for leave to bring an appeal out of time:

The grant of an extension of time under this rule is not automatic. The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the court…. to do justice between the parties….In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation and the consequences of the parties of the grant or refusal of the application for extension of time…. When the application is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the applicant succeeding in the appeal.

15. The Courts in this jurisdiction have considered Australian authorities amongst others, on the question of the exercise of a court’s discretion and such decisions are of persuasive value.

16. I propose to consider the principles enunciated in Was Neimari (supra) and Gallow (supra) in determining whether to exercise the discretion of this court in favour of allowing Hi Tech to appeal.

Delay 

17. It has been deposed on behalf of Hi Tech that its present lawyer has only recently received all of the files from Hi Tech’s previous lawyers and that upon a perusal of those files, has formed the view that an appeal under s.408(1) Companies Act should have been filed. This implies that there has been some failure or error by the previous lawyers in not filing or seeking leave to file an appeal earlier.

18. It has been held on numerous occasions in this jurisdiction that the negligence of a lawyer is not generally a good reason for granting an extension of time; Peter Dixon Donigi v. Base Resources Ltd [1992] PNGLR 110. As the previous lawyers conduct is the only explanation for the delay in filing the appeal, the explanation as to delay in my view, is not satisfactory.

Merits of appeal

19. It is submitted on behalf of Hi Tech that:

a) 	the property that was transferred by the Registrar to PNGIIA is occupied by Hi Tech’s business.

b) 	the property that was transferred by the Registrar to PNGIIA was held by the Registrar on trust for Hi Tech and should not have been transferred to anyone other than Hi Tech.

c) 	the transfer by the Registrar was not done in good faith as the Registrar did not contact Hi Tech prior to entering into the transaction with PNGIIA, even though he knew of Hi Tech’s interest and further, the property was transferred to PNGIIA for the consideration of K1.00 only.

d) 	section 373(3) Companies Act applied to this fact situation and it was a breach of trust by the Registrar to transfer the property as he did.

e) 	the transfer of the property by the Registrar in the manner that he did raises issues of public policy, and whether the Registrar acted in the best interests of the State by transferring a valuable property for K1.00 only.

20. When regard is had to the evidence and submissions, it is apparent that the appeal has strong merits and there is a real likelihood of success.

21. As to the conduct of the parties, the Registrar has admitted that he did not notify Hi Tech before he transferred the property. There has been delay by Hi Tech in lodging an application for leave to appeal, as referred to previously.

22. As to the history of the proceedings, this is the first step in this proceeding by Hi Tech. It is acknowledged that Hi Tech is a party to other proceedings concerning the property, but these are not presently before me for consideration.

23. The consequences to the parties if the application for leave to appeal is granted, are that all parties are able to argue their respective cases. If Hi Tech is successful in its appeal, the Registrar will lose K1.00 and PNGIIA will lose a property for which it only paid K1.00. The consequences for Hi Tech if the application for leave to appeal is not granted is that it will lose any entitlement it had to valuable property and no doubt will have to relocate its business.

24. Given the above, to do justice to the parties, I am satisfied that this is one of those rare cases referred to in Was Neimari (supra) where the strong merits of the case outweigh the unsatisfactory reasons for delay.

25. Accordingly the relief sought by the Plaintiff in paragraph 1 of the Originating Summons is granted. 

26. As to the relief sought in paragraph 2 of the Originating Summons, I order that the appeal be filed within 14 days of today. I do not determine whether the appeal should be heard concurrently with the hearing of proceedings WS1160 of 06 as those proceedings are not before me. I give leave to the Plaintiff to make this application on 3 days notice to the other parties.

27. As to the relief sought in paragraph 3 of the Originating Summons, I order that it is not necessary for the Plaintiff to give notice of its intention to seek leave to appeal the decision of the Registrar of Companies pursuant to s. 5 Claims By and Against the State Act.

28. As to the relief sought in paragraph 4 of the Originating Summons, the costs of these proceedings are to be costs in the appeal.

Lawyers for the Plaintiff - Blake Dawson Lawyers 
Lawyers for the First Defendant - Peraki Lawyers
Lawyer for the Second Defendant - Office of the Registrar of Companies