N10051

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

MP (COMM) NO. 19 OF 2020 (IECMS) (NO. 3)

IN THE MATTER OF THE COMPANIES ACT 1997, SECTION 152(1)(2)(3) & (4)(g) AND IN THE MATTER OF THE COMPANIES RULES, RULE 14(c)

AND:
IN THE MATTER OF PETROLEUM EXPLORATION JOINT VENTURE LIMITED (1-35304)

BETWEEN:

GIGIRA DEVELOPMENT CORPORATION LIMITED
First Petitioner

AND:
TUKUPA DEVELOPMENT CORPORATION LIMITED
Second Petitioner

AND:
KEWAPA DEVELOPMENT CORPORATION LIMITED
Third Petitioner

V

STANIS TALU
First Respondent

AND:
PUKULA HEREBA
Second Respondent

AND:
DANIEL NERE
Third Respondent

Waigani: Anis J
2022: 16th & 28th November

NOTICE OF MOTION –– Application to set-aside ex parte order – Order 12 Rule 8(3) – National Court Rules – whether judgment irregular or regular – whether allegation of fraud should warrant setting aside of judgment - Division 4 – Order 12 Rules 37 and 38, and Order 10 Rule 9A(15) of the National Court Rules considered – whether failure by party to inform court and for court to caution itself sufficient basis to assume or perceive improper exercise of discretion thus should warrant setting aside of ex parte order – consideration - ruling

Cases Cited:
Gigira Development Corporation Ltd and Ors v. Stanis Talu and Ors (2021) N8852
Lord & Company Ltd v Inapero [2014] SC1624
National Fisheries Authority v Tipi [2012] N4836
Kalang Advertising Ltd v Visvanathan Kuppusamy (2008) SC924
David Lambu v Paul Paken Torato (2008) SC953
Peter Dixon Donigi v. Base Resources Ltd [1992] PNGLR 110
Leo Duque v Avia Andrew Paru [1997] PNGLR 378
Tom Rangip v. Peter Loko (2009) N3714
South Pacific PNG Sea Foods Co Ltd v National Executive Council (2017) N6888
Nelulu Land Group Inc v Rimbunan Hijau (PNG) Ltd (2018) N7994
Gigira Development Corporation Ltd and Ors v Stanis Talu and Ors (2021) N9027

Counsel:
D Bidar, for the Petitioners
G Manda, for the Respondents

RULING

28th November 2022

1.	ANIS J:  On 16 November 2022, the respondents applied to set-aside an ex parte order I made on 31 August 2022.  The application was contested.  I heard and reserved my ruling to a date to be advised.

2.	I rule on it now.
BACKGROUND

3.	I had set-out the background of the matter at [3] to [7] in my earlier decision Gigira Development Corporation Ltd and Ors v. Stanis Talu and Ors (2021) N8852.  I restate them herein as follows:

3.	The 3 petitioners (the petitioners) are companies created under the Companies Act 1997 (the Companies Act).  They are landowner companies of one of the oil and gas rich provinces of Papua New Guinea, the Hela Province.  They represent more than 6,000 landowners from the area where Petroleum Development License One (PDL 1) is situated.  In May of 1999, the petitioners entered into a joint venture agreement (JV) amongst themselves.  From the JV, they established an umbrella company, the subject of this proceeding, called Petroleum Exploration Joint Venture Limited (PEJVL or the company).  The petitioners hold equal shares in PEJVL.

4.	The petitioners file this petition as shareholders, pursuant to s. 152 of the Companies Act.  They argue or assert their rights as shareholders of PEJVL in their petition to allege that the affairs of the company have been, or are being, or are likely to be, conducted in a manner that is, or any act or acts of the company have been, or are, or are likely to be, oppressive, unfairly discriminatory, or unfairly prejudicial to them as shareholders.  

5.	In the petition, and I will paraphrase, the petitioners allege that the respondents, in their executive capacities (1st and 2nd respondents as chairman and director) and purported position (3rd respondent as general manager) of the company at the material time, acted against its interest.  They say monies that had been provided by the Government to the company to the tune of K18 million, which was for the beneficiaries (i.e., landowners of the area where PDL 1 is situated) whose interests the petitioners (as shareholders of the company) represent, had been unlawfully dealt with by these respondents.  They say the company or PEJVL operates a Bank South Pacific Limited account which is its original and only account.  They say the respondents deceitfully or illegally opened a separate account purportedly for the company with the ANZ bank.  They say the first K10 million had been paid by the State on 6 December 2011, which was accepted by these respondents and paid to the company’s said illegitimate or unauthorized ANZ bank account.  They say the respondents then used up the K10 million that was deposited in the ANZ account for their own purposes or outside the interest of the company, within weeks from the date of deposit.  They say in April of 2013, they had learnt that the remaining balance of the K18 million, that is, K8,000,000 was paid into the ANZ account.  They say in the petition that PEJVL then took steps to commence proceeding in the National and Supreme Courts, that is, WS No. 375 of 2013 - Petroleum Joint Venture Limited and Ors v. Stanis Talu and Ors, and SCA 24 of 2019 - Petroleum Joint Venture Limited v. Stanis Talu & Ors v. (earlier proceedings).  It is not disputed that similar allegation or claims had been made by PEJVL against the respondents.  Restraining orders were obtained and the K8 million was ordered and paid into the National Court Trust Account.  On 11 March 2019, the National Court dismissed the proceeding after a hearing.  PEJVL appealed the decision to the Supreme Court.  On 28 October 2020, the Supreme Court dismissed the appeal as incompetent.  The petitioners claim that on 22 February 2021, the K8,300,000 from the National Court Trust Account was paid into the trust account of the respondents’ lawyers Greg Manda Lawyers.

6.	The petitioners were aggrieved by the actions or inactions of the respondents and or PEJVL and filed the present petition.  In summary, they say in the petition that the actions and omissions by the respondents amount to unlawful, deceitful, and fraudulent conducts and an unlawful conversion of the funds and property of the company and the petitioners.  They also say that the actions and omissions by the respondents were performed collectively and severally, and that they conspired with full intent and knowledge to defraud the company and the petitioners and cause them financial loss. 

7.	On 26 February 2021, interim ex parte orders were granted by this Court in favour of the petitioners against the respondents and their lawyers, amongst others, against the use of K8,300,000 that had been paid by the National Court Trust Account into the trust account of Greg Manda Lawyers.

MOTION

4.	The notice of motion by the respondents was filed on 11 October 2022 (NoM).  Relief 3 and 4 were conceded by counsel for the respondents as unfounded, that is, they seek relief that have, amongst others, not been pleaded, thus, I will refrain from dealing with them herein.  

5.	The contentious relief were relief 1 and 2, and I restate them herein as follows:

1.	Pursuant to Order 12 Rule 8(3) of the National Court Rules, the Orders of the National Court per Anis J of 31st August 2022 entered on 02nd September 2022 be set aside.
2.	The proceedings herein be dismissed pursuant to Order 12 Rule 40 of the National Court Rules on the following basis;
(a)	no reasonable cause of action is disclosed, and or
(b)	the proceedings are frivolous or vexatious, and or
(c)	the proceedings are an abuse of the process of the Court.
……

COMMON GROUND

6.	Counsel for the respondents informed the Court at the outset that the ex parte decision of the Court of 31 August 2022 (ex parte order/Court Order of 31 August) was regularly entered.  As such, his submission was made premised on that.

7.	However, towards the end of the submission, which is captured at [46], [47] and [48] of the respondents’ written submission, counsel raised the argument that fraud had been pleaded in the petition and as such counsel submitted that the petitioners should have alerted the Court of the same.  In support of this argument, the respondents rely on the case Lord & Company Ltd v Inapero [2014] SC1624.  Briefly, the Supreme Court therein found merit in Kariko J’s decision in National Fisheries Authority v Tipi [2012] N4836 where His Honour had observed at [11], and I quote:

11.  The rationale why a claim should not be summarily determined where it is founded on allegations of fraud is that fraud is a serious allegation and may amount to a criminal offence, so in the interest of justice the claim should be properly tried. For the same reasons, this court has held that default judgement should not be granted where the statement of claim raises serious allegations of fraud and deceit, as the interests of justice require those allegations to be proved by evidence in a trial before judgment is given on the merits; Bala Kitipa v Vincent Auali, Supply and Tenders Board of Western Highlands Provincial Government and Others (1998) N1773.

8.	The Supreme Court in Lord & Company at [59] and [60] stated, and I quote,

59.  In our view the cautious approach adopted by Kariko J in National Fisheries Authority v Tipi had merit.  Certainly this Court has previously cautioned that care needs to be taken in giving default judgment where fraud or deceit are alleged: Lambu v Torato [2008] SC953 at [119], Kunton v Junias and the Independent State of Papua New Guinea (2006) SC929 at [21] and Kewakali v Independent State of Papua New Guinea [2011] SC1091 at [23]. In our view similar principles are applicable in cases involving summary disposal, even those outside the scope of Order 12 Division 4 of the National Court Rules.

60.  Because it is clear that his Honour did not have regard to a material consideration in determining whether to exercise his discretion, namely the fact that serious allegations of fraud were pleaded in both statements of claim, we consider that the exercise of his discretion miscarried.”

9.	I observe that the Supreme Court’s decision relates to review by the Supreme Court on exercise of judicial discretion by a trial Judge.  In the present case, however, I am not reviewing my earlier ex parte decision, and if I may add, I do not have jurisdiction to do so.  The NoM does not constitute a review or appeal where the Court is being asked to consider whether a trial judge erred in his decision in the exercise of his discretion.  Even if an application seeks such, it would, in my view, be wrong in law because the National Court does not have the power to review its own decision.  Only the appellate Court has that type of power or jurisdiction to, for example and in this case, inquire and make a determination on whether, in the exercise of my discretion, I did not take into account or was alerted by the petitioners, that the claim, which is founded not on fraud but prejudiced shareholders under s. 152 of the CA, involves allegation of fraud or fraudulent conducts.  

10.	It is for this reason that the respondents’ argument regarding fraud shall fail.

11.	Even if I may be wrong (which I say otherwise), the Supreme Court had clearly stated that Division 4 of Order 12 shall not be invoked if fraud is alleged; and that it does not extend to the Court’s powers under other provisions of the court rules that may be invoked.  The Supreme Court in Lord & Company, amongst others, stated and I quote:

1.	Although it was not explicitly identified, the primary judge made an order pursuant to Order 10 rule 9A (15) of the National Court Rules. “Summary disposal” of a matter pursuant to Order 10 Rule 9A (15) is not “summary judgment” within the meaning of Order 12 Division 4 National Court Rules, and Order 12 Rule 37(b) is not relevant to summary disposal of a matter in those circumstances.

2.	It was open to his Honour to summarily dispose of the proceedings before him, notwithstanding that they were founded on allegations of fraud.

12.	In Kalang Advertising Ltd v Visvanathan Kuppusamy (2008) SC924, the Supreme Court, amongst others, held:

(2)	Rule 15 of the Listings Rules 2005 permits the National Court to summarily determine a matter on its own initiative if a party or its lawyers fail to appear at a directions hearing.

13.	The final relevant case is David Lambu v Paul Paken Torato (2008) SC953.  Cannings J stated at [102] to [106] as follows:

102.  A motion for default judgment, though it might be regarded as a method of summary disposal of a case, is not brought under Division 12.4 of the Rules. It is brought under Division 12.3 (default judgment), consisting of Rules 24 to 36. Rule 37 only applies if there is a motion for summary judgment under Rule 38 or a motion for some other form of summary disposal permitted by Division 12.4.

103.  Default judgment and summary judgment are two different things. A default judgment can be entered where the defendant fails to file a notice of intention to defend or a defence within the time required by the Rules or where the defendant has been required to verify his defence but has not done so. They are the forms of “default” prescribed by Order 12, Rule 25. A summary judgment, on the other hand, which is entered under Order 12, Rule 38, is only appropriate where a defence is filed but it is not a good defence. That basic difference between the two forms of summary disposal was explained by the Supreme Court in Telikom PNG Ltd v Thomas Tulin (2004) SC748. 

104.  Division 12.3 is, in effect, a self-contained code for moving motions for default judgment; and it has no rule in it equivalent to Rule 37. It follows that the Rules do not prevent the entry of default judgment in a defamation case; though they do prevent entry of summary judgment in such cases. 

105.  Mr Kubak submitted that a motion for default judgment is similar to a motion for summary judgment and that the reasons the primary Judge gave for concluding that a default judgment is inappropriate in a defamation case apply with equal force to summary judgments. So the Rules should be interpreted the same, irrespective of whether the motion is for default judgment or summary judgment. However, that argument ignores the very real differences between a default judgment and summary judgment. It also ignores the clear dictates of the National Court Rules.

106.  I consider that the learned primary Judge erred in law by misconstruing the National Court Rules. In my view the correct interpretation of the Rules is that they do not prohibit the entry of default judgment in a defamation case.

14.	Given the clear distinction between summary judgment under Division 4 Order 12 and other rules which may be invoked including Order 10 Rule 9A15(1) and (2) or the inherent jurisdiction of the Court to control proceedings before it, I see no glaring irregularity in my orders of 31 August 2021 such as want of consideration of fraud for example.  This was not a case where the Court was asked to invoke its powers under Order 12 Rule 38 of the NCR.  Rather, I invoked my powers under Order 10 Rule 9A(15)(1) and (2) of the NCR as well as my inherent jurisdiction in controlling proceedings before me.  I was asked to summarily determine the matter based on want of compliance with earlier Court Order directions and attendances by the respondent.

15.	For these reasons, the respondents’ arguments on fraud are refused.

ISSUES

16.	The main issues in my view are, (i), whether the respondents have provided a valid reason why judgment was entered in their absence, (ii), whether the NoM was made promptly, (iii), whether there is defence on merits, and (iv), subject to all of the above, whether the petition should be dismissed.

17.	There is a further issued I will add given the special background of the case (i.e., of how the ex parte order was obtained in the first place) which is this, whether the respondents, since the entry of the ex parte order and after the filing of the NoM, have fully complied with the said Court Directions (that had been issued that had not been complied with by them that had led to the Court to grant the ex parte order).

REASON

18.	I refer the evidence of the respondents.

19.	Mr Manda concedes that (i), the reasons for allowing the ex parte orders to be entered ex parte, (ii), failure to comply with previous orders, and (iii), failure to make court appearances, were internal administrative matters that were within the purview of his firm as lawyers for the respondents.  

20.	I note the submissions of the parties in this regard as well as in regard to this sub-heading.

21.	Having considered them, I uphold the submissions of the petitioners.  The main reason I give is this.  Failure or negligence of a lawyer cannot be a valid excuse or reason for not making Court appearances.  See cases:  Peter Dixon Donigi v. Base Resources Ltd [1992] PNGLR 110, Leo Duque v Avia Andrew Paru [1997] PNGLR 378, Tom Rangip v. Peter Loko (2009) N3714, South Pacific PNG Sea Foods Co Ltd v National Executive Council (2017) N6888 and Nelulu Land Group Inc v Rimbunan Hijau (PNG) Ltd (2018) N 7994.  The same shall apply to internal management or issues that a law firm may have.  They cannot in themselves be regarded as valid excuses.  

22.	Let me also say this.  Court issued directions including adjourned dates, are Court Orders and they must be complied with at all times.  Lawyers, as officers of the Court, must adhere to this basic fundamental obligation.  This requirement cannot be passed onto a client or a third party.  Lawyers acting for parties in court proceedings must make appearances every time their matters are called unless prior arrangements are made.  If a lawyer will not be available to appear in Court, then a brief out should follow or otherwise a consent order or some form of explanation must be provided to the Court when the Court is in session.  Such have been the practice and, in my view, must continue to remain so.

23.	In the present case, there were more than one failure by the respondents and their lawyers, in turning up for Court.  Not only that, but the respondents had also constantly failed to comply with Court issued directions going back as far as 26 February 2021.  Mr Manda had other members of his law firm who had appeared in the past who could have appeared on these various occasions to assist the Court or provide the necessary explanations if Mr Manda was incapable of appearing himself.  I note the 2 medical reports of Mr Manda which are adduced in evidence.  However, they may be termed as ‘too little too late’ or inconsequential for this purpose for the stated reasons.

24.	I find that the respondents have failed to provide a valid reason for not turning up in Court, and in so doing, in allowing the decision to be made ex-parte.

PROMPTNESS

25.	The ex parte order was made on 31 August 2022.  This was after the court was satisfied that the respondents knew of the return date but failed to appear.

26.	How should I compute time to assess whether the NoM was filed promptly?  In my view, computation of time for the present matter should apply immediately or days after the grant of the ex parte order.  I say this because the respondents knew of the return date when the ex parte order was made which in itself may be regarded as contemptuous, that is, when they failed to appear in Court on 31 August 2022.  In my view, they ought to have conducted a file search or inquired immediately after 31 August 2022.  It is not sufficient or excusable, in my view, for the respondents or any failing party for that matter, to sit back and do nothing and only respond when they are notified.  Any such continuous acts of neglect or want of appearances by counsel on mentions, direction hearings, motion hearings, or at trials, must or should be viewed unfavorably or against the party concern.

27.	In the present matter, the NoM was filed on 11 October 2022.  The delay period therefore was 1 month 11 days.  To promptly apply, in my view, means to immediately or quickly apply.  In practical terms, it should mean, the next day or two, or a couple of days later, that is, especially in a case where the failing party had been notified of the return date but failed to appear in Court at the time when orders were made.

28.	In the present matter, I find that the NoM was not filed promptly.  In so doing, I also find that the respondents failed in that regard.

DEFENCE ON MERIT

29.	The respondents’ argument on defence on merit is captured at [43] to [50] of their written submissions.

30.	I note the submissions of the parties.

31.	The respondents’ main defence may be summarized as follows:

(i)	Proceeding is time bar; and
(ii)	issue estoppel or res judicata.

32.	I note that the respondents have also made other submissions under this sub-heading that do not relate to their defence but other matters.  The submissions and arguments under this sub-heading should relate directly to the respondents’ defence to the petition and nothing else.  For this reason, I dismiss other submissions that are made that do not relate to or address their defence to the petition.

33.	As stated, the respondents raise the 2 main defence.  They concern time-bar, estoppel and or res judicata.  As also stated, I have noted the submissions of the parties on these.  However, and with respect, I note that these issues were jurisdictional in nature and were or have been determined by this Court in earlier applications that had been filed by the respondents.  I refer to the 2 unreported decisions namely, Gigira Development Corporation Ltd and Ors v Stanis Talu and Ors (2021) N9027 and Gigira Development Corporation Ltd and Ors v Stanis Talu and Ors (supra).

34.	The respondents were entitled to appeal these decisions if they were not satisfied with them.  They have not done so.  As such, I therefore fail to see the merits of their defence on these preliminary matters as alleged.

35.	The respondents also raised an argument under this sub-heading which is not a defence but which I believe I should address for clarity.  They argue that the petitioners’ lawyers have received instructions to now act for the management company Petroleum Exploration Joint Venture Ltd.  Therefore, they claim that the law firm has a conflict of interest in the matter to also act for the said company with the petitioners.  They say that given the scenario, it has now changed the perception of the case unlike it was earlier when the law firm was only acting for the petitioners in the matter.

36.	I note the submissions of the parties on this.

37.	In my view, I fail to understand this argument.  I also do not see any relevance in the argument that may sustain any defence that the respondents may have if the exparte orders were set aside.  The argument, in my view, is baseless.  The company is a legal person and may choose its legal counsel where required.  And if the petitioners do not have any issue with that, then I fail to see the argument by the respondents.  The management company’s cases or cause of actions against the respondents in earlier proceedings is still distinguishable to the petitioners’ cause of action herein.  Again, I have addressed that in my earlier ruling.  Receiving instructions by counsel for the petitioners herein, to also act for the company does not change what had been pleaded where based upon which judgment has already been entered against the respondents.  

RELIEF SEEKING DISMISSAL

38.	Relief 2 of the NoM is pleaded subject to the Court’s findings on relief 1.

39.	Relief 1 will now be dismissed.  Consequently, relief 2 becomes irrelevant but for completeness will also be dismissed.

SUMMARY

40.	The respondents’ NoM therefore shall be dismissed.

COST

41.	An order for cost is discretionary.  I will order cost to follow the event on a party/party basis to be taxed if not agreed.

ORDERS OF THE COURT

42.	I make the following orders:

(1)	The respondents’ notice of motion filed on 11 October 2022 is dismissed.

(2)	The respondents shall pay the petitioners’ costs of the application on a party/party basis to be taxed if not agreed.

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

The Court orders accordingly.

________________________________________________________________
Goodwin Bidar Nutley: Lawyers for the Petitioners
Greg Manda Lawyers: Lawyers for the Respondents