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PNG Resource Corporation Ltd (1-50062) v Papua New Guinea Customs Service [2025] PGNC 256; N11410 (11 August 2025)

N11410

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 148 of 2025

PNG RESOURCE CORPORATION LIMITED (1-50062) t/a KWIK BUILT (6-207956)
Plaintiff

AND
PAPUA NEW GUINEA CUSTOMS SERVICE
First Defendant

AND
DAVID TOWE CHIEF COMMISSIONER OF PNG CUSTOMS SERVICE
Second Defendant

WAIGANI: BERRIGAN J
7 AND 11 AUGUST 2025

INJUNCTION – application for interim injunction, restraining orders and mareva injunction – parties entered into agreement to sell and purchase land – allegation of failure by defendants to fulfil terms of the agreement – plaintiff incurring costs for developing land – plaintiff seeks relief in the form of specific performance of the MOA and damages, or specific performance of the MOA and damages on a quantum meruit basis, amongst other orders

INJUNCTION– whether there is a serious question to be tried and whether damages would be an adequate remedy – whether the balance of convenience lies in maintaining the status quo - consideration of - Plaintiff has failed to establish that damages would be an inadequate remedy if the injunction is not granted and the Plaintiff suffers loss as a result - freezing of the First Defendant’s bank account would seriously interfere with the First and Second Defendants ability to perform their mandated roles and responsibilities on behalf of the State – application refused

Cases cited

Chief Collector of Taxes v. Bougainville Copper Limited [2007] SC 853
Innovest Ltd v Cakara Alam (PNG) Ltd (2017) N6668
PAC LNG International Ltd v. SPI (208) Ltd (2014) N5681
Airlines of PNG v. Air Niugini Ltd (2010) N4047
PNG Deep Sea Fishing Ltd v. Luke Critten (2010) SC1126
Ramu Nico Management (MCC) Ltd v. Tarsie (2010) SC1075
Osi v Sungi (2017) N7180
Paul Paraka v. Eastern Highlands Provincial Government (2005) SC809.

Counsel

G Manda with A Manda for the plaintiff
C Korus with E Sipison for the first and second defendants

DECISION ON MOTION

1. BERRIGAN J: This a decision on a contested application for interim injunction, restraining orders and mareva injunction.
   

Background

2. There does not seem to be any dispute that the parties entered into a memorandum of agreement (MOA) on 25 October 2020 under which the Plaintiff agreed to sell, and the First Defendant agreed to purchase, land titles for 100 allotments located at Milinch Granvile, Four Mile, Port Moresby, NCD, for K30m, for the development of housing for its staff, under which K3m was payable as deposit and the balance of K27m was payable over a period of five years. The Plaintiff claims that the First Defendant breached the MOA by failing to pay the 10% deposit required upon execution of the MOA and that the Second Defendant contributed to the breach by failing to ensure payment of the 10% deposit. The Plaintiff incurred costs between 25 October 2020 and July 2023 to undertake planning, surveying, subdivision and other work to bring utilities to the land. K10m was allocated for the purpose of the MOA and has not been paid. The Plaintiff seeks relief in the form of specific performance of the MOA and damages to a total of K38.5m, or specific performance of the MOA and damages on a quantum meruit basis, amongst other orders.
   
3. It is the Defendants’ case that the MOA was in breach of the Public Finance Management Act and the National Procurement Act and is therefore null and void applying Fly River Provincial Government v Pioneer Health Services Ltd (2003) SC705.
   

Application

4. Pursuant to its notice of motion filed 7 May 2025, the Plaintiff seeks: to restrain the Defendants and others from withdrawing or dealing with the sum of K10m deposited into the bank account of the First Defendant held with the Bank of Papua New Guinea or any other bank account; to freeze the bank accounts of the First and Second Defendants; and other orders, including orders that the Defendants provide details as to the whereabouts of the K10m allegedly deposited, a list of all assets owned, bought or sold, and a list of all loans offered or given since 4 July 2023 by the Defendants, together with orders restraining the Defendants from informing any person of the proceedings or any orders made.
   
5. A Mareva injunction is also sought restraining the defendants from removing from the jurisdiction or otherwise dealing with any of their respective or joint assets within the jurisdiction, including but not limited to monies held in their personal bank accounts.
   

Consideration

6. The law on interlocutory injunctions is well settled:
   

“[T]he grant of an injunctive relief is an equitable remedy and it is a discretionary matter. The authorities also agree that before there can be a grant of such a relief, the Court must be satisfied that there is a serious question to be determined on the substantive proceedings. This is to ensure that such a relief is granted only in cases where the Court is satisfied that there is a serious question of law or fact raised in the substantive claim. The authorities also agree that the balance of convenience must favour a grant or continuity of such a relief to maintain the status quo. Further, the authorities agree that, if damages could adequately compensate the applicant then an injunctive order should not be granted”: per Kandakasi J in Golobadana No 35 v Bank of South Pacific Limited, approved Chief Collector of Taxes v. Bougainville Copper Limited [2007] SC 853; applying American Cyanamid Company v. Ethicon Limited [1975] UKHL 1; (1975) AC 396 and the cases applying including Craftworks Nuigini Pty Ltd v. Allan Mott (1997) SC 525.

7. Adopting the approach of Hartshorn J in Innovest Ltd v Cakara Alam (PNG) Ltd (2017) N6668; PAC LNG International Ltd v. SPI (208) Ltd (2014) N5681, I will presume for present purposes only that the Plaintiff has established that it has a serious question to be tried. This is not in any way to be taken that I have formed a view either way on the issue. On the presumption that the Plaintiff has a serious question to be tried, the next consideration is whether it would be adequately compensated in damages.
   
8. If damages would be an adequate remedy then even if there is a serious question to be tried interlocutory injunctive relief should be refused: Airlines of PNG v. Air Niugini Ltd (2010) N4047 at 22 and 23 and PNG Deep Sea Fishing Ltd v. Luke Critten (2010) SC1126 at 30, PAC v. SPI (supra) [24], Ramu Nico Management (MCC) Ltd v. Tarsie (2010) SC1075 [53]; .
   
9. The Plaintiff submits that an award of damages is not an adequate remedy. The MOA will end on 25 October 2025. The Plaintiff has already commenced work with the intention of implementing the Custom House Ownership Scheme and has lost business opportunities and will continue to do so in the event that the First Defendant takes a long time to finalise their policy framework or get NEC approval. Damages will not adequately compensate the Plaintiff for the cost, commitment and potential loss of business. The loss of business opportunities will continue and that itself is irreparable harm.
   
10. In addition, Mr Manda submits that his client does not want damages. It is not fair, nor in the interests of justice nor public policy for the MOA not to go ahead. It is intended under an earlier memorandum of understanding that the Plaintiff will also construct buildings on the property as part of the housing scheme. The Plaintiff is the only locally owned developer participating in the housing scheme. It does not provide a good example to other State institutions. It is in the interests of both parties for the scheme to go ahead.
    
11. The Defendants submit that there is no threat of the Defendants fleeing the jurisdiction or avoiding any duty to rectify or pay damages or loss that the Plaintiff may suffer between now and the conclusion of the substantive matter. The First Defendant is a public entity mandated with roles and functions, including to raise State revenue and protect boarders, which are essential to the overall wellbeing of the population. The proposed orders will severely affect the First Defendant’s core functions.
    
12. I find that the Plaintiff has failed to establish that damages would be an inadequate remedy if the injunction is not granted and the Plaintiff suffers loss as a result.
    
13. As stated by Lord Diplock in American Cyanamid at 408, when determining whether damages would be an adequate remedy, per:
    

“[t]he court should go on to consider whether, if the plaintiff were to succeed at the trial in establishing his right to a permanent injunction, he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendant’s continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If damages....would be an adequate remedy and the defendant would be in a financial position to pay them, no interim injunction should normally be granted, however strong the claimant’s claim appeared to be at that stage.”

14. The purpose of the injunction is to freeze bank accounts and/or certain monies so that funds are available to perform the MOA through payment of the balance owing and meet the damages claimed in the event that the substantive claim is successful. It follows that damages would be an adequate remedy for any loss suffered between now and then. Those damages would also be quantifiable. In addition, the first Defendant is an instrumentality of the State, which is capable of paying damages.
    
15. As for the submission that the Plaintiff is not interested in damages, if the purpose of the injunction is not to secure the funds for the purpose of meeting the MOA and any damages in the event that the Plaintiff is successful then what is it for? It can only be to incentivize the Defendants to perform the MOA which is clearly not a proper purpose. Arguably the application could be dismissed as an abuse of process on that basis alone.
    
16. Putting that aside, there can be no doubt that the balance of convenience lies with maintaining the status quo.
    
17. In Osi v Sungi (2017) N7180 at 18 and 19 Hartshorn J recalled the following statement of Hoffman J in Films Rover International Ltd v. Canon Films Sales Ltd [1987] 1 WLR 670 at 680:
    

“The principal dilemma about grant of interlocutory injunctions, whether prohibitory or mandatory, is that there is by definition a risk that the Court may make the ‘wrong’ decision, in the sense of granting an injunction to a party who fails to establish his right at the trial (or would fail if there was a trial) or alternatively, in failing to grant an injunction to a party who succeeds (or would succeed) at trial. A fundamental principle is therefore that the Court should take whichever course appears to carry the lower risk of injustice if it turns out to have been ‘wrong’ in the sense I have described.”

The principle contained within this passage has been affirmed in Yama Group of Companies Ltd v. PNG Power Ltd (2005) N2831, Canopus No.16 Ltd v. Mausi Trust Co (2008) N3401, Talisman Energy Niugini Ltd v. Bismark Maritime Ltd (2015) N6800 and Mobil Oil New Guinea Ltd v. Yakainga Business Group (Inc) (2014) N6661.”

18. I am satisfied that the freezing of the First Defendant’s bank account or even K10m within it would seriously interfere with the First and Second Defendants ability to perform their mandated roles and responsibilities on behalf of the State. Similarly, the prejudice caused to the Second Defendant and his dependents by the freezing of his personal bank would be severe.
    
19. Furthermore, the Plaintiff has failed to demonstrate what prejudice it would suffer which cannot be adequately met by damages.
    
20. For similar reasons, the Plaintiff’s submission that the injunction should be granted out of fairness or public policy is vague and misconceived. It appears to assume that not only is the Plaintiff entitled to performance of the MOA which it seeks to enforce in these proceedings but also to participate in the building of houses under a scheme which on its own submission is yet to be finalised. Moreover, it is clearly contrary to public policy, at least in general terms, to freeze the bank account of a State entity for the purpose of securing a court judgment when it has the ability to meet such an order.
    
21. In summary, even assuming the Plaintiff has a serious question to be tried, I am not satisfied that damages would not be an adequate remedy or that the balance of convenience favours the relief being granted.
    
22. For similar reasons the Plaintiff has failed to show that there are grounds for believing that there is a risk that the funds will be removed from the jurisdiction or dissipated before judgement such that the Defendants will be unable to meet any order for damages made if a Mareva injunction is not granted: see Paul Paraka v. Eastern Highlands Provincial Government (2005) SC809 for the principles applying.
    
23. Even assuming on the Plaintiff’s case that K10m was allocated to the First Defendant for the MOA and has since been redirected for other purposes, matters which are disputed by the Defendants, I am satisfied that the First Defendant will be able to meet any damages ordered in the event the Plaintiff is successful.
    
24. Accordingly, the application is refused.
    

ORDERS:

1. The relief sought in the notice of motion filed 7 May 2025 is refused.
2. The Plaintiff shall pay the First and Second Defendants’ costs of and incidental to the said notice of motion on a party party basis to be taxed if not agreed.
3. Time is abridged.

_____________________________________________________________
Lawyers for the plaintiff: Greg Manda Lawyers
Lawyer for the first and second defendants: PNG Customs Services in House Counsel