SC794

PAPUA NEW GUINEA

[In the Supreme Court of Justice]

SCA 52 OF 2004

BETWEEN:

WAU ECOLOGY INSTITUTION
(First Appellant)

AND:

CAMILLUS NARAKOBI
for himself and on behalf of the BOARD OF DIRECTORS OF W.E.I.
(Second Appellant)

AND:

HARRY SAKULAS
(Third Appellant)

AND:

REGISTRAR OF COMPANIES
(First Respondent)

AND:

NEIL TREVOR
(Second Respondent)

AND:

SAMUEL HUDSON
(Fourth Respondent)

AND:

MICHAEL HUDSON
(Fourth Respondent)

AND:

OMAS GENORE
(Fifth Respondent)

AND:

WAGI KUKUBOL
(Sixth Respondent)

Waigani	:	Sawong, Mogish & Lay, JJ.
2004		:	October 1st
2005		:	August 12th

SUPREME COURT ACT - s5((1)(b) – O3 r2 - order of single judge - whether direction not involving the decision on the appeal – meaning of "involving the decision on the appeal" – order to resolve directorship and shareholding of the appellant – involves decision on the appeal – single judge – order in effect permitting further or amended evidence – order changing fact situation from which appeal arises.

Counsel:
Ms. D. Gavara-Nanu for First Respondent
Mr. J. Kais for Second, Third, Fourth, Fifth & Sixth Respondents
Mr. B. Meten for the Appellants

Cases Cited:
Christian Revival Crusade v Eyo Taviviya & Ors SC610
Rahonamo v Enai and the Administration of the Territory of Papua New Guinea [1971] PNGLR 150
Wong Tak Kue v Kung Kwok Wau David (In representative capacity) FACV No.1 1997 (27/10/97) Ping PJ

Legislation Cited:
Supreme Court Act s5(1)(b)
Supreme Court Rules O3 r2
Constitution s162(2)&(3)
Supreme Court of Queensland Act 1991 s43(2)(b)

Facts:

The Appellants applied by originating summons to the National Court for permanent injunctions against the Respondents interfering with the operations of the First Appellant. The application was refused, the originating summons dismissed and the Appellants permanently enjoined from participating in the affairs of the First Appellant. The Appellants appealed, inter alia, on grounds that the trial judge failed to consider evidence that the Second and third Appellants were and always had been Chairman and director, respectively, of the First Appellant, and failed to consider that the shareholder was a trustee of the shares held by him and in breach of that trust authorized the issue of further shares. A single judge of the Supreme Court issued directions that the First Appellant was to resolve the issue of its directorship and shareholding before the appeal proceeded.

Held:

The phrase "involving the decision on the appeal" means - include or entail or affect in its operation, any decision which may have to be made on the appeal. To determine that issue the grounds of appeal, and not the decision appealed from, need to be examined. The grounds of appeal raised issues of the status of the Second and Third Appellants as directors of the First Appellant, which may have to be decided on the appeal; therefore the orders made by a single judge affecting those issues should not have been made. A single judge of the Supreme Court should not make any order which has the potential to permit further evidence or change the fact situation out of which the appeal or application for leave to appeal arose.

BY THE COURT: This is a Referral made by the Deputy Chief Justice to a 3 judge bench of the Supreme Court to determine the appropriateness of various orders made by Kandakasi, J. The referral was initially made by his Honour the Deputy Chief Justice pursuant to s. 10(2) of the Supreme Court Act. Both Counsel submit and we are in agreement that the appropriate provision is s. 5(1) of the Supreme Court Act.

The background to the referral is this, on the 30th December 2003 the First Appellant, Wau Ecology Institute Limited commenced proceedings by way of an Originating summons against the Respondents seeking an order to prevent them from interfering with the affairs of the Institute.

On 23rd April 2004 Justice Kirriwom dismissed the proceedings as being frivolous and vexatious. Being aggrieved by that decision, the Appellant filed an application for leave to appeal. The Appellant also filed an application purportedly seeking interim directions pursuant to s. 5 of the Supreme Court Act which was in fact an application for a declaration in relation to the status of directors and shareholders of the First Appellant.

On the 24th July 2004, Kandakasi, J. sitting as a single judge of the Supreme Court acceded to the application seeking interim direction and granted the following orders, the subject of this Referral. The orders are in the following terms:

"Order 1:	That the Supreme Court proceedings and the National Court proceedings are stayed pending resolution by the First Appellants Shareholders.

Order 2:	That the First Appellant resolves the issue of legal representation within 14 days from today.

Order 3.	that the First Appellant resolve shareholding and Board of Directors within 14 days from today".

On the 6th August 2004 the Deputy Chief Justice referred to the full bench of the Supreme Court for their determination the appropriateness of these orders. The referral is made pursuant to s. 5 of the Supreme Court Act which states: 

5.	Incidental directions and interim orders.

(1)	Where an appeal is pending before the Supreme Court:-

(a)	a direction not involving the decision on the appeal; or 
(b)	an interim order to prevent prejudice to the claims of the parties; or 
(c)	an order in any proceedings (other than criminal proceedings) for security for cots; or 
(d)	an order dismissing the appeal in any proceedings (other than criminal proceedings) for default in furnishing security or 
(e)	an order admitting an appellant to bail. 

(2)	A direction or order made under Subsection (1) shall be deemed to be a direction or order of the Supreme Court".

The provisions of s5(1) are reflected in O3 r2 of the Supreme Court Rules.

Mr. Meten, Counsel for the appellant submitted that the directions do not involve the decision on appeal. He submitted that the substantive issue raised in the grounds of appeal is whether the Originating Summons disclose a cause of action. He submitted that the orders have nothing to do with the appeal and therefore were appropriate orders. 

Mr. Kais, Counsel for the Respondents, on the other hand submitted that the orders are inappropriate as they involve the decision on the appeal. He pointed out that one of the grounds of appeal relates to the status of the Appellants and to that extent the orders are inappropriate. He also submitted that the orders would create rather that prevents prejudice to the claims of the parties before the appeal court. 

It is not in dispute that certain of the powers of the Supreme Court can be exercised by a single Judge of the Supreme Court. See c. 162(2)(3) of the Constitution ss. 5and 10 of the Supreme Court Act. 

The issue for our consideration is whether the orders granted by Kandakasi, J. fall within the scope of s. 5(1)(a) or (b) of the Supreme Court Act. The provision has a long legislative history having appeared in the pre – independence Supreme Court (Full Court) Act and then in the post independence Supreme Court Act 1975 before the current Act; but there is little case law on its application.

As the Supreme Court said in Christian Revival Crusade v Eyo Taviviya & Ors:

"It is trite principle of statutory interpretation that if "the words of a statute are themselves precise and unambiguous, then no more is necessary than to expound those words in their ordinary and natural sense." Wemas –v- Kepas Tumdual {1978] PNGLR 173 at 176 per Wilson J. adopted in SCA No. 6 of 1984 Re Provocation [1985] PNGLR 31."

There is nothing ambiguous about the provisions of s5(1)(a) but a little care needs to be taken in considering its meaning. The verb "involve" is defined by the Concise Oxford Dictionary as follows:

involve // v.tr. 

1 (often foll. by in) cause (a person or thing) to participate, or share the experience or effect (of a situation, activity, etc.).

2 imply, entail, make necessary.

3 (foll. by in) implicate (a person in a charge, crime, etc.).

4 include or affect in its operations.

5 (as involved adj.) a (often foll. by in) concerned or interested. b complicated in thought or form. c amorously associated.

In our opinion the meanings "entail", "include" and "affect in its operations" are the meanings intended by the legislature in using the word "involved" in the provision. What is the "decision on the appeal"? In other jurisdictions, for example in the Supreme Courts Acts of New South Wales and Queensland, Australia, the limitation on the power of a single judge is rendered in slightly different terms as:

…(not) "an order or direction involving the determination or decision of the appeal…"

In our opinion that provision is directed to the same purpose as s5(1)(a). We believe a comparison of those provisions with the provision under review, shows that the same effect is intended and makes it clear that s5(1)(a) is not speaking of the decision "on appeal", that is the decision appealed from, as is assumed in the written submissions for the Appellants, but is referring to the decisions which will have to be made by the Court to determine the issues raised on the appeal.

And so the question before us is, does the order of the learned judge include or entail or affect the operation of any decision which may have to be made on the appeal? 

Under the Supreme Court (Full Court) Act the equivalent provision was held by a single judge to include the power to order the appellant to amend a Notice of Appeal in certain specific particulars. In what was then another Commonwealth jurisdiction and applying an identical provision, a single judge of the Permanent Court of Hong Kong held that the power did not extend to an application to adduce further evidence because this involves the "decision on the appeal. That is, on the hearing of the appeal proper, the decision in the ordinary course of events will be based on the evidence before the court below. If further evidence is allowed before the appeal is heard, it changes the basis on which the court will make its decision, and in that way "involves the decision on the appeal"; therefore such an application cannot be heard by a single judge.

In order to determine this Referral it is necessary to consider the grounds of the appeal rather than the order appealed from. Grounds of appeal which deserve consideration are: 

"11.	Whether his Honour erred in failing to consider the facts and evidence provided by the Appellants at the hearing in respect to the Second and Third Appellants position as Chairman and Director of Wu Ecology Institute Limited

(f)	His Honour in receiving evidence that there was always a Board of Directors chaired by Camillus Narokobi and managed by Director Harry Sakulus failed to make a finding that a Board had existed at all times and failed to make such findings or Orders appointment of such Directors under Companies Act having regard to Section 442, 446 and Schedule 14(a)

(g)	In receiving evidence that new share holders were allotted by Omas Genora, his Honour erred in law in failing to satisfy himself that the paid up capital was fair and reasonable value o the company and to all existing shareholders under Companies Act requirements on allotment of shares particularly when Omas Genora was only a nominal trustee share holder and not entitled to convene such meeting or allot shares under Section 127(3) of the companies Act

(k)	The decision of His Honour to permanently restrain Camillus Narakobi and Harry Sakalus was wrong in law and fact".

These grounds of appeal are clearly contrary to the submissions by Mr. Meten. They do not raise the issue of whether there is a reasonable cause of action. Rather those grounds continue to assert the legitimacy of the 2nd and 3rd Appellants as lawful members and directors of the First Appellant contrary to the decision of the National Court on the 23rd April 2004 which permanently restrained the 2nd and 3rd Appellants from dealing with the affairs of the First Appellant in any manner. Those are issues which the grounds of appeal show may call for decision on the appeal. To that extent we agree with Mr. Kais that the orders granted by Kandakasi J. were inappropriate under s. 5(1)(a) of the Supreme Court Act in that they amount to a direction involving the decision on the appeal contrary to the prohibition contained in that section. The orders create, rather then prevent prejudice to the claims of the parties before the appeal court, contrary to s. 5(1)(b) of the Supreme Court Act. They create a further opportunity for the parties now in control of the First Appellant, the Respondents, to yet again change the shareholding and directorship of the First Appellant whilst the Second and Third Appellants are restrained from participating in the First Appellant. The consequence could be the presentation to the Supreme Court of a different fact situation from the facts which were before the trial judge from whom the application for leave to appeal arises. Looked at another way, the orders give the First Appellant the opportunity to adduce further evidence on the issues of who are the shareholders and directors. We agree with Ping PJ in the Hong Kong case cited, permitting additional evidence is not a matter which can be decided by a single judge exercising jurisdiction under the Supreme court Act s5(1)(a). A single judge should not take further evidence unless by direction of the Court pursuant to O3 r3. Also, in our view a single judge exercising s5 power should not make an order which has the potential effect of changing the fact situation out of which the appeal or application for leave to appeal arises.

Consequently we are of the view that the learned trial judge wrongly exercised his discretion to grant the orders sought by the Appellants. 

For those reasons we quash Orders 1, 2 and 3. We order that all of the affidavits arising out of or showing compliance with those orders be removed from the file.

We order costs against the Appellants.
___________________________________________________
Lawyers for the Appellant:		Narakobi Lawyers
Lawyer for the Respondent:		Pryke and Bray Lawyers