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Pogera Landowners Association Inc. v Trainor [2017] PGNC 416; N7645 (8 May 2017)

N7645

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

O.S. NO. 685 OF 2013

POGERA LANDOWNERS ASSOCIATION INC.
Plaintiff

V

CHRISTOPHER TRAINOR in his capacity as Trustee
First Defendant

PAUL MAWA in his capacity as Trustee
Second Defendant

DANIEL HEHONA in his capacity as Trustee
Third Defendant

KURUBA IPARA, RUBEN NALEPE AND JOHN ONDALENE, Interim Trustees
Fourth Defendant

Waigani: Kariko, J
2015: 7^th December,
2017: 8^th May

PRACTICE AND PROCEDURE - application to set aside ex parte order - applicable principles – lawyer noted incorrect hearing date - whether reasonable explanation for failure to attend hearing

PRACTICE AND PROCEDURE – application for stay of order – period for relief sought already occurred

PRACTICE AND PROCEDURE - application to vary previous court order – whether appropriate to allow application – application in equity – applicant to have “clean hands”
TRUST FUND – appointment of trustees – management of fund pending appointment of trustees pursuant to trust deed

Cases Cited

Inchcape Shipping Services (PNG) Ltd v TG Holdings Ltd (2010) N4268
Leo Duque v Avia Andrew Paru [1997] PNGLR 378
Mainland Holdings v Paul Stobbs & Ors (2003) N2522
Martha Limitopa v Independent State of Papua New Guinea [1988-89] PNGLR 364
Morobe Provincial Government v Tropical Charters Ltd (2009) N4160
Tau Mavaru Kamata v David Sode & Ors (2006) N3067
Thomas Rangip & Anor v Peter Loko & Anor (2009) N3714

Legislation

National Court Rules

Counsel

Ms J Nandape, for the Plaintiff
Mr J Brooks, for the first Defendant
Mr A Kostopoulos and Mr N Kiuk, for the fourth Defendant
No appearances for the second and third Defendants

DECISION

8^th May, 2017

1. KARIKO J: This is my decision relating to the following motions that returned before me on 7^th December, 2015:

• The application of the fourth defendant Kuruba Ipara, Ruben Nalepe and John Andalane (the Interim Trustees) filed 20^th November, 2015 seeking a stay of the Order of this Court made 23^rd September, 2015 pending the hearing of their application to set aside that Order.
• The application of the Interim Trustees also filed 20^th November, 2015 seeking to have the Order of this Court made 23^rd September, 2015 set aside.
• A further application of the Interim Trustees filed 30^th November, 2015 to have the plaintiff Pogera Landowners Association Inc. (the PLA) produce an updated register of the Pogera SML Children and the members of the 24 SML landowner clans. This application also seeks to have the first defendant Christopher Trainor or the PJV (the Pogera Joint Venture), produce audited financial statements for the years 2005-2013 or alternatively to provide the financial records for that period.
• Application by the PLA filed 3^rd December, 2015 for the appointments of the Interim Landowner Trustees to cease and either the External Trustees or Barrick Niugini Limited be approved to manage the affairs of Trust Fund in consultation with the Trust Fund Co-ordinator until such time as the outstanding AGM is concluded.
  

Background

2. I consider it appropriate to first set out a summary of the background of the proceeding.

3. On 24^th September, 1992 a Deed of Trust (the Trust Deed) for the Establishment of the Pogera Special Mining Lease Landowners Children’s Investment Fund (the Trust Fund) was executed between the State, the Enga Provincial Government, the Pogera Development Authority and the Trustees appointed pursuant to the Deed.

4. The Trust Fund was established for the benefit of the children of the Pogera Special Mining Lease Landowners (SML Landowners).

5. The Trust Deed provides under Clause 10.1 for the appointment of three trustees at the Annual General Meeting or AGM of the SML Landowners (the Landowner Trustees) and another three trustees each of them appointed respectively by the Secretary for Finance and Planning, the Pogera Development Authority and the Pogera Joint Venture (the External Trustees).

6. The Landowner Trustees hold office for a term. The terms of the last of such trustees expired in 2009 and since then there have been no new appointments of Landowner Trustees.

7. On 14^th December, 2011 Hartshorn, J ordered in proceeding entitled OS No. 159 of 2011 that an Annual General Meeting or AGM be held in accordance with the Trust Deed so that the Landowner Trustees could be properly appointed. The AGM was not held for various reasons resulting in this proceeding being filed.

8. I note at this juncture that according to the Trust Deed, any cheque payment out of the Investment Fund requires the signature of one Landowner Trustee and one External Trustee. As there were no Landowner Trustees at the time, the cheques could not be raised and therefore school fees were not being paid for beneficiaries under the Trust Deed who were in school, thereby jeopardizing the education of those children.

9. The plaintiff filed this proceeding on 24^th September, 2013 to have the Court compel the existing trustees representing the Pogera Development Authority and the Pogera Joint Venture to conduct a meeting of the SML Landowner Agents who would then appoint the Landowner Trustees so that cheques could be signed.

10. By consent of the parties, I ordered the outstanding AGM be held on 4^th November, 2013. That AGM was deferred due to lack of quorum, and I varied the order for the AGM to proceed on 9^th December, 2013 but that meeting also did not eventuate.

11. On 13^th August, 2014 consent orders were endorsed for the External Trustees to arrange a meeting in Port Moresby for the appointment of Interim Landowner Trustees who with the External Trustees would then arrange and conduct the AGM pursuant to the Trust Deed.

12. The Interim Landowner Trustees were accordingly appointed (comprising the fourth defendant) and they were to hold that office until the AGM scheduled for 30^th April, 2015 when the substantive Landowner Trustees were to be appointed in accordance with the Trust Deed, but that scheduled AGM did not take place either.

13. Issues began to be raised by various parties. The Interim Landowner Trustees decided to take a position that an AGM could only be held if the register of the Pogera SML Children and the members of the 24 SML landowner clans are updated and the outstanding audited final statements are produced. The plaintiff continued to question whether the Interim Trustees were acting in the interests of the beneficiaries of the Trust Fund or for themselves. The first defendant became concerned with the delay in conducting the AGM, plus the receipt of information suggesting that the Interim Trustees had appointed DAW Accountants as auditor for the Trust Fund when PWC was the duly appointed auditor, and also that these trustees had purportedly amended the Trust Deed. Mr Trainor has also questioned who was paying the legal costs of the Interim Landowner Trustees in this matter and other related proceedings.

14. On 9^th September, 2015 I ordered that the following notices of motion be heard as a special fixture hearing at 9.30am on 23^rd September, 2015:

• the Interim Landowner Trustees’ notice of motion filed 10^th October, 2014 by Nikiuma Lawyers for the applicants to join the proceeding;
• an amended notice of motion filed 14^th July, 2015 by Nikiuma Lawyers supposedly for the defendants (then comprising the External Trustees as separate defendants) seeking a variation of the Orders of 13^th August, 2014 for the AGM to instead be held within 3 weeks of the finalization of the outstanding financial statements;
• a notice of motion filed 3^rd August, 2015 by Mr Trainor seeking among others, that the AGM to be held within two months, the purported amended Trust Deed be declared null and void, no fees be paid to beneficiaries aged over 21 years, and the appointment of DAW Accountants as the auditor of the Trust Fund be declared null and void.
  

15. On 23^rd September, 2015 when the matter returned to Court neither Mr Kiuk nor any other counsel on his behalf appeared and nor did the Interim Landowner Trustees. Consequently, the motions filed by Nikiuma Lawyers were dismissed for want of prosecution, and most of the orders sought in the application by Mr Trainor were granted.

16. Nikiuma Lawyers then filed four applications:

• Application filed 16^th October, 2015 for the Order of 23^rd September, 2015 to be set aside.
• Application filed 16^th October, 2015 for a stay of the Order of 23^rd September 2015 pending the hearing of the first application.
• Application filed 16^th October, 2015 for joinder of six SML Agents.
• Application filed 11^th November, 2015 for the Interim Trustees to be joined as defendants.
  

17. At the hearing of the motions on 18^th November, 2015 before Cannings J, it was revealed and confirmed that Nikiuma Lawyers filed those applications in the name of the defendants (then the External Trustees) either singularly or collectively, even though he had not been instructed by any of them. While it is on record that Mr Nikiuma previously filed a Notice of Appearance to act on behalf of Paul Mawa (the second defendant) Mr Mawa filed an affidavit categorically denying that he ever instructed Nikiuma Lawyers to act for him in this or any other court proceeding. In the end, the first two applications were withdrawn, the third application was dismissed as an abuse of process, and the fourth application was allowed to be amended and the Interim Trustees were joined as the fourth defendant.

18. On the next day, Nikiuma Lawyers acting on behalf of the fourth defendant filed new applications which are the subject of this judgement.

Application for stay

19. It is unnecessary to consider the application for stay as the relief is sought pending “hearing” of the motion to set aside the Order of 23^rd September, 2015 which event has already occurred.

Application to set aside

20. I endorse the views expressed in Thomas Rangip & Anor v Peter Loko & Anor (2009) N3714 and Morobe Provincial Government v Tropical Charters Ltd (2009) N4160 that the National Court has jurisdiction to set aside an ex parte order of the National Court that dismisses a proceeding for want of prosecution.

21. In Thomas Rangip & Anor v Peter Loko & Anor (supra) Hartshorn J discussed and adopted the law in New South Wales relating to that State’s equivalent of our O12 r8 and found that the National Court does have jurisdiction to set aside an ex parte National Court order that dismisses an action for want of prosecution. The reason he found is that O12 Rule 8 National Court Rules provides some exceptions to the general rule that a court ordinarily has no power to set aside a final order once it has been passed and entered, and one of those exceptions is where the judgment or order has been made ex parte. His Honour then noted that the power to set aside or vary an order under Order 12 Rule 8(3) applies to both interlocutory orders and final orders.

22. Those case I cite confirm the principles governing the exercise of discretion in considering whether or not to set aside an ex parte order, and that is the applicant must satisfy the Court:

(1) why the order was allowed to be entered in the absence of the applicant;
(2) if there is a delay in making the application to set aside, a reasonable explanation as to the delay; and
(3) whether there is a reasonable explanation for the proceeding (or in this case, the notice of motion) not being prosecuted with due diligence.

23. I remark in passing that based on what transpired on 18^th November, 2015 before Cannings J and in particular his Honour’s finding that the filing of documents in the name of a party without his instructions constitutes an abuse of process, which view I endorse, I would not be agreeable to any application to set aside the order dismissing the application filed 14^th July, 2015 by Nikiuma Lawyers because it was purportedly filed on behalf of the defendants (who at the time were the External Trustees) and none of them had instructed Nikiuma Lawyers to act for him. While the amended motion of 14^th July, 2015 was dismissed for want of prosecution, it could well have been dismissed for being flawed and an abuse of process.

24. Applying the legal principles discussed earlier I firstly ask whether a reasonable explanation has been offered for the absence or non-attendance of the fourth defendant and their counsel. Mr Kiuk and his clients simply say it was all a result of a mistake – that the wrong date (8^th October, 2015) was noted for the hearing of the applications. I have listened to the court recording of when the matter was adjourned on 9^th September, 2015 to 23^rd September, 2015 and on no less than 3 occasions I confirmed the return time and date as 9.30am on 23^rd September, 2015. No other date was mentioned in discussing the return date. Pronouncing the date “23^rd September, 2015” does not sound anything like “8^th October, 2015”.

25. Both this Court and the Supreme Court have stated on many occasions that a lawyer’s negligence is not a reasonable explanation for allowing a default to occur or a ground to set aside a judgment; see Martha Limitopa v Independent State of Papua New Guinea [1988-89] PNGLR 364; Leo Duque v Avia Andrew Paru [1997] PNGLR 378 and Inchcape Shipping Services (PNG) Ltd v TG Holdings Ltd (2010) N4268. In this case, I do not accept the explanation for the non-attendance as reasonable and on that ground alone I would dismiss the fourth defendant’s application to set aside.

Application for production of documents

26. In relation to the fourth defendant’s application filed 30^th November, 2015 I note that it appears to be in the same vein as the amended notice of motion filed 14^th July, 2015 that was dismissed on 23^rd September, 2015. In considering the present application, I think it is most relevant to take into account the background of this proceeding and in particular highlight that the outstanding AGM of the SML Landowners pursuant to the Trust Deed has not been held since it was ordered by the Court (per Hartshorn J) back in 2011. There are of course various reasons for this but it is clear to me on the evidence referred to by parties in submissions that the delay in the last two years or so has been caused largely by the fourth defendant. It seems to me that while it is common acknowledgement that it is very much in the interests of the beneficiaries of the Trust Fund that the substantive Trustees are appointed sooner rather than later, the fourth defendant continues to come up with reasons not to convene the AGM. The latest reason is the contention that the AGM cannot be held according to the Trust Deed unless the following are first finalised:

• Audited financial statements for the years 2005-2013;
• The updated register of SML Children; and
• The updated register of the 24 SML landowner clans.
  

27. I am unable to agree with that proposition. The AGM could proceed predominantly to appoint the Trustees for the Trust Fund, as priority. Any issues concerning the financial statements and the registers could then be properly discussed at the meeting and appropriate resolutions reached. The Trustees could address specific issues including the financial statements or the registers and attend to them in the interests of the beneficiaries of the Trust Fund, which is their duty to do. If it is determined that any current or previous trustee has breached his fiduciary obligations as a trustee then appropriate action (legal or administrative) may be taken against such person.

28. There is clear evidence that the financial statements from 2005-2013 cannot be produced at all for the reason that certain records are missing and they are from a period when the Pogera Development Authority was apparently in charge of those records. The Interim Landowner Trustees are demanding that Mr Trainor produce those financial statements when he has only been a Trustee since 2013. To my mind, this is an unreasonable demand and expectation. So to argue that the AGM cannot be held until the outstanding financial statements are first completed would obviously mean that the AGM could never be convened.

29. In my opinion, any further delay in the holding of an AGM is prejudicial to the beneficiaries of the Trust Fund and other related stakeholders. They deserve a full complement of trustees properly appointed pursuant to the Trust Deed or as close as possible to the relevant provisions of the Deed in the circumstances.

30. The fourth defendant has failed to comply with the Court’s order of 14^th August, 2014 to conduct the AGM. The Interim Landowner Trustees waited until that date ordered for the convening of the AGM lapsed before seeking the present orders. It is now going onto four years since their appointment as Trustees on an interim basis. They are seeking relief in equity but in my opinion they have not come to court with clean hands. The rule is that he who comes to equity must come with clean hands; see for example Mainland Holdings v Paul Stobbs & Ors (2003) N2522 and Tau Mavaru Kamata v David Sode & Ors (2006) N3067.

Conclusion

31. After considering submissions, referring to relevant material filed and applying the legal principles noted above, I dismiss all the notices of motion filed by the fourth defendant. That means the Court’s Order of 23^rd September, 2015 remains. As the time for convening the AGM pursuant to term 3 of the Order has long passed, I will consider setting a new date and I am obliged pursuant to term 3 of the Order and relied upon in plaintiff’s notice of motion filed 3^rd December, 2015 to review the appointment the Interim Landowner Trustees and consider management of the affairs of the Trust Fund until the AGM is held.

32. In the circumstances that have developed, I view that the External Trustees should be given the responsibility of managing the affairs of the Trust Fund, and they should also be charged with the responsibility of arranging for and convening the AGM in consultation with the Trust Fund Co-ordinator. The AGM should preferably be held after the completion of the National Elections. I am not minded to terminate the appointments of the Interim Landowner Trustees but they should not be permitted to unnecessarily interfere with the work of the External Trustees in managing the affairs of the Trust Fund and organizing for the AGM. There must be finality to litigation and the orders I make are intended to be final. Any person not in agreement with the decision may of course exercise the right to appeal. If any legal dispute arises in relation to the management of the Trust Fund or from the AGM, that may be the subject of separate court proceedings.

Order

33. The Court orders that:

(1) The following notices of motion filed by the fourth defendant are dismissed:

• (a) Notice of motion filed 20^th November, 2015 seeking a stay order.
• (b) Notice of motion filed 20^th November, 2015 seeking to set aside the Order of 23^rd September, 2015.
• (c) Notice of Motion filed 30^th November, 2015 seeking the production of documents.

(2) The applications by the plaintiff pursuant to its notice of motion filed 3^rd December, 2015 are upheld in part.
(3) The first, second and third defendants (namely Christopher Trainor, Paul Mawa and Donald Hehona) shall be responsible for the management of the affairs of the Pogera Special Mining Lease Landowners Children’s Investment Fund until the appointment of the substantive Trustees of the Trust Fund pursuant to an AGM of the SML Landowners.
(4) The first, second and third defendants shall also be responsible for arranging and convening the AGM in consultation with the Trust Fund Co-ordinator, which meeting shall be held no later than 31^st August, 2017.
(5) The fourth defendant (namely Kurubu Ipara, Ruben Nalepe and John Andalene) their servants and agents are restrained from obstructing, hindering, disrupting, threatening or otherwise interfering with the first, second and third defendants and the Trust Fund Co-ordinator in carrying out their obligations pursuant to Orders 3 and 4 above.
(6) For avoidance of doubt, the fourth defendant may carry out such duties as trustees of the Trust Fund subject to Orders 3, 4 and 5 above.
(7) Time is abridged.

34. I will hear parties on costs.
________________________________________________________________
Nandape Lawyers: Lawyer for the Plaintiff
Ashurst Lawyers: Lawyer for the First Defendant
Nikiuma Lawyers: Lawyer for the Fourth Defendant