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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
OS No 04 OF 2022 (IECMS)
BETWEEN:
JONATHAN PARAIA as Chairman of PORGERA GOLD MINES LTD
First Plaintiff
AND:
PELLU PUNDI in his capacity as Director of PORGERA GOLD MINES LTD
Second Plaintiff
AND:
KURUBU IPARA in his capacity as Director of PORGERA GOLD MINES LTD representing Porgera Local-Level Government Special Purposes
Authority
Third Plaintiff
AND:
AKEN PULUKU as purported Director of PORGERA GOLD MINES LTD representing Porgera Local-Level Government Special Purposes Authority
First Defendant
AND:
HENRY LARA in his capacity as Director of PORGERA GOLD MINES LIMITED
Second Defendant
AND:
SOLE TARO in his capacity as Director of PORGERA GOLD MINES LIMITED
Third Defendant
AND:
TABE JUGARI in his capacity as Company Secretary of PORGERA GOLD MINES LIMITED
Fourth Defendant
AND:
INVESTMENT PROMOTION AUTHORITY
Fifth Defendant
Waigani: Wurr AJ
2022: 4th November
COMPANY LAW - Practice and procedure – application seeking certain declaratory orders – to validate and or invalidate purported board meetings held by different factions claiming to be directors of the same company – directors claim to pass conflicting resolutions without required quorum – resolutions passed in compliance to earlier consent order -no nominee director of the Authority on the board of PGML - any decision purportedly made by purported Board of PGML since 05 February 2021 until present is also invalid for the reason that there is no nominee director of the Authority on the board of PGML - the PGML board, like the Authority, is void of quorum and fuctus officio pending the outcome of supreme court appeal- appointment made on 22 January 2022, is null and void -relief sought by the plaintiffs as pleaded in Terms 1 to 6 and Term 12 of their Originating Summons is refused
Facts
This is a trial seeking certain declaratory Orders to validate and or invalidate two different purported board meetings held by
two different factions who claim to be Directors of the Board of Porgera Gold Mine Limited and who claim to have the quorum required
to pass various conflicting resolutions in purported compliance of a Consent Order made in a separate earlier proceeding.
Held:
Counsel:
J. Haiara, for the First Plaintiff
P. Harry, for the Second and Third Plaintiffs
J. Nandape, for the First, Second, Third and Fourth Defendants
JUDGMENT
04th November, 2022
1. WURR AJ: The plaintiffs by way of an Originating Summons filed 19 January 2022, seek the following reliefs captured in terms 1 to 6 and 12 of their Originating Summons:
and as such Aken Puluku's purported appointment was unlawful, null and void, and of no legal effect.
EVIDENCE
2. All Plaintiffs rely on the evidence adduced through the Second and Third Plaintiffs as per their Amended Notice to Rely on Affidavit filed 15 September 2022. These evidence are marked as Exhibit P1 through to Exhibit P14, and they are:
3. The Defendants rely on:
PRELIMINARY ISSUES
4. I will firstly address two (2) preliminary issues which were brought to my attention during trial and submissions.
5. The plaintiffs argue that Warakos Ondalane gave two contradictory evidences at this trial hence he is not a witness of truth and his evidence should be disregarded. The defendants argue that he is a witness of truth, and that Exhibit P7 which is an affidavit purportedly deposed to by Warakos Ondalane and relied on by the plaintiffs, is a fraudulent affidavit because he denies signing it. His denial of Exhibit P7 is contained in his evidence, Exhibit D4.
6. It is now a question of whom to believe. For the plaintiffs, Junior Yawale of Haiara Lawyers testifies in Exhibits P10 and P11 that Warakos Ondalane did sign Exhibit P7. His evidence is that he met Warakos Ondalane and his brother John Ondalane at Grand Papua Hotel where he read and explained the contents of the affidavit to him before he signed that affidavit in his, and John Ondalane’s presence. Lawyer Paul Harry’s evidence in Exhibit P13 is that he drafted Warakos Ondalane’s affidavit upon receiving instructions and emailed the draft to John Ondalane with specific instructions to show it to Warakos Ondalane and to explain the content of the affidavit to him. John Ondalane’s evidence in Exhibit P12 is that he did show the draft affidavit to Warakos Ondalane and he was happy with it, and so signed this affidavit at Grand Papua Hotel. John Ondalane’s affidavit is that Warakos Ondalane signed the affidavit, Exhibit P7, after the content of the Affidavit was explained to him by lawyer Junior Yawale; and that he witnessed it. In the absence of any expert evidence, such as forensics to confirm the signature appearing in Exhibit P7, I will have to decide on the evidence as it is. The plaintiffs’ evidence is corroborated whereas Warakos Ondalane’s evidence is not. Because the plaintiffs’ evidence is corroborated, I accept their evidence and filed that Warakos Ondalane did depose to both affidavits- Exhibits P7 and D4. He is not a truthful witness, and therefore I will not give any consideration to his evidence.
ii. Whether the Court can accept into evidence and or take judicial notice of the Order and Judgement made in the matter styled as OS 127 of 2021(IECMS-CC3); John Ondalane & Fredrick Ipara v Thompson Kulara & Others in the manner it was presented before the Court?
7. The Order and Judgment in the matter styled as OS 127 of 2021 (IECMS- CC3); John Ondalane & Frederick Ipara -v- Thompson Kulara & Others were simply attached to the First Plaintiff’s written submissions and handed up to Court by Mr Haiara after evidence was already closed. The defendants were ambushed hence Ms Nandape aggressively argued that the Court should disregard those documents as they were not properly before the Court; meaning they were not attached to an affidavit; and second evidence was already closed and no leave was sought to adduce these documents into evidence.
8. Mr Haiara on the other hand argued that all parties were aware of the existence of the Court Order and Judgment as they were all parties in that related proceeding. Furthermore Mr Haiara argued that pursuant to Order 12 Rule 9 of the National Court Rules, the Court should take judicial notice of these Orders.
9. I did not make any ruling on that issue at the time as I needed time to consider it. I will deal with it now.
10. The plaintiffs were aware of the existence of the Order and Judgment in OS 127 of 2021. However, they have failed to properly bring them before this Court by way of an Affidavit as is required under the Evidence Act. Order 12 Rule 9 of the National Court Rules provides that in any proceedings the Court may take judicial notice of any order of the Court in the proceedings. When subsection 1 is read together with subsection 2, Order 12 Rule 9 implies that the Court can take judicial notice of an Order (s) made in that proceeding. The provision does not apply to Orders or Judgements made in proceedings other than the one currently before the Court. Therefore if a party is to refer to and rely on an Order and or Judgment made in another proceeding, such evidence must properly come before the trial court by way of an affidavit.
11. That was not done, in this case. It was instead attached to the first plaintiff’s written submissions, and handed up in Court, disguised to be part of the submissions until reference was made to these documents during submissions.
12. I therefore cannot accept the Order and Judgment made in OS 127 of 2021. The plaintiffs had the option to apply to the Court under Order 10 Rule 13 of the National Court Rules to re-open the case and adduce fresh evidence. They failed to take that option. I therefore have not considered the judgment and the order in this decision.
13. In the event this Court’s findings and orders, contradict the one made in OS 127 of 2021, it would be best for the aggrieved party to appeal my decision to the Supreme Court, and allow the Supreme Court to make a proper determination.
FINDINGS OF FACT
14. Based on the evidence, and in light of the various Court Orders made in various other related proceedings and the Kupiane Agreements executed in December 2014, this Court will begin with making findings of fact before addressing the issue on whether or not this Court should grant all the reliefs as sought in Terms 1 to 6 and 12 of the plaintiffs’ Originating Summons.
15. Porgera Gold Mines Limited (PGML) is the landowner’s equity company. Its shareholders consist of 25 clans, which were changed from individual clans to parent/holding entities, thereby allowing PGML to be held indirectly by the landowners in this structure:
i. Kupiane Holdings Ltd (KHL) – 52.6% shares
16. Per Clause 6.2 of the Shareholder Agreement, PGML is to have six (6) directors comprising of three (3) directors appointed by KHL, (2) directors appointed by KGRL and one (1) director appointed by the Authority.
17. Per Clause 7.3 (a) of the Shareholders Agreement, the minimum required to constitute a Quorum of the Board of PGML is 4:
a. 2 Directors from KHL
18. This Clause is of particular importance. My interpretation of this clause is that if there is no attendance by a director nominee of PDA at a Board meeting of PGML, then the Board will automatically lack the quorum to have any Board meetings. Likewise, if a nominee director of KGRL is absent, then there will be no quorum to have any Board meeting. Same if there is only one director nominee of KHL in attendance or none in attendance; the Board will still lack quorum. It is therefore crucial that for any Board meeting of PGML to be valid and properly constituted, there must be 2 Directors from KHL, 1 Director from KGRL, and 1 Director from the Authority.
19. Another important Clause that parties have referred to is Clause 6.6 of the Shareholders Agreement, which is read together with Clause 6.2 of the same Agreement. My reading of Clause 6.6 and 6.2 is that the Chairman of KHL by virtue of these provisions, particularly 6.6, automatically becomes the Chairman of PGML. The Chairman of KHL must of course be a nominee director from KHL, and as long as he is a nominee director of KHL, and chairman of KHL Board, he automatically becomes the Chairman of the Board of PGML. Until and unless that clause is amended, this remains to be the correct interpretation. However as to whether or not this provision has been followed and given effect to by the PGML Board since 2014 is another matter.
20. Section 4 of the Constitution of the Authority provides for the membership of the Authority who form the management committee or the Board of the Authority. The terms Management Committee and Board are used interchangeably here but mean the same. The management committee consists of 11 members, namely;
a. 2 persons each appointed by the Porgera and Palela Hewa Rural Local-Level Government
b. 2 representatives of the Special Mining Lease Landowners Association nominated by that Association
c. 2 persons appointed by the Special Mining Lease Landowners Association because of their professional skills that may be required to assist the Management Authority to carry out its functions
d. Porgera District Administrator
e. 1 person appointed by the Porgera Joint venture
f.1 person appointed by the National Department of Finance
21. Section 10 (3)provides that at a meeting of the Authority, six (6) members shall be a quorum. The provision further provides that the Chairperson or in his absence the Deputy Chairperson shall preside over the meeting, and in their absence the members present shall appoint a Chairperson from among their own number and subject to the Constitution, matters arising shall be decided by a majority of votes of the members present and voting. The Authority shall cause minutes of its meeting to be recorded and kept.
22. Section 10 (1) provides that the Authority must hold meetings at such times and at such places within the Porgera District as the Chairperson or in his absence the Deputy Chairperson determines.
23. In order to understand what this Court is actually dealing with, I think it is important that I take a step back and put things into perspective. I begin with the decision made by the Authority headed by Thompson Kulara on 09 April 2020. The Authority decided at that time to terminate Kurubu Ipara and appoint Aken Puluku as its representative to PGML, Kupiane Investments Ltd (KIL) and Paiam Accommodation and Development Company Ltd (PADC). Mr Ipara was not informed of his termination until six (6) months later on 21 October 2020, contrary to s 137 (2) (b) of the Companies Act which stipulates that any change in the directorship of a company must be submitted to the Registrar of Companies for registration within one month. On 07 December 2020, Mr Ipara challenged his termination in the proceeding OS No 190 of 2020; Kurubu Ipara v Thompson Kulara, Moses Peara, David Mapuli and Anako Aiyala as purported members of Porgera Special Purpose Auhtorit, George Poio as Porgera District Administraator and ex-officio member of Porgera Special Purpose Authority, Grayson Apakali as purported Acting General Manager of Porgera Special Purpose Authority & Aken Puluku.
24. On 05 February 2021, this matter was finalized with the endorsement of a Consent Order which was in the following terms:
25. In an attempt to comply with Term 5 of this Order, a purported meeting of the Board of the Authority was convened on 11 February 2021. In that meeting the plaintiffs claim that the Board resolved to appoint Mr Kurubu Ipara and revoked the appointment of Aken Puluku. The evidence of the purported meeting resolution begins with “ We hereby certify that the resolutions set out below are a true extract of the resolutions of the Special Management Committee meeting held on 11 February 2021 at the Administrative Office Building of the Porgera Development Authority, at Porgera, Enga Province” . It then sets out the five (5) Resolutions reached. It is then signed off by John Ondalane as Chairman and Fredrick Ipara as Deputy Chairman and affixed with the Authority’s seal. There is no evidence of the composition of the quorum who sat to pass these resolutions. The required quorum is six member, however it seems only John Ondalane and Frederick Ipara attended that meeting as per the evidence.
26. The Defendants argue that because the Court made a declaration that the term of the four (4) LLG nominees to the Board had expired, the two (2) LLG’s met and re-appointed their four (4) nominees. After the new Board members were sworn in, the new Board held their first meeting on 18 June 2021 and confirmed their decision of 09 April 2020. Kurubu Ipara was terminated and Aken Puluku was appointed. The evidence of the purported board resolution is contained in Aken Puluku’s evidence, exhibit D2, annexure AP8. It is a one - page document and begins with “ On Friday 18 June 2021, the Management Committee/Board of the Porgera Development Authority (PDA) met at the Heritage Café Conference Room at Gordons, NCD.” It was signed off by Thompson Kulara as Chairman and affixed with the Authority’s seal. As with the plaintiff’s evidence, there is no evidence of the composition of the quorum. From the evidence it seems to me that only Thomas Kulara sat in that Board meeting. He lacked the authority to pass any resolution. Furthermore, the purported meeting was conducted outside of Porgera District, which is in direct contravention of section 10 (1) of the Constitution. Based on those two grounds, I find that there was no valid meeting of the Management Committee of the Authority on that date.
27. Another reason why the purported Board meeting on 18 June 2021 is not valid is because of the Order made by the Deputy Chief Justice His Honour Justice Kandakasi in the proceeding styled as OS(JR) 152 of 2021. This was a case that was mounted to challenge the Minister’s endorsement of purported appointments made by the relevant appointing authorities which appointed various representatives to be members of the Board of the Authority. The endorsements were made by the Minister on 11 June 2021, and those members constituted the Board meeting held on 18 June 2021, which resolved to confirm Aken Puluku as the nominee director to PGML for the Authority. The Court, in quashing the various appointments and reverting the matter back to the appointing authorities, also made an order that any subsequent decision (s) made by the Fourth, Fifth, Sixth and Seventh Defendants as purported members of the Authority were null and void.
28. Both parties concede that the term “subsequent” in the order means following an event or after an event. The plaintiffs argue that the event date is 11 June 2021, which is the date of endorsement of the LLG nominees by the Minister which was declared a nullity. On the other hand, the defendants argue that the event date is 29 November 2021, which is the date of the Order, which means all subsequent decision (s) made by the Fourth, Fifth, Sixth and Seventh Defendants after 29 November 2021 are null and void.
29. I disagree with the defendants on this point. Term 9 of the Order must be read in the context of the whole Order, which in effect nullified the appointments of the fourth, fifth, sixth and seventh defendants made on 11 June 2021. And as such all decisions made subsequent to their unlawful appointments on 11 June 2021, were declared by the court to be null and void. This includes the decision that was made on 18 June 2021 which saw the appointment of Aken Puluku. On this basis, I reject the defendant’s argument that the purported decision of the purported Board made on 21 June 2021 was valid.
30. The Orders of 29 November 2021 in OS (JR) 152 of 2021 are now subject of an appeal and yet to be determined by the Supreme Court.
WHAT IS THE EFFECT OF THESE FINDINGS?
31. In light of these findings, I find that Term 5 of the Consent Court Order made on 05 February 2021 in OS 190 of 2020, is yet to be complied with by the Board of the Authority. This means Kurubu Ipara and Aken Puluku’s appointment as directors are yet to be determined by the Authority, pending which the decision of 09 April 2020 remains stayed as per Term 4 of the Consent Order in OS 190 of 2020. This means, the Authority does not have a nominee director to the PGML Board to date.
32. Per terms 1 & 2 of the Consent Order, Messers Thompson Kulara and Moses Peara were lawfully in office from 05 February 2018 to 5 February 2021 – term of 3 years. Messers David Mapuli and Anako Aiyala were also lawfully in office until 05 February 2021 when their term expired.
33. As such all decisions or resolutions, made or passed during their term in office, were valid for all intents and purposes. This includes the Authority’s decision of 09 April 2020, which removed Mr Ipara and appointed Mr Aken Puluku. This reasoning is sound in law as it is also in line with Section 136 of the Companies Act 1997 which stipulates that the acts of a person as a director are valid even though the person’s appointment was defective; or the person is not qualified for appointment.
34. Term 4 of the Consent Order recognized the validity of that decision but stayed it and referred the matter back to the Board/Management Committee of the Authority to confirm its decision of 09 April 2020. Hence, although the decision of 09 April 2020 was valid for all intents and purposes, it was superseded by the Consent Court Order of 05 February 2021.
35. Events have now overtaken. At present, the board of the Authority cannot function because the proper membership/composition of the board is subject of an Appeal before the Supreme Court. As such, there cannot be a nominee director to the Board of PGML , and there is no nominee director to the Board of PGML at present.
36. As such, the Board/Management Committee of the Authority is fuctus officio at this time, as the membership of the authority is currently in dispute and before the Supreme Court, in SCA No 65 of 2021 for determination.
37. The Court in OS No. 190 of 2020, by consent made certain orders however it did not invalidate the decision of the Authority made on 09 April 2020. This means that the decision made by the Board on 09 April 2020 terminating Kurubu Ipara and appointing Aken Puluku, was valid, which means Aken Puluku was the nominee director of the Authority from 09 April 2020 until 05 February 2021 when the Court stayed the decision of 09 April 2020.
38. However, since 05 February 2021 until present, pending the outcome of SCA 65 of 2021, there is no nominee director of the Authority. As such, any decision made by the Authority and/or PGML for that matter, wherein Aken Puluku was a part of between 09 April 2020 and 05 February 2021 is valid, as long as there was a proper quorum.
39. But since 05 February 2021 until present, there is no nominee director of the Authority on the board of PGML. As such, any decision purportedly made by the purported Board of PGML since 05 February 2021 until present, is also invalid for the reason that there is no nominee director of the Authority on the board of PGML .
40. Without a nominee director from the Authority, the Board of PGML lacks the quorum to conduct any board meetings. PGML Board does not have the quorum to decide on any matters and pass any resolutions, until a nominee director is appointed to the Board of PGML, which will most likely take place after the Supreme Court makes a determination on SCA 65 of 2021.
41. In the meantime, the PGML board, like the Authority, is void of quorum and fuctus officio pending the outcome of SCA 65 of 2021. This means Tabe Jugari and Nixon Mangape’s appointment made on 22 January 2022, is null and void.
42. Based on the forgoing, I decline to grant the reliefs as sought by the plaintiffs in the manner they are pleaded in Terms 1 to 6 and Term 12 of their Originating Summons.
43. Formal Orders are:
a. All reliefs as sought by the plaintiffs in their originating summons filed 19 January 2022, are refused.
b. Cost shall follow the event.
c. File is closed.
________________________________________________________________
Haiara’s Legal Practice: Lawyers for the First Plaintiff
P. Harry: Lawyer for the Second and Third Plaintiffs
Nandape & Associates: Lawyers for the First, Second, Third and Fourth Defendants
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URL: http://www.paclii.org/pg/cases/PGNC/2022/576.html