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KBM Ltd v Mili [2025] PGNC 518; N11663 (8 December 2025)

N11663

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

OS NO. 207 OF 2025 (IECMS)
BETWEEN:
KBM LIMITED
Plaintiff

AND
SANNY MILI
Defendant

WAIGANI: WIMALASENA J
08 DECEMBER 2025

APPLICATION FOR INTERIM INJUNCTIONS – Prospects of success – Competency of proceedings – Abuse of process – Misconception of causes of action – Locus standi – Deceased shareholder – Unlawful transfer of shares – Defective appointment of director – Section 136 of Companies Act – Interim injunction refused – Proceedings dismissed.

Cases cited

Mainland Holdings Ltd v Paul Stobbs [2003] PGNC 10
Golobadana No 35 Ltd v Bank of South Pacific Ltd [2002] PGNC 36
American Cyanamid Company v Ethicon [1975] UKHL 1
Chief Collector of Taxes v Bougainville Copper Ltd (2007) PGSC 1
Komet v Komet [2018] PGNC 328 ; N7407
Mani Naka Investment Ltd [2025] PGNC 250
Radio Taxis Ltd v John Wano & Ors [2018] PGSC 98; SC1768
Ramu Nico Management (MCC) Ltd v Ane [2025] PGNC 22; N11150
Paul v Kispe [2001] PGNC 132; N2085
Siaman Riri & Anor v. Simon Nusen & Ors (1995) N1375

Counsel

Mr J. Samuel, for the plaintiff
Mr A. Steven, for the defendant

RULING

1. WIMALSENA J: This is an application for restraining orders sought by the Plaintiff by way of a Notice of Motion filed on 22 October 2025. The Plaintiff also sought dispensation with the requirement under Order 4 Rule 42 of the National Court Rules, which requires the Notice of Motion and supporting affidavit to be served within three clear days prior to the date of hearing. Accordingly, on 6 November 2025, the Court granted leave and made interim ex parte restraining orders as sought by the Plaintiff.
   
2. The Plaintiff sought the following interim restraining orders:
   

(1) Pursuant to Order 1 rule 7 and Order 4 Rule 49 (20) of the National Court Rules ("NCR"), leave be granted to dispense with the requirement of Order 4 Rule 42 of the NCR requiring the Plaintiff to serve this Notice of Motion and supporting affidavit within three (3) clear days prior to the date of its hearing and this application be heard forthwith.

(2) Pursuant to section 12 (1) of the Laws Adoption and Adaptation Act and Order 14 rule 10 (1) of the NCR, the Defendant, its servants, agents and associates be restrained from using, selling and/or disposing the following vehicles, firearm and property pending the determination of the proceeding:

(a) Toyota Land Cruiser Ten (10) Seater white in colour with registration plate EAH 184.

(b) Toyota Land Cruiser Blue in colour with registration plate EAL 070.

(c) Isuzu NPS Cargo Truck white in colour with registration plate EAL 693.

(d) Toyota Coaster Bus (25) Seater white in colour with registration plate P0110L.

(e) Toyota Land Cruiser Ten (10) Seater Blue in colour with registration plate IAD 371.

(f) the firearm described as Winchester Shot Gun 12 Gauge Single Shot registered under late Mili Rex Kiage

(g) Section 26 Allotment 10, Goroka, Eastern Highlands Province.

(3) Consequently, an order pursuant to Order 14 rule 10 (1) & (2) of the NCR authorizing the Goroka Town Police or any member of the Police within Eastern Highlands Province to get possession of the vehicles, firearm and title referred to in relief (2) above and detain them in the Plaintiff's workshop or any other locations as the Court deems fit for their safe keep.

(4) Pursuant to section 12 (1) of the Laws Adoption and Adaption Act and the inherent powers of the Court, the Defendant, its servants, agents and associates be restrained from supplying food rations to Bundaira Prison Camp (Kainantu) and Bihute Prison Camp (Goroka), Eastern Highlands Province pending the determination of this proceeding.

(5) Any such further or other orders as the court may order.

3. The Defendant appeared in Court and, on 17 November 2025, filed an affidavit in response. In addition to opposing the grant of interim restraining orders, the Defendant raised a preliminary issue concerning the competency of the proceedings. The parties subsequently filed written submissions, and on 8 December 2025, when the matter was taken up for hearing, they informed the Court that they would rely on their written submissions and the supporting affidavits.
   
4. I have considered the affidavits filed by Raymond Mili on 22 October 2025 and 19 November 2025, as well as the affidavit filed by the Defendant on 17 November 2025, together with the written submissions filed by the parties. The Plaintiff responded to the objections regarding competency by filing amended written submissions on 28 November 2025 and further amended written submissions on 08 December 2025. The parties agreed for the Court to deal with the issue of competency together with the application for interim restraining orders.
   
5. At this juncture, it is pertinent to note the substantive claims of the Plaintiff as set out in the Originating summons filed on 22 October 2025, to add context to the matter. The plaintiff claims:
   1. A declaration that the Plaintiff is the registered owner of the following vehicles:
      • (a) Toyota Land Cruiser ten-seater white in colour with registration plate EAH 184.
      • (b) Toyota Land Cruiser Blue in colour with registration plate EAL 070.
      • (c) Isuzu NPS Cargo Truck white in colour with registration plate EAL 693.
      • (d) Toyota Coaster Bus 25-seater bus 25-seater white in colour with registration plate P0110L.
      • (e) Toyota Land Cruiser ten-seater Blue in colour with registration plate IAD 371.
   2. A declaration that the firearm described as Winchester Shot Gun 12-gauge Single Shot registered under late Mili Rex Kiage is intended for protection of the Plaintiff’s business operations.
   3. A declaration that the Plaintiff is the registered proprietor of the property described as Section 26 Allotment 10, Goroka, Eastern Highlands Province.
   4. A declaration that the Defendant is in unlawful possession of the:
      • (a) Vehicles described in relief (1) above;
      • (b) The firearm described in relief (2) above; and
      • (c) Certificate of the property described in relief (3) above.
   5. Consequently, the Court grant the following orders;
      • (a) An order directing the Defendant to release to the Plaintiff the peaceful possession of the vehicles described in relief (1), the firearm described in relief (2) and the title of the property described in relief (3) above within (3) days from the date of this order.
      • (b) Alternatively, the Goroka Town Police Station Commander with its police officers and the Provincial Police Commander of Eastern Highlands Province are directed to take peaceful possession of the vehicles described in relief (1), the firearm described in relief (2) and the title of the property described in relief (3) above within [3] days from the date of this order.
      • (c) An order directing the Motor Vehicle Insurance Ltd to transfer to the Plaintiff the ownership of the vehicles described in relief (1), if the vehicles ownership were transferred to the Defendant without the Plaintiff’s knowledge.
   6. A permanent restraining order be granted restraining the Defendant, its servants, agents, and associates from:
      • (a) Getting possession, disturbing and interfering with any vehicles, properties, firearms and any or all assets owned by the Plaintiff.
      • (b) Using the Plaintiff’s contract to supply food rations to Bundaira Prison Camp (Kainantu) and Bihute Prison Camp (Goroka), Easetrn Highlands Province.
   7. Any such further or other orders as the court may order.
      
6. At the very outset, it must be noted that interim injunction is a relief of equity, and it is important that he who seeks equity must come with clean hands; See Mainland Holdings Ltd v Paul Stobbs [2003] PGNC 10 (Injia DCJ). Also, a party that seeks an injunctive relief must make full disclosure of all relevant matters; see Golobadana No 35 Ltd v Bank of South Pacific Ltd [2002] PGNC 36 (Kandakasi DCJ). The principles governing the grant of interim restraining orders are well settled. In determining whether to grant such relief, the Court must consider the following factors: see American Cyanamid Company v Ethicon [1975] UKHL 1; Chief Collector of Taxes v Bougainville Copper Ltd (2007) PGSC 1.
   

(a) are there serious questions to be tried and does an arguable case exist?

(b) has an undertaking as to damages been given?

(c) would damages be an inadequate remedy if the interim order is not made?

(d) does the balance of convenience favour the granting of interim relief?

(e) do the interests of justice require that the interim injunction be granted?

7. I will first consider whether there is a serious question to be tried and the prospects of success of the Plaintiffs’ substantive claim. The supporting affidavit of Raymond Mili, filed on behalf of the Plaintiff company, states that he is the sole director and a shareholder of the Plaintiff company. It further states that, by Board Resolution No. 10122025 dated 25 August 2025, the Plaintiff engaged Jema Lawyers to institute proceedings against the Defendant. Raymond Mili deposed that his father, the late Mili Kiage, was the sole director of the Plaintiff company until his death on 15 September 2017, and that following his father’s death, he was appointed as the director of the Plaintiff company. He further deposed that the Defendant is a former employee of the Plaintiff company who commenced employment as the Operations Manager in April 2018, and that the Defendant’s employment ceased on 4 August 2025.
   
8. Raymond Mili further averred in his affidavit that the Defendant took possession of five vehicles listed in the Notice of Motion. He stated that the Defendant began supplying food rations to the Bundaira Prison Camp (Kainantu) and the Bihute Prison Camp (Goroka), which had previously formed part of the Plaintiff company’s business. He further deposed that the Defendant took possession of a firearm purchased by the late Mili Kiage and removed the original title to a property belonging to the Plaintiff company, which the Defendant is currently renting.
   
9. Upon perusal of the supporting evidence filed with Raymond Mili’s affidavit, it appears that the registered owner of vehicles bearing registration numbers EAL 070, EAL 693, and P0110L is the Plaintiff company. The registered owner of vehicle EAH 184 is the late Mili Kiage, while the registered owner of vehicle IAD 371 is the Defendant. It also appears that the Winchester firearm is registered in the name of the late Mili Kiage, and that the property described as Section 26, Allotment 10, Goroka, is registered in the name of the Plaintiff company.
   
10. In response to the application for interim restraining orders, the Defendant stated in his affidavit that he was adopted by the late Mili Kiage as the eldest of five children, all of whom are adopted. He deposed that Mili Kiage passed away on 15 September 2017, and that in 2018 he assumed management of the Plaintiff company. He stated that he rebuilt the Plaintiff company and that, in August 2025, he stepped away from the company. He further stated that, as compensation for his unpaid services over the years, he took possession of three vehicles bearing registration numbers EAL 070, EAL 693, and P0110L, which are registered to the Plaintiff company. He claimed that vehicle registration number EAH 184 is registered in the name of his late father, and that he is the registered owner of vehicle registration number IAD 371. The Defendant admitted that he took possession of his late father’s firearm as the eldest and most mature son. He also admitted that the property described as Section 26, Allotment 10, Goroka is registered under the Plaintiff company’s name, and he withheld it to prevent Raymond Mili from selling that property given his conduct.
    
11. Furthermore, the Defendant stated that his father, the late Mili Kiage, died intestate and that, to date, no letters of administration have been obtained in respect of his estate. The Defendant alleged that the 50% shareholding of the Plaintiff company held by the late Mili Kiage was fraudulently transferred to Raymond Mili after his death.
    
12. Raymond Mili filed a second affidavit on 19 November 2025 in response to the Defendant’s affidavit. In that affidavit, he stated that the Defendant had deposed that vehicle registration number EAH 184 is registered in the Defendant’s name, and that Raymond Mili was not aware of how it was transferred to the Defendant. However, it should be noted that the Defendant did not make such a statement in his affidavit, and that this amounts to a misrepresentation. Raymond Mili also incorrectly stated that vehicle registration number IAD 371 is registered in the name of the late Mili Kiage, which likewise appears to be incorrect.
    
13. Raymond Mili stated in that affidavit that he could not respond to the claim of adoption and that his mother would produce evidence if required. However, no such evidence was produced by his mother to prove otherwise.
    
14. It should be noted that at no point did the Plaintiff take any steps to disclose how the estate of the late Mili Kiage was distributed. The only evidence before the Court on this issue is the Defendant’s affidavit, which states that the late Mili Kiage died intestate and that no letters of administration have been obtained to date. This raises a question as to the administration of the estate of the late Mili Kiage. On the face of the evidence, it is clear that vehicle registration number EAH 184 and the Winchester firearm were the property of the late Mili Kiage, and that the Plaintiff has no basis to claim ownership in the absence of a proper distribution of the deceased’s estate.
    
15. In any event the Defendant also raised a preliminary issue regarding the competency of the proceedings on the basis that the transfer of the 50% shareholding previously held by the late Mili Kiage was not properly done. The Defendant claimed that the resolution dated 25 August 2025 was improper and invalid, as the appointment of Raymond Mili as the director and the transfer of the 50% shareholding into his name were unlawful.
    
16. The Defendant asserted that although a purported directors’ resolution was relied upon to institute this proceeding, it was not lawfully procured and is therefore invalid. The Defendant argued that the appointment of Raymond Mili as the director was invalid in light of section 133 of the Companies Act 1997, as it is the shareholders of the company who must vote on a resolution to appoint a director. The Defendant further contended that, as the late Mili Kiage was the sole director and held the majority 50% of the shares, and died without proper administration of his estate, no valid shareholder approval could have been given.
    
17. In written submissions, the Plaintiff asserted that the preliminary issue concerning competency could not be raised by the Defendant, as the Defendant was merely an employee and not a director or shareholder of the Plaintiff company. It was also submitted that such an issue, if raised at all, ought to be pursued in separate proceedings and not in the present matter. The Plaintiff further submitted that section 133 of the Companies Act 1997 governs the appointment of directors, and that upon the death of the late Mili Kiage, who held 50% of the shares, Raymond Mili, who already held 25% of the shares, and Catherine Mili, who held the remaining 25% of the shares of A’pee Mili in trust, appointed Raymond Mili as a director. It was further submitted that, even if Raymond Mili’s appointment was defective, section 136 of the Companies Act 1997 operated to validate the board resolution dated 25 August 2025. Section 136 reads:
    

“The acts of a person as director are valid even though –

(a) The person’s appointment was defective; or
(b) The person is not qualified for appointment.”

18. It is clear that the late Mili Kiage held majority 50% of the shares at the time of his death and that he died intestate. There is no evidence before the Court that letters of administration were obtained to administer the estate of the deceased. Section 36 of the Companies Act 1997 provides that a share in a company is personal property. Where a shareholder dies intestate, the deceased’s property vests in the Public Trustee (Public Curator) pursuant to section 44 of the Wills, Probate and Administration Act. The Companies Act further provides that only the personal representative of a deceased person may deal with the deceased’s shares under section 40(3). A “personal representative” is defined in the Companies Act as the executor, administrator, or trustee of the estate of a person. Accordingly, once a shareholder dies intestate, the deceased’s shares in the company vest in the Public Trustee, and until letters of administration are granted, those shares cannot be dealt with or transferred by any person.
    
19. In Komet v Komet [2018] PGNC 328 ; N7407 (8 August 2018) David J discussed this position as follows:
    

“[87] The Companies Act regulates how a deceased’s share should be dealt with. Section 40(3) of the Companies Act provides that the personal representative of a deceased shareholder may transfer a share even though the personal representative is not a shareholder at the time of transfer. Section 73 of the Companies Act provides that a personal representative of a deceased shareholder is entitled to be registered as the holder of a share held in a company by the deceased. It is abundantly clear from these provisions or alternatively by necessary implication that until the grant of administration that formalises the appointment of a personal representative as administrator of the deceased, the deceased’s share in Pukos cannot be dealt with or transferred by anyone to another person.”

20. It should be noted that although the present proceedings were not instituted to determine the validity of the appointment of the director or the regularity of the transfer of shares, it is nevertheless necessary to ascertain whether the action was instituted with proper authority, particularly given that the Defendant has raised a preliminary issue concerning competency. Although Raymond Mili stated briefly in his affidavit filed on 22 October 2025 that he was appointed as the director of the Plaintiff company following the death of the late Mili Kiage, no further details were provided as to how it was done. However, in the affidavit filed by the Defendant, evidence was produced relating to the appointment of Raymond Mili as the director and the transfer of shares. In particular, the minutes of a meeting held on 30 September 2017 indicate that Raymond Mili was appointed as the director following the death of the late Mili Kiage and that the late Mili Kiage’s 50% shareholding was also transferred to Raymond Mili, thereby making him the majority shareholder with 75% of the shares. It must be noted that these actions appear to have been carried out in clear contravention of the provisions of the Companies Act 1997.
    
21. In Mani Naka Investment Ltd [2025] PGNC 250, the petitioner, a founding director and shareholder, challenged extensive alterations to the company’s records at the Investment Promotion Authority which removed him as a director and shareholder and introduced multiple new directors and shareholders without compliance with the mandatory provisions of the Companies Act 1997. Anis J discussed how, once the foundational actions are tainted, subsequent resolutions are inconsequential, invalid, and void:
    

“[41] Premised on these findings, I also find that the company’s record had been unlawfully tempered with to alter the names of its original directors and shareholders. Consequently, I therefore find that the names of purported directors or shareholders that appeared in the 17 March 2023 and 7 March 2024 company extracts, to be invalid as well as null and void. Any entry that is made that purports to change the names of the directors and shareholders as originally shown in the company’s records shall be discarded.

[42] I also find that since the initial actions of the company has been tainted, submissions and issues that arise in regard to what happened or may have occurred afterwards by the company, whether it be meetings, special meetings and resolutions that may have been entered into, are also invalid and void. They also go to show the unlawful actions of the company in conducting its affairs contrary to the provisions of the CA.”

22. Although the Plaintiff submitted that, even if the appointment of Raymond Mili was defective, section 136 of the Companies Act 1997 confers validity on acts done by a director, I am not persuaded that section 136 can avail the Plaintiff in the circumstances of this case. As explained in Komet v Komet (supra), a share in a company is personal property and, upon the death of a shareholder intestate, the deceased’s shares vest in the Public Trustee until a grant of letters of administration is made. As such, no person other than the personal representative is entitled to deal with or exercise rights attaching to those shares, including voting rights. In the present case, the shareholder who held the majority shareholding died intestate, no letters of administration were obtained, and the shares forming part of the deceased’s estate were nevertheless transferred and relied upon to confer voting power. That purported voting power was then used to appoint a sole director, and the same unlawfully assumed control was subsequently relied upon to commence this proceeding on behalf of the company.
    
23. In these circumstances, I am of the view that the defect is not a mere procedural irregularity but goes to the root of corporate authority and control. Although section 136 validates acts done by a person acting as a director despite defects in appointment, the Court in Mani Naka Investment Ltd (supra) discussed that where the initial assumption of corporate control is unlawful, subsequent meetings and resolutions are invalid, and void. The decision therefore demonstrates that section 136 cannot be relied upon to legitimise acts flowing from an unlawful takeover of corporate control.
    
24. In Radio Taxis Ltd v John Wano & Ors [2018] PGSC 98; SC1768 Dingake J stated that:

“[8] A company is in law a separate legal person capable of suing or being sued in its own name. Unless the law provides otherwise, the company cannot initiate legal proceedings without a duly passed resolution authorizing the company to litigate. A company that purports to litigate without a duly passed resolution to that effect lacks locus standi and such proceedings amount to an abuse of Court process.”

25. This position was further reiterated in Ramu Nico Management (MCC) Ltd v Ane [2025] PGNC 22; N11150 where Purdon-Sully J held:
    

“[31] To be properly authorised, such authorization must be provided by the convening of a properly constituted board of the company, on whom rests the legal authority to manage and conduct the affairs and business of the company.”

26. In light of the foregoing decisions, it is essential that the Plaintiff establish proper locus standi to institute this action. The fact that the Defendant is not a director or a shareholder is not relevant to the question of whether the Plaintiff itself has the requisite authority to commence proceedings. Although the Plaintiff relied on a purported resolution dated 25 August 2025 to institute this action, I am not satisfied, for the reasons discussed above, that the resolution was validly made or capable of conferring the necessary authority to commence this proceeding.
    
27. Secondly, it should be noted that the remedies sought by the Plaintiff to restrain the Defendant from supplying food rations to Bundaira Prison Camp and Bihute Prison Camp are not tenable. The agreements entered into by the Defendant with those third-party institutions are independent contracts between the Defendant and those entities. The Plaintiff has not joined those third-party institutions as defendants in these proceedings, and there is therefore no proper basis upon which the Plaintiff may seek relief affecting independent contractual arrangements to which it is not a party. Those third parties are entitled to conduct business with any person of their choosing, and the mere fact that the Plaintiff previously conducted business with them does not give rise to a cause of action entitling the Plaintiff to restrain their business transactions with the Defendant. The supply of food rations to third parties arises from contractual obligations between the Defendant and those institutions, and if there has been any breach of contract, the Plaintiff must institute appropriate proceedings to seek remedies for such breach. Introducing this unrelated cause of action in the present proceedings by way of an originating summons is, in my view, an abuse of process. Accordingly, I find that the Plaintiff has no entitlement in this action to seek restraining orders to prevent the Defendant from supplying food rations to those third-party institutions.
    
28. Moreover, the motor vehicle bearing registration number EAH 184 and the Winchester firearm are registered in the name of the deceased. In the absence of a grant of letters of administration, I am unable to see any locus standi on the part of the Plaintiff company to assert ownership over those properties or to seek restraining orders in respect of them. Further, the motor vehicle bearing registration number IAD 371 is registered in the name of the Defendant, based on the evidence produced by the Plaintiff itself, and there is no evidence to show that the vehicle was previously registered in the name of the Plaintiff company and subsequently transferred by the Defendant without proper authority. In these circumstances, I am not satisfied that any cause of action has accrued to the Plaintiff in respect of those properties as well.
    
29. For the foregoing reasons, I am not satisfied that the Plaintiff has demonstrated any reasonable prospect of success in respect of the substantive claims advanced in support of the application. In those circumstances, I am of the view that it is unnecessary to consider the remaining criteria applicable to the grant of interim restraining orders.
    
30. It should also be noted that the matters discussed above extend beyond the question of prospects of success, given the preliminary issue raised by the Defendant concerning the competency of these proceedings. The Defendant submitted that the person who procured and signed the resolution relied upon to institute this action was not validly appointed as a director in accordance with the Companies Act 1997, and that the alleged source of his authority, namely the shareholding of a deceased shareholder, remains unadministered and legally unresolved. It was therefore contended that, since the purported resolution to institute this action is invalid, the Plaintiff lacks locus standi to initiate these proceedings and that the entire action accordingly constitutes an abuse of the process of the Court.
    
31. Although the Plaintiff submitted that section 136 of the Companies Act 1997 shields the acts of a director even where the appointment is defective, for the reasons stated at paragraph 23 above, the circumstances of these proceedings do not support the view that such invalidity can be cured by resorting to section 136. In the circumstances, the Plaintiff has instituted these proceedings without locus standi, which, in my view, amounts to an abuse of the process of the Court. Further, as noted earlier, the Plaintiff has also misconceived the causes of action relied upon in these proceedings. Order 12 Rule 40 of the National Court Rules provide:
    
    • (1) Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings –
      1. No reasonable cause of action is disclosed; or
      2. The proceedings are frivolous or vexatious; or
      100. The proceedings are an abuse of process of the Court.
      4. The Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.
         
32. In Paul v Kispe [2001] PGNC 132; N2085 (17 April 2001) Injia J stated the following when dismissing the entire proceedings on the basis that the writ of summons was invalid, irregular, and amounted to an abuse of the process of the Court:
    

“There is a wide discretion vested in the Court by the NCR to screen and weed out claims which do not disclose as reasonable cause of action, are frivolous and vexatious or an abuse of process of the Court, (O12 r40) or the documents filed in Court is scandalous, irrelevant or otherwise oppressive (O2 r29), or on the ground of irregularity. That discretion is normally exercised upon application by an interested party. Nevertheless, it goes without saying that the Court may exercise that discretion on its own initiative. It is open to the Court to raise and determine questions concerning the regularity (O1 r1-9) or competency of proceedings at any stage of the proceedings with or without application by an interested party: see Siaman Riri & Anor v. Simon Nusen & Ors N1375 (1995). It is for this reasons that I raised the issue of competency on any initiative.

33. Accordingly, I find that the entire proceedings incompetent. The preliminary issue raised by the Defendant on competency of proceedings is upheld.
    
34. The orders of the Court:
    
    1. The Application for interim restraining orders is refused.
    2. The ex parte interim restraining orders issued on 06 November 2025 are dissolved forthwith.
    3. The entire proceedings is dismissed as it amounts to an abuse of process.
    4. The Plaintiff shall pay cost to the Defendant on party/party basis and cost to be taxed, if not agreed.
    5. The time for entry of this Order is abridged to the time of signing by the Court which shall take place forthwith
       

________________________________________________________________
Lawyers for the plaintiff: Jema Lawyers
Lawyers for the first defendant: Croton Legal Services