N8295

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 928 OF 2019 (NO. 2)(COMM)

BETWEEN:
STEVEN WEMBUT
Plaintiff

AND:
OK TEDI FLY RIVER DEVELOPMENT FOUNDATION LTD
First Defendant

AND:
STEVEN BAGARI in his capacity as Director of Ok Tedi Fly River Development Foundation Limited
Second Defendant

AND:
ABEL DARUKO in his capacity as Director of Ok Tedi Fly River Development Foundation Limited
Third Defendant

AND:
JACOB KABOGE in his capacity as Director of Ok Tedi Fly River Development Foundation Limited
Fourth Defendant

AND:
MICHAEL LAM GEN in his capacity as Director of Ok Tedi Fly River Development Foundation Limited
Fifth Defendant

AND:
BOSTON KASIMAN in his capacity as Director of Ok Tedi Fly River Development Foundation Limited
Sixth Defendant

AND:
REX SALLE in his capacity as Director of Ok Tedi Fly River Development Foundation Limited
Seventh Defendant

AND:
SISA BAIDAM in his capacity as Director of Ok Tedi Fly River Development Foundation Limited
Eight Defendant

AND:
IAN KUN in his capacity as Director of Ok Tedi Fly River Development Foundation Limited
Ninth Defendant

AND:
SAMSON JUBI in his capacity as Secretary of Ok Tedi Fly River Development Foundation Limited
Tenth Defendant

Waigani: Anis J
2020: 10th March & 11th May

NOTICE OF MOTION – 2 motions - motion to dismiss proceeding – Order 12 Rule 40(1)(a)(b) & (c) – National Court Rules – motion for lawyer and law firm to cease to act and for judgment to be entered based on alleged admission - rule 12 of the Professional Conduct Rules 1989, and Order 12 Rule 1 of the National Court Rules – judgment to be entered based on admissions - Order 14 Rule 2 and Order 12 Rule 1 of the National Court Rules

PRACTICE AND PROCEDURES – standing of the plaintiff – unascertained and vague – plaintiff not a director, former director, shareholder, former shareholder - whether the plaintiff has standing - whether want of standing amounts to want of reasonable cause of action and frivolity

PRACTICE AND PROCEDURES – mode of proceeding – whether correct mode should be under the Companies Act 1997 – section 142 and related provisions discussed

Cases Cited:

Steven Wembut v. Ok Tedi River Development Foundation Ltd and Ors (2020) N8192
In the Matter of the Companies Act, In the Matter of Canopus No. 101 Ltd (2019) N8162
In the Matter of the Companies Act, In the Matter of L & A ILB (PNG) Ltd (2019) N8175
Batteng Putto v. Andrew Sallel (2015) N5845 
Gawan Kuyan v. Andrew Sallel; Andrew Sallel v. Gawan Kuyan and Ors (2008) N3376
S & T Corporate Services Ltd v. Alex Maun (2015) N6606
Ok Tedi Mining Ltd v. Niugini Insurance Corporation and Ors (No 2) [1988-89] PNGLR 425
Placer Dome (PNG) Ltd v. Yako (2011) N4691
Independent State of Papua New Guinea v. Central Provincial Government (2009) SC977
Dr. Onne Rageau v. Kina Finance Ltd (2015) N6175
National Fisheries Authority v. New Britain Resources Development Ltd (2009) N4068

Counsel:

Mr H Namani, for the Plaintiff
Mr G Sheppard, for the Defendants

RULING

11th May, 2020

1.	ANIS J:	Two (2) applications returned before me for hearing on 10 March 2020.  The first was by the defendants filed on 19 February 2020, and the second was by the plaintiff filed on 25 February 2020.  Both applications were contested.  I reserved my ruling to a date to be advised.

2.	Parties have been notified so I will rule on them now.

BACKGROUND

3.	I have set out the back-ground of the matter at paragraphs 3, 4 and 5 of my earlier decision, that is, in Steven Wembut v. Ok Tedi River Development Foundation Ltd and Ors (2020) N8192.  I quote as follows:

3.  The plaintiff says he comes from Moian village which is situated in the Middle Fly area of Western Province.  He says that in or about 2001, his area, which he describes as Middle Fly Region plus 7 other areas (i.e., Kiwaba area, Dudi area, Manawete area, Suki-Fly Gogo area, Highway area, North Ok Tedi area and Lower Ok Tedi area) entered into an agreement with the Ok Tedi Mining Limited.  The agreement, he says, is called Community Mine Continuation Agreement (CMCA).  In 2006 and 2007, the plaintiff says the CMCA had resolved to and had facilitated another agreement with the Ok Tedi Mining Limited (OTML), the Papua New Guinea Sustainable Development Program (PNGSDP) and the Independent State of Papua New Guinea.  That agreement, he says, is called Memorandum of Agreement and is dated 29 June 2007 (the MOA).  He says, amongst others, that it was the MOA that had facilitated the creation of the first defendant.  

4.  Evidence that he has adduced, which is not contested, shows that the first defendant was created under the Companies Act 1997 (the Companies Act) on 23 September 2016.  The plaintiff says, which also appears uncontested, that each of the 8 groups have appointed representatives who each held 1 shares in the first defendant, for or on their behalf.  A total of 8 shares were created by the first defendant and allocated to each of the 8 representatives for the 8 regions or groups.  The plaintiff also, as it appears undisputed, comes from the Middle Fly Region.  He and those people in the said region have appointed Rex Salle, who is the 7th defendant herein, to be their representative and shareholder in the first defendant.

5.  The plaintiff seeks various declaratory relief in his originating summons.  His claim is this.  He challenges the appointment of directors and the secretary of the 1st defendant.  He claims that their appointments were done contrary to what had been resolved by CMCA and the MOA.

APPLICATIONS

4.	I refer to the defendants’ application.  The relief sought are, and I quote: 

1.	Pursuant to Order 12 Rule 40(1)(a)(b) and (c) of the National Court Rules the proceedings herein be dismissed as it does not disclose a reasonable cause of action, is frivolous or vexatious or is an abuse of the process of the Court.
2.	The Plaintiff to pay to the Defendants costs of and incidental to these proceedings.
3.	Such further and other Orders this Honourable Court deems appropriate.

5.	In regard to the plaintiff’s application, he seeks the following relief, and I quote in part:

1.	Pursuant to Rule 12 of the Professional Conduct Rules 1989, and Order 12 Rule 1 of the National Court Rules, Mr. Greg Sheppard and Young & Williams Lawyers cease to represent the Defendants in these proceedings on the basis of having a Conflict of Interest and want of Independence.
2.	Judgment be entered against the Defendants based on admission pursuant to Order 9 Rule 30(1) of the National Court Rules.
3.	Alternatively, pursuant to Order 14 Rule 10(3) and Order 12 Rule 1 of the National Court Rules and section 155(4) of the Constitution, in the interest of justice, the Defendants, their lawyers, agents and whosoever be restrained from accessing and or making any transactions whatsoever out of the Western Province People’s Dividend Trust Account – Community Mine Continuation Agreement Bank account no. 12767475 operated with the Australia New Zealand Banking Group (PNG) Limited (ANZ) and any other accounts held in other Banks within Papua New Guinea, including Lawyers’ Trust Accounts pending the determination of this proceeding.
4.	Pursuant to Order 14 Rule 2 and Order 12 Rule 1 of the National Court Rules, the Defendants and Young and Williams Lawyers give account within seven (7) days of all the monies drawn by them from the Western Province People’s Dividend Trust Account – Community Mine Continuation Agreement.

PRELIMINARY FINDINGS

6.	I refer to relief 3 and 4 of the plaintiff’s application.  In my view, the plaintiff is seeking the same types of relief which had been sought in his earlier application filed on 18 December 2019.  I had already dealt with them and dismissed the said application on 17 February 2020.  The way forward should have been to lodge an appeal to the Supreme Court.  Pleading them in the present application, in my view, amounts to abuse of process.  

7.	I therefore dismiss these 2 relief.

PRELIMINARY ISSUES

8.	The issues of want of standing and proper mode of proceeding, have again arisen before me for consideration.  I recall that they were raised by the Court at the hearings (both ex-parte and inter-parte) of the plaintiff’s earlier application that was filed on 18 December 2019.  In my written ruling, I addressed the issues to consider whether there was an arguable case.  It seems that the defendants may have filed their present application to dismiss the proceeding perhaps also in light of what the Court had noted in its ruling of 17 February 2020.  The defendants had successfully relied on the grounds (i) want of standing and (ii) want of mode of proceeding, in opposing the plaintiff’s application for interim injunctive relief.

9.	At paragraph 17 of my earlier ruling in Steven Wembut v. Ok Tedi River Development Foundation Ltd and Ors (supra), I summarized my findings on point, and I quote in part:

17.  I am inclined to refuse the plaintiff’s notice of motion filed on 18 December 2019.  I am not satisfied that there may be an arguable case, and I find and say this based on the defendants’ strong argument that the plaintiff may not have standing to seek the sort of relief as pleaded in the originating summons against the defendants.  I remind myself that I am not making any final determination here.  I simply find the plaintiff’s standing in this proceeding to be at reasonable to serious doubt.  I also find that it is arguable whether the plaintiff has commenced the correct mode of proceeding, that is, whether the correct mode should have been to invoke the Court’s jurisdiction under section 142 of the Companies Act.

10.	The defendants, in their present application, are now requesting this Court to make a final determination and dismiss the proceeding based on grounds in their substantive arguments as well as based on these 2 preliminary arguments.  I note that I have already found the 2 preliminary arguments valid in my earlier ruling.  What is really left for me to consider now it would seem, is whether the plaintiff has come up with evidence or valid reasons to show why I should not exercise my discretion and dismiss this proceeding.  Recapping, the defendants’ contentions are as follows.  They say that the plaintiff’s main cause of action is to challenge the appointments of directors and the secretary of the first defendant.  That being the case, the defendants submit that the plaintiff has no standing under section 142 the Companies Act 1997 (Companies Act) to make such claims.  They also submit that the plaintiff has commenced an incorrect mode of proceeding; that the correct mode should have been to commence proceedings under the Companies Act.  I note that in my earlier decision, I found the plaintiff’s counsel unprepared to address these issues.  I made mention of that at paragraphs 10 and 11 of my decision.  It is regrettable to say that the plaintiff’s counsel has again been unable to sufficiently address the Court on these matters. 

11.	I will begin by saying this.  The establishment of the first defendant under the Companies Act is not disputed.  Evidence of that including company extracts of the first defendant, are filed.  I refer to a latest extract, which is marked as annexure A to Shalom Wagon’s affidavit filed on 19 February 2020.  The extract is dated 13 February 2020.  According to the said extract, there are 10 directors of the first defendant registered.  And there are 7 shareholders who are registered as well.  Each of the shareholders hold 1 share each in trust for the communities or groups that they represent, in the first defendant.  As for the plaintiff, it is not disputed that he comes from the Middle Fly Region, which is a recognized impacted area situated in the Middle Fly District (Middle Fly Region).  It is also not disputed that the appointed person who holds the 1 share in trust for the group, is Rex Salle.  According to the extract, Mr Salle is listed as a director and the trustee shareholder for or on behalf of the people of the Middle Fly Region.  And Rex Salle is being sued as the 7th defendant.

12.	This is where, in my view, the issue of standing arises.  I ask myself this.  Where is the plaintiff’s standing in the first defendant?  What right does he have in the first defendant to commence this proceeding to try to remove its directors and the company secretary?  The plaintiff, I note, keeps using the same reasons.  He argues that he had participated in the initial stages of the negotiations with the relevant stake holders.  These, he says, had resulted in various scheme of arrangements, which included the MOA.  He says that it was based upon the MOA that has led to the creation of the first defendant, therefore, he claims that he has standing in the matter.  In response, I recall that I kept reminding counsel in the earlier application as well as in the present, to explain how these reasons had or may have any relevance given the fact that the first defendant was established under the Companies Act with the status of a legal person.  The first defendant’s legal status remains the same to this day. 

13.	Without any valid explanation in law given by counsel to show his client’s interest in the first defendant, I am unable to hear his complaint(s) in the proceeding.  It is the plaintiff’s case.  He has the onus to establish his standing; or draw the Court to the relevant provisions under the Companies Act or otherwise, that gives him the right or interest to try to remove the directors and company secretary of the first defendant.  In my view, the plaintiff has failed in that regard, and if I may add, wasted a lot of the Court’s time.  I do not say this lightly given the fact that the plaintiff had been given 2 opportunities to establish his standing.  The first was in regard his application for interim injunctive relief, and the second is in the present applications.  I will add that given the situation of this case, the burden of proof does not or will not shift to the defendants unless I am satisfied of prima facie evidence or sufficient legal basis regarding the plaintiff’s standing in this proceeding.

14.	I note the arguments put forward by the defendants in response.  They relate to the process, standing and eligibility of a person under the Companies Act who may commence proceeding to remove a director or company secretary.  In my view, I find the arguments valid and rational.  The defendants make references to provisions under PART IX.—ENFORCEMENT of the Companies Act, and in particular, sections 141, 142 and 143.  I would also briefly refer to other possible relevant provisions, that is, under PART VIII.—DIRECTORS AND THEIR POWERS AND DUTIES of the Companies Act, namely, Division 5.—Appointment and Removal of Directors, and provisions such as sections, 132.  Court may appoint directors, and 134.  Removal of directors.  See cases:  In the Matter of the Companies Act, In the Matter of Canopus No. 101 Ltd (2019) N8162; In the Matter of the Companies Act, In the Matter of L & A ILB (PNG) Ltd (2019) N8175; Batteng Putto v. Andrew Sallel (2015) N5845 and Gawan Kuyan v. Andrew Sallel; Andrew Sallel v. Gawan Kuyan and Ors (2008) N3376.  None of these provisions were drawn to my attention by the plaintiff.  In my view, this Court cannot assist the plaintiff without first having a fair idea of the legal standing or capacity where or based upon which the plaintiff has commenced this proceeding.  It is not the Court’s role to second guess or presume the plaintiff’s standing.  To do so in itself may enhance the already existing ambiguity.  I find that the plaintiff has failed to establish his standing, and as such, his claim must fail.

15.	In my view, the proceeding is therefore without merit, frivolous and vexatious, and therefore must be dismissed.

16.	The next preliminary ground for dismissal is alleged wrong mode of proceeding.  However, I note that without a clear standing or capacity in which the plaintiff is suing under, it is difficult to ascertain whether perhaps the appropriate step should have been to commence proceeding under the Companies Act.  This, in my view, also goes on to support that defendants’ claim that the action is without merit and is frivolous.

OTHER CONSIDERATIONS

17.	There are 2 other matters which, in my view, are worth mentioning.  The first matter is this.  The plaintiff may be a beneficiary for the group in the Middle Fly Region within the impacted area of the Ok Tedi Mine.  Assuming that that is the case, he would be just one out of hundreds if not thousands of people from that area.  And these people, including the plaintiff, as it seems or may be presumed, have mandated Rex Salle to hold their share in trust, in the first defendant.  And there are 7 to 8 other trustees or representatives of the other 7 or 8 groups of people in the impacted area of the Ok Tedi Mine, who also hold 1 share each for their groups.  And these groups in total would represent hundreds of thousands of people within the impacted areas of the mine.

18.	The plaintiff, however, does not attach any evidence to show whether he has the authority of the people within his group, to make this claim which is significant in that he is trying to replace the executives of the first defendant in a company that is created to hold or facilitate the interests of these hundreds of thousands of people in the affected or impacted areas of the mine.  And it is obvious that he does not speak for the other 7 or 8 impacted areas or groups.  Evidence disclosed shows that the 8 impacted regions, including the Middle Fly region where the plaintiff is said to come under, have all agreed to and have appointed the executives of the first defendant in 2016.  These executive members have since held their positions in the first defendant for more than 3 years or so, before this proceeding was commenced.  The 8 impacted groups’ selected or recommended directors for the first defendant, was also consented to by the plaintiff at that time.  I refer to the plaintiff’s affidavit filed on 18 December 2019.  At paragraph 11, he states, and I quote:

11.  However, because the 8 CMCA Regions endorsed an entity of the same that was already incorporated, we consented to it that the entity remain and the already handpicked appointed directors to remain as interim directors until such time when permanent directors are appointed through community endorsements.

19.	In my view, and as I had also pointed out to the parties in the previous hearings as well as in the present, the executives of the first defendant may be interim and which may be a genuine concern by the plaintiff.  But even if that is the case, what would be the correct process to address that given the present status, particularly the legal status of the first defendant?  The plaintiff is not a director, a former director, a shareholder or a former shareholder of the first defendant.  So what right does he have to file this proceeding against the first defendant to attempt to nullify the appointments of its executives, and at the same time, to attempt to freeze or interrupt its operation?  The answer to that, in my view, is clearly this, “he does not have that right, and also, that he has failed to disclose that right to the satisfaction of the Court”.  I note that the answers to the plaintiff’s concern may be found in the MOA or perhaps in the other agreements that had been reached between the parties or between the relevant stake holders of the 8 regions within the impacted areas of the mine.  However, the plaintiff herein, as I have found above, does not have standing or the relevant capacities to sue the first defendant and its executives nor the right to ask for the type of relief that he is seeking.

20.	The second matter I wish to address, refers to the first relief in the originating summons.  It reads and I quote in part, An order in the nature of a Declaration that the First Defendant was incorporated for the purposes of the Memorandum of Agreement-Outcomes of the 2006/07 CMCA Review (hereafter as “MOA”) dated 29th June 2007.

21.	This relief, in my view, does not constitute a valid cause of action against the defendants.  There is no issue or controversy to this intended declaration.  See cases:  S & T Corporate Services Ltd v. Alex Maun (2015) N6606; Ok Tedi Mining Ltd v. Niugini Insurance Corporation and Others (No 2) [1988-89] PNGLR 425; Placer Dome (PNG) Ltd v. Yako (2011) N4691; Independent State of Papua New Guinea v. Central Provincial Government (2009) SC977; Dr. Onne Rageau v. Kina Finance Ltd (2015) N6175 and National Fisheries Authority v. New Britain Resources Development Ltd (2009) N4068.  The MOA that is in evidence, is what it is.  It does provide provisions that relate to the establishment of the first defendant.  And as it is, the first defendant was set-up pursuant to the MOA.  So why seek the relief if that was the case, or who is challenging the MOA that warrants the plaintiff to try to seek its recognition or validity?  The defendants do not challenge the MOA as I gather from their submissions and from the evidence that have been tendered.

SUMMARY

22.	For the above reasons, the plaintiff’s case shall fail.  I will dismiss the proceeding based on my preliminary finding, that is, want of standing.  I will also dismiss the proceeding for want of merit and on the basis that it is frivolous.

COST

23.	Award of cost is discretionary.  I will award cost to follow the event, that is, cost of the proceeding is awarded to the defendants on a party/party basis which may be taxed if not agreed.

ORDERS OF THE COURT

24.	I make the following orders:

1.	The proceeding is dismissed.

2.	The plaintiff shall pay the defendants’ cost of the proceeding on a party/party basis which may be taxed if not agreed.

3.	Time for entry of these orders is abridged to the date of settlement by the Registrar which shall take place forthwith.

The Court orders accordingly
________________________________________________________________
Namani & Associates:	Lawyers for the Plaintiff
Young & Williams Lawyers:	Lawyers for the Defendants