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Colquhoun v Public Curator and Trustee for the Intestate Estate of Francis Ovu [2010] PGNC 196; N4266 (9 February 2010)

N4266

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 230 OF 2008

BETWEEN:

ALAN COLQUHOUN & MARY COLQUHOUN
First Plaintiffs

AND:

ALLIED ENTERPRISES LIMITED
Second Plaintiff

AND:

PAUL WAGUN – IN HIS CAPACITY AS PUBLIC
CURATOR &TRUSTEE FOR THE INTESTATE
ESTATE OF FRANCIS OVU DECEASED
First Defendant

AND:

SIMON OVU, ALAN OVU AND
FRANCIS OVU (Jnr)
Second Defendants

AND:

IVAN POMALEU – IN HIS CAPACITY AS
REGISTRAR OF COMPANIES
Third Defendant

Waigani: Hartshorn J.
2009: 21 July,
2010: 9 February

Dispute as to ownership of company shares – whether notice pursuant to s.5 Claims By and Against the State Act required - whether plaintiffs claim statute barred – s.16 Frauds and Limitations Act

Facts:

The first plaintiffs owned shares in the second plaintiff, Allied Enterprises Limited incorporated, in 1967. The first plaintiffs maintain that they still own 2000 of the original 5000 shares. They also maintain that Mr. Colquhoun, one of the first plaintiffs, is owed AUD$15,000 by Francis Ovu, a former employee of Allied Enterprises who died in May 2006. The first plaintiffs have commenced this proceeding to, among others, seek declarations that certain documentation lodged at the Companies Office concerning the shareholders and officers of Allied Enterprises are null and void. Other related declarations are sought in a purported counterclaim to a cross claim filed pursuant to a consent order of this court. The second defendants maintain that their father, Francis Ovu deceased, owned all the shares in Allied Enterprises Limited. They also seek declaratory orders.

Held:

1. The second defendants have standing to be heard in this proceeding as they are named as parties, are listed as directors of Allied Enterprises Limited, and it is evident that the Public Curator is supporting the first plaintiffs' claim and not the claim of the second defendants' father's estate.

2. The notice requirements of the Claims By and Against the State Act apply only to actions that are founded on contract or tort or a breach of constitutional rights: Mision Asiki v. Manasupe Zurenoc (2005) SC 797, Elizabeth Kanari v. Augustine Wiakar (2009) N3589. The claims against the Public Curator and Registrar of Companies are not so founded.

3. The shares in Allied Enterprises Limited had been transferred to Francis Ovu and PNG Development Bank and the shareholding of Allied Enterprises Limited was as listed in the 1969 annual return. The first plaintiffs' cause of action to recover the shares or to recover any purchase price or to recover the unpaid loan, accrued in about 1969. The first plaintiffs' claim concerning the shares in this proceeding is therefore statute barred as this proceeding was not filed until 2008.

4. The relief sought in the originating summons and counterclaim is refused.

Cases cited:

Mision Asiki v. Manasupe Zurenoc (2005) SC797
Elizabeth Kanari v. Augustine Wiakar (2009) N3589

Counsel:

Mr. R. Saulep, for the Plaintiffs
Mr. J.N.K. Popuna, for the First Defendant
Mr. A. Wasina, for the Second Defendants

9th February, 2010

1. HARTSHORN J. The first plaintiffs Mr. and Mrs. Alan and Mary Colquhoun owned shares in the second plaintiff, Allied Enterprises Ltd when it was incorporated in 1967. The Colquhouns maintain that they still own 2000 of the original 5000 shares. They also maintain that Mr. Colquhoun is owed AUD$15,000 by Francis Ovu, a former employee of Allied Enterprises who died in May 2006.

2. The Colquhouns have commenced originating summons proceedings seeking declarations that certain documentation lodged at the Companies Office concerning the shareholders and officers of Allied Enterprises are null and void and for related orders. Other related declarations are sought in a purported counterclaim to a cross claim filed pursuant to a consent order of this court.

3. The second defendants, the sons of Francis Ovu (deceased) (Ovu sons) submit that all of the shares in Allied Enterprises were owned by their father. They have filed a cross claim in which they seek declarations and related orders to that effect pursuant to an order of this court requiring them to do so.

4. The first defendant, Mr. Paul Wagun, the Public Curator, submits that any shares in Allied Enterprises that were transferred to Francis Ovu (deceased) should form part of Francis Ovu's estate.

Preliminary

a) second defendants – standing

5. The Colquhouns have pleaded in their cross defence that the estate of Francis Ovu (deceased) including any beneficiaries, are represented by the Public Curator and consequently the Ovu sons do not have standing to represent their father's estate.

6. The Ovu sons submit that the Public Curator is supporting the claims of the Colquhouns and consequently is not properly representing their father's estate including beneficiaries. It is evident from the affidavit of the Public Curator that he is supporting the Colquhouns' claim. Further, the Colquhouns have named the Ovu sons as parties. In addition the Ovu sons are listed as directors of Allied Enterprises. I am satisfied that the Ovu sons have standing to be heard in this proceeding.

b) Claims By and Against the State Act

7. The Ovu sons submit that this proceeding should be dismissed as the Colquhouns have not given notice of their claim to the State under s.5 Claims By and Against the State Act (Claims Act). Such notice is necessary it is submitted, as the Public Curator and Registrar of Companies have been named as parties.

8. I reject this submission. The notice requirements of the Claims Act apply only to actions that are founded on contract or tort or a breach of constitutional rights: Mision Asiki v. Manasupe Zurenoc (2005) SC 797, Elizabeth Kanari v. Augustine Wiakar (2009) N3589. The claims against the Public Curator and Registrar of Companies in this proceeding are not so founded.

c) Frauds and Limitations Act

9. The Ovu sons submit that the originating summons and counterclaim should be dismissed as they are based on an agreement entered into in 1969. As the Colquhouns' cause of action accrued at about that time but the originating summons was not filed until 2006, s.16 Frauds and Limitations Act applies and any claims that the Colquhouns may have had are now statute barred, it is submitted.

10. The Colquhouns submit that their cause of action against Francis Ovu (deceased) did not arise until his death in 2006. Consequently they submit that they have until 2012 to commence their proceedings.

11. It is common ground that there was an agreement in 1969 for the shareholders of Allied Enterprises to sell their shares to Francis Ovu. The Colquhouns submit that Mr. Alan Colquhoun advanced the sum of $15,000 to Francis Ovu. This was to be collateral for a proposed loan of $30,000 that Francis Ovu was to obtain from the PNG Development Bank to purchase the shares in Allied Enterprises. In essence, the Colquhouns submit that this agreement was never completed.

12. It is acknowledged in submissions made on behalf of the Colquhouns that the 1969 annual return filed with the Registrar of Companies on 5th June 1970 lists the shareholders of Allied Enterprises as Francis Ovu owning 3,843 shares and the PNG Development Bank owning 1,157 shares, a total of 5000 shares.

13. Further, in a copy of a memorandum of a management committee meeting of Allied Enterprises held on 3rd October 1969, at which Mr. Colquhoun is listed as being present on behalf of 'Trade & Industry', it is noted as being resolved that the PNGDB, which I presume is the PNG Development Bank, was to be approached as to its intentions on the future of its shareholding in Allied Enterprises. The memorandum is signed by 2 members of the management committee, one of whom is listed as being for the accounting firm of Cooper Brothers & Co, and the other for Allied Enterprises and the PNG Development Bank.

14. In a second memorandum of a management committee meeting held on 24th October 1969, although unsigned, it is also assumed that PNG Development Bank is a shareholder.

15. From the above it can be concluded in my view, that as a member of the management committee, Mr. Colquhoun would have been aware of what had occurred at those meetings and the assumption at those meetings that PNG Development Bank was a shareholder. Further, he would have been aware of the shareholders listed in the 1969 annual return. Mr. Colquhoun however, in his affidavit deposes amongst others that so far as he can recall, the correct shareholders should still be those as shown in the company return filed 31st December 1968 and that he cannot recall whether the loan from PNG Development Bank was ever approved.

16. If Mr. Colquhoun is correct, the following questions are raised: why was a management committee formed for Allied Enterprises with a Mr. Dickson from and for PNG Development Bank as chairman? If the management committee was formed without there being a loan approved from PNG Development Bank and without some shareholding being transferred to PNG Development Bank, why was the assumption that PNG Development Bank was now a shareholder not challenged by Mr. Colquhoun?

17. Further, if there never was a management committee, no loan approval and no transfer of shares, it seems highly improbable that a member of an accounting firm and a member of a bank would go to such lengths to give the impression that there was such a committee.

18. A further consideration is that Mr. Colquhoun commenced proceedings in 1976 against Francis Ovu for $6,719.32 being the unpaid balance of the loan of $15,000 that he had made to Francis Ovu. There is no evidence as to the result of those proceedings. There is also no evidence of any proceedings commenced by the Colquhouns for the possession of the shares they held in Allied Enterprises, notwithstanding the shareholding listed in the 1969 annual return.

19. Given the above, I am not satisfied that Mr. Colquhoun's recollection of events is correct. I am of the view that the shareholding of Allied Enterprises was intended by the Colquhouns, Francis Ovu and the PNG Development Bank amongst others to be as stated in the 1969 annual return pursuant to the agreement or agreements between the Colquhouns, Francis Ovu and the PNG Development Bank.

20. After a consideration of the evidence, I am satisfied on the balance of probabilities that the shares in Allied Enterprises had been transferred to Francis Ovu and PNG Development Bank and the shareholding of Allied Enterprises was as listed in the 1969 annual return. The Colquhouns cause of action to recover the shares or to recover any purchase price or to recover the unpaid loan, accrued in about 1969, (presumably that was why the proceeding for the recovery of the unpaid balance of the loan was commenced in 1976, within 6 years of the cause of action accruing). Such actions would be founded on simple contract or tort. Consequently I am satisfied that s. 16 Frauds and Limitations Act applies to the Colquhouns claim in respect of the shares. The Colquhouns claim is based upon an agreement or agreements entered into in 1969. Given the evidence, I am satisfied that their cause of action arose then. Consequently their claim concerning the shares in this proceeding is statute barred as this proceeding was not filed until 2008.

21. The submission by the Colquhouns that their cause of action did not accrue until the death of Francis Ovu cannot be sustained.

22. As to the claim for $15,000, I note that the Colquhouns have not claimed any relief in respect of this sum in the originating summons or in the prayer for relief in the counterclaim. In any event, there is no evidence before me that proceeding WS 659 of 1976 has been finally determined. If it has been determined then the issue has been dealt with. If the proceeding has not been determined then presumably the proceeding is still current.

23. Given the above it is not necessary to consider the other arguments of counsel.

24. As to the relief sought by the Ovu sons in the cross claim, I have not given consideration to it as notwithstanding that the cross claim was filed pursuant to a court order, to my mind the relief sought should be claimed in other proceedings commenced for that purpose.

Orders

25. The orders of the Court are:

a) the relief sought in the originating summons and counterclaim is refused.
b) the costs of and incidental to the proceeding are to be paid by the first plaintiffs to the first and second defendants.

_______________________________________________________

Saulep Lawyers: Lawyers for the Plaintiffs
Office of the Public Curator: Lawyers for the First Defendant
Legal Impact lawyers: Lawyers for the Second Defendants