N8268

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 691 of 2017
	
BETWEEN
KURUBU IPARA, JOHN ONDALANE & RUBEN NALEPE as Internal Interim Trustees of the Porgera SML Landowners Children’s Investment Fund Representing the SML Landowners
First Plaintiffs

AND
ELIZABETH  UMANGE in her capacity as the Coordinator of the Porgera SML Landowners Children’s Investment Fund
Second Plaintiffs

AND
DONALD HEHONA in his capacity as Trustee of the Porgera SML Landowners Children’s Investment Fund Representing the State
Third Plaintiffs

AND
CHRISTOPHER TRAINOR, in his capacity as Trustee of the Porgera SML Landowners Investment Fund Representing PJV
First Defendant

AND
MASO KARIPE, MAZ PAIWEN & CLINCH YANDAPAKE as Purported elected Trustees of Porgera SML Landowners Children’s Investment Fund Representing the SML Landowners
Second Defendants

Waigani: Makail, J
2019: 4th December & 2020: 17th April

PRACTICE & PROCEDURE – Application to remove party – Party to a proceeding – Unnecessary party – Whether party has sufficient interest – Whether a right has been infringed – Cause of action – Whether party is necessary for full resolution of dispute – National Court Rules – Order 5, rule 9

Cases cited:
Nil
Counsel:
No appearance, for First & Second Plaintiffs
Ms. P. Harry, for Third Plaintiff
Mr. T. Injia, for First Defendant
Ms. J. Nandape, for Second Defendants

RULING
17th April, 2020
1.	MAKAIL, J:  This is an application by the second defendants to remove the third plaintiff from the proceeding or in the alternative, stop his lawyers from acting for him pursuant to Order 5, rule 9 of the National Court Rules (NCR) and Section 7(i) of the Attorney-General Act, 1989. It emanates from a dispute over the election of three trustees of the Porgera SML Landowners Investment Fund (Trust Fund) where the second defendants were elected as trustees at an Annual General Meeting (AGM) on 25th August 2017.
2.	There is no dispute that the third plaintiff is one of six trustees of the trust fund under a Trust Deed.  His appointment as a trustee is made by the Secretary of the Department of Treasury.  The others are three internal trustees who are landowners and two external trustees, one from the company Barrick Niugini Ltd represented by the first defendant and the other, the Trust Fund Co-ordinator, the second plaintiff.

3.	The principal ground to support the party removal application is that, as a trustee appointed by the Secretary of the Department of Treasury pursuant to the Trust Deed, the third plaintiff is a State nominee and official.  As such he is not adversely prejudiced by the result of the election and should not be allowed to litigate it.   At the very least, he should be a witness or remain neutral.  The first defendant does not take any position on the application.  	    

4.	The third plaintiff submits that he is necessary party because he has direct knowledge of how the election was conducted and has given an account of it in his affidavit filed in support of the plaintiffs’ case.  

5.	As a matter of principle, in an application for removal of party, the converse of a joinder application must be demonstrated.  It must be demonstrated that a party does not have sufficient interest and its removal will not be adverse to the resolution of the dispute.  What is sufficient interest must be directly connected and not something that is remote or disconnected to the party.  That interest must form a right which has been infringed by the other party to form a cause of action in law.

6.	In this case the third plaintiff is not one of those trustees who are elected by the landowners.  His authority to act as a trustee is by appointment by the Secretary of Department of Treasury.  His authority as a trustee is by appointment while the landowner trustees are elected by and through an AGM of the Porgera SML Landowners, the legality of that election is now the subject of this proceeding and the cause of action initiated by the first and second plaintiffs: see relief sought in the originating summons filed 1st September 2017.  To that extent, the third plaintiff’s appointment as trustee is intact and he suffers no harm.  Until it is revoked by the Secretary, he has no cause of action against the defendants.  Only the first and second plaintiffs do.  It follows that he has not demonstrated that he has been directly prejudiced by the result of the election and must remain as a party to assist the Court to resolve the dispute.  

7.	Even if he says that he witnessed the election and is able to say that it was not conducted in accordance with the established procedure or rules on calling of AGMs, I agree with the second defendants that he can be a witness and provide that information to the Court to consider.  The party removal application will be upheld and the third plaintiff shall be removed from the proceeding forthwith.

8.	Having reached this conclusion, it is not necessary to consider the alternative application on the lawyer’s removal.  The remaining issue is costs which the second defendants seek against the third plaintiff to be personally met by him.  On the other hand, the third plaintiff submits that costs be paid out of the Trust Fund pursuant to Clause 14 of the Trust Deed.

9.	This is a case where two of the external trustees support the litigation while the other has not.  One of them is the third plaintiff.  In such a case, we must turn to the Trust Deed to find out if it provides for costs and liabilities of trustees.  The Trust Deed broadly expresses that a trustee may be indemnified against expenses and liabilities.  But it is not a complete indemnity.  It is still subject to the general law relating to trustees.  Clause 14(a) states:
“Subject to the provisions of the general law relating to trustees, a Trustee shall –
(a)	be indemnified out of the Fund from and against any expenses or liabilities that may be incurred in prosecuting or defending any court action arising out of this deed or its……..”.
10.	No arguments were received from the parties that the dispute over the election of the trustees did not fall within the terms of the Trust Deed.  Generally, parties seemed to have accepted that the Trust Deed applied and that according to the second defendants, the third plaintiff should not be indemnified by the Trust Fund for the costs of application.

11.	However, trustees may be liable for being negligent or acting in bad faith or not in the best interest of the beneficiaries.  This is the general law relating to trustees’ rights and obligations.  Unless it is shown in this case that the third plaintiff was negligent or acted in bad faith or contrary to the best interest of the beneficiaries, he should not be personally held liable for costs.  In this respect, it was not put or shown by the second defendants that the third plaintiff was negligent or acted in bad faith when he joined the other plaintiffs to institute and prosecute this proceeding.  And the fact that he formed a contrary view to that of the other trustees is not sufficient to show that he was negligent or acted in bad faith to justify an order for costs against him personally.  It follows that the second defendants have failed to establish that the third plaintiff is not qualified to be indemnified for the costs under Clause 14 of the Trust Deed.  The second defendants can have their costs of the application which will come out of the Trust Fund.

12.	The orders are:
1.	The second defendants’ application to remove the third plaintiff from this proceeding is granted.
	2.	The third plaintiff shall be removed from this proceeding forthwith.
3.	The second defendants’ costs of the application shall be paid out of the Porgera SML Landowners Children’s Investment Fund, to be taxed, if not agreed.
4.	Time for entry of these orders shall be abridged to the date of settlement by the Registrar, which shall take place, forthwith.
________________________________________________________________
Haiara Legal Services 	:	Lawyers for First and Second Plaintiffs
Harry Lawyers		:	Lawyers for Third Plaintiff
Ashurst Lawyers		: 	Lawyers for First Defendant
Nandape & Associates	:	Lawyers for Second Defendants