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Papua New Guinea Law Reports |
NATIONAL COURT OF JUSTICE
IGISENG INVESTMENTS LTD
V
STARWEST CONSTRUCTIONS LTD; AND
IGISENT-OKMANIP
BUSINESS GROUP INC
WAIGANI: KANDAKASI J
26th August and 17th December 2003
PRACTICE & PROCEDURE – Evidence by affidavit – Party
wishing to use an affidavit at a trial must comply with the requirements
of the
Evidence Act (chp. 48) – A failure to do so should result in non-admission
of the affidavit in question into evidence.
PRACTICE & PROCEDURE
– Assessment of credibility of witnesses – Inconsistencies and
illogical accounts indicates lack
of credibility – Demeanour of witness
also a relevant factor.
EVIDENCE – Admission of extrinsic evidence generally not permissible but could be admitted to clear an ambiguity – Admissibility of such evidence must be addressed prior to admission of – Once admitted Court entitled to consider the evidence before it.
BUSINESS ASSOCIATIONS – De-registration of a business group for non lodgment of annual returns –Re-incorporation of – Effect of de-registration and re-incorporation on assets of business group concerned – Issue a procedural one - Lack of relevant provision in the relevant Act – Court has power to supply - No reason why the same procedure under Companies Act 1997 should apply – Assets vested in the Registrar of Business Groups during de-registration and reverting to business group upon re-incorporation – Sensible result to encourage the policy behind the requirements for registration of business groups and companies – Section 29 Business Groups Incorporations Act (Chp. 144) – Sections 365 to 381 Companies Act 1997.
Facts
The plaintiff company (Igiseng Investments Ltd) sought a declaration that 500 shares issued by the first defendant in the name of Igiseng Business Group inc, were intended for the Company and the certificates should be amended accordingly. It was claimed that the former was the investment vehicle of Igiseng Business Group Inc. The second defendant was not a party to the proceedings before the Orders were made but on becoming aware of the Order applied to be joined as a party to the action and for the order to be set aside. In the rehearing, the second defendant claimed that the shares were initially purchased by it for the benefit of its members who are not all represented as shareholders in the Company. It then claimed that the description of the share certificate in terms of Igisend Business Group Inc is a mistake and should correctly read as "Igiseng-Okmanip Family Business Group Inc." Both parties presented evidence by affidavits and in determining the weight to be given to the evidence the Court found that several of the affidavits filed by the Company could not be admitted into evidence for failure to comply with the requirements of the Evidence Act. The Companies' witnesses were unreliable and the evidence not credible, in contrast the evidence of the first defendant's witnesses were reliable and credible.
The Court found that the shares in contention were purchased by the second defendant from the first defendant. The second defendant was subsequently deregistered for failure to lodge annual returns and re registered.
Held
1. There is no provision in the Business Groups Incorporated Act dealing with the question of restoration to the register after a business group has been removed from the register for failing to file its annual returns. The Act does not prohibit its re incorporation. On deregistration its shares vest in the Registrar upon its removal from the list, and revert to the Business Group on re incorporation.
2. The evidence established that the shares were owned by the second defendants.
3. Although the relevant share certificate and receipts have been written out in the name of "Igiseng Business Group Inc" extrinsic evidence was admissible to resolve the ambiguity in the written document and to establish that Igiseng Business Group Inc and the 2nd Defendant are one and the same person
Papua New Guinea cases cited
Rimbink Pato v Reuben
Kaiulo (2003) Unreported judgement delivered 29/08/03) N2455.
Mark
Ankama v ELCOM (2002) N2303.
Applications by Hugo Berghuser and
Lawrence Titimur [1995] PNGLR 259.
Curtain Brothers (Queensland) Pty
Ltd and Kinhill Kramer Pty Ltd v The State [1993] PNGLR 285.
Odata Ltd
v Ambusa Copra Oil Mill Ltd [2001] PNGLR 344.
Papua New Guinea Forest
Authority v Concord Pacific Ltd (No 2) [2003] PNGLR N2465.
Other cases cited
Bank of New Zealand v
Simpson [1900] UKLawRpAC 6; [1900] AC 182.
Horsfall v Braye [1908] HCA 85; (1908) 7 CLR 629.
Counsel
M Nasil, for the
plaintiff.
T Elemi, for the second defendant.
D G Lidgett,
for the first defendant.
17 December 2003
Kandakasi j. In this action, the plaintiff company, Igiseng Investments limited ("the company") is seeking a declaration that 500 shares issued by the first defendant company ("Star West') in the name of "Igiseng Business Group Inc." be changed to the Company. It is claimed that the Company is the investment vehicle of the Igiseng Business Group. The other orders it seeks are aimed at giving effect to the first relief sought if granted.
Earlier on, the National Court granted the orders sought by the Company. The second defendant ("the Business Group") was not named as a party to the proceedings before the orders were made. After the orders were made, it became aware and applied to be joined as a party and for a set aside of the orders. The National Court appears to have dismissed that application and the matter ended up in the Supreme Court. The Supreme Court ordered the Business Group to be joined as a party and the matter be reheard by the National Court. Hence, the matter came before me in August of this year and I reserved a decision to enable parties to file their written submission and for the Court to consider them and come up with a decision. This is now the decision of the Court.
The Business Group opposes the orders that are sought by the company. It claims the share were initially purchased by it for the benefit of its members who are not all represented as shareholders in the company. Accordingly, it says the company neither represents it, nor does it represent the whole of its members who own the Company. It goes on to claim that the description in the relevant share certificate in terms of "Ingiseng Business Group Incorporated" is a mistake. It should correctly read as, "Ingiseng-Okmanip Family Business Group Inc."
At the outset of the trial, the parties agreed to all of the relevant facts as set out in the Statement of Agreed and Disputed facts and agreed issues for trial dated 26 August 2003. This statement does not fully set out the relevant facts. The parties sought to have that complemented and supported by affidavits filed with some of the deponents being cross-examined who have given opposing evidence. It is therefore, necessary to determine which of the witnesses and their evidence are credible before making a find of the relevant facts. Thus, I deal firstly with the witnesses and their evidence.
Credibility of witness and their evidence
The plaintiff called two witnesses namely, Iling Kalbiok and Jeffery Aitskep. The first witness deposed to two affidavits, with the first one on 6 March 2001 (exhibit "A") and the second one on 28 April 2003 (exhibit "B"). As for the second witness he deposed to an affidavit on 18th June 2001 (exhibit "C"). Certain parts of these affidavits were struck out on the successful objection of the Business Group. Several other affidavits were filed for the Company but they could not be admitted into evidence and used for failure to comply with the requirements of the Evidence Act.
I do not find the first witness as a truthful and therefore a reliable witness for a number of reasons, apart from his demeanor in the witness box, which gave him away. Of these reasons, there are three obvious ones. The first is the fact that he was evasive and not being specific when giving evidence as to who said or did what. He simply used the words "we" and "they" throughout his evidence, thereby giving me the clear impression that he was not certain and or confident of what he was talking about.
Secondly, and more importantly, he contradicted himself in a number of respects. One of the obvious and more critical one was in the composition of the shareholders of the company, the persons who contributed toward the purchasing of the 500 shares back from Cloudlands Investments Limited ("CIL"), the acquisition of Suara No. 5 Limited and changing it to the company and its shareholding arrangements.
The witness said he is the chairman of the board of directors and a shareholder of the Company. His evidence essentially is that certain persons from the Igiseng Family purchased back the shares from CIL by contributing the total amount of the purchase price of K6,000.00 under an unregistered entity called "Igiseng Business Group Inc." At the same time, however, he does not deny that the Business Group was incorporated in 10 September, 1982. Then comes exhibit "D2" admitted into evidence for the Business Group (the second defendant) through this witness, which is a letter dated 20 April, 1995 by a Mr. Levi Bineng to the Registrar of Business Groups. That letter stated amongst others that Igiseng Business Group Inc. was incorporated on 10 September, 1982. This was the date of incorporation of the Business Group.
Next, he lists a total of 23 persons, some under what he calls full members and others as part members by reference to the amounts of money they contributed in paragraph 18 of his affidavit of 13 March 2001. He claims those who contributed agreed to a shareholding in the company in a representative capacity by some of them. Accordingly, he claims all of the persons who contributed are the shareholders of the company with only the full members having the right to vote and participate as shareholders. When this evidence is contrasted with the company search done and produced in Court through this witness by the Business Group, it is clear that only 7 persons are listed as shareholders. This is 3 short of his own list of what he calls full members. It also lists Mr. Levi Bineng as a majority shareholder but Mr. Bineng was already dead by the time the company came into existence. When questioned as to why a dead person happened to be the major shareholder in the company, he said the late Levi Bineng was the one who had lodged the names for the shareholders. Under further questioning however, he admitted that he was the person responsible and not the late Levi Bineng.
Another area where he gives contradicting evidence is in relation to a purported resolution to sell back the shares to the Business Group, without specifying whose resolution it was. At the same time, the witness was asked as to whether there was a resolution by the Star West and CIL to return the shares to the Business Group and another business group, Trabulok Business Group Inc., and he answered in the negative. In line with that, he maintained that the payment of K6,000.00 to CIL was for the purchase of shares, when in fact it was for requisition or a buy back of shares to the "Igiseng Business Group" which is confirmed by the relevant receipt dated 4 October 1985. The receipt is annexure "A" to the witness's affidavit of 28 April 2003, in evidence as exhibit "B" for the Company.
The third reason for my finding this witness untruthful and unreliable is, as will be shortly demonstrated, the totality of his evidence is contrary to any logic and the general import of the facts that are not in dispute.
As for the second witness, Jeffery Atiksep, most of what he deposed to in his affidavit of 18 June, 2001 was struck out, as he was not giving any direct evidence, but consisted of hearsay evidence, assumptions and opinions. His remaining evidence is that he is the chairman of a different business group, "Trabulok Business Group." A position he now no longer holds. This business group was also a shareholder in Star West, which shares also got sold to CIL on a wrong advice. He speaks of both him and Robin Iweropnok (for the Business Group) receiving a cheque each in the amount of K6,000.00 from CIL for the shares. He also speaks of both Mr. Iweropnok and him being later asked to repay that money in order to redeem their respective business group's respective shares in Starwest.
Also this witness contradicted himself when a letter written by him on 21 August, 2000 was admitted into evidence through him for the defence as exhibit "D4" for the Business Group. He confirmed the content of that letter as correctly setting out the real reasons for his business group's shares in Starwest, their sale and redemption. These were that, on September 1984, CIL illegally bought off Trabulok Business Group Inc.'s 10% shares in Star West. The transaction was illegally done without consulting OK Tedi Mining Limited's Business Development Department. So Ok Tedi Mining Limited (OTML) with the assistance of Kirk's Lawyers considered the shares as illegally transacted and advised the Business Group to repay CIL, its bought off price of K6,000.00.
Apart from these inconsistencies it is also clear that, the witness does not give any evidence directly concerning the Business Group's shares. He has nothing to do with the Business Group nor was he personally involved in the transactions concerning that business group's shares. Further, I observed that his demeanor in the witness box was not that of a truthful witness.
For these reasons, I also find this witness unreliable. Accordingly, I reject
his evidence.
I now turn to consider the defendants' evidence, which has come
only from the Business Group and nothing from Star West. This consists
of the
affidavit evidence from witnesses, Robin Iweropnok, Bob Bubec and Reynold Pus.
The first two witnesses were cross-examined
while the third was not. His
affidavit was admitted into evidence as exhibit "D5" without any objection from
the company and Starwest
and also because no notice for cross-examination was
filed and served for that purpose under the Evidence Act.
The affidavits of Robin Iweropnok sworn on 25 February, 2003 was admitted into evidence as exhibit "D6" and Bob Bubec's affidavit sworn on 20 January, 2003 was admitted into evidence as exhibit "D7". Mr. Iweropnok was one of the two persons that were initially involved in the incorporation of the Business Group and later the buying back of the shares from CIL, so he was directly involved as opposed to the witnesses called by the company.
Mr. Bubec was also directly involved in the Business Group acquiring shares in Starwest and later buying back its shares from CIL after they were illegally transferred. His evidence is therefore critical.
Both Mr. Bubec and Iweropnok were subjected to cross-examintion on their respective affidavits. No questions questioning the credibility of either of these witnesses were put to them. There is nothing raised in the submissions of the company that touches on that aspect. Instead, its submission relies on this evidence in support of its arguments. Also, my observation of these witnesses in the witness box did not give me the impression that they were not telling the truth. This will be clearer when the totality of the evidence and the facts that are not in issue are considered in their proper context. In these circumstances, I find and accept these witnesses and their evidence as credible.
The effect of the rejection of the company's witnesses and their evidence means there is nothing on which the Court could find for the plaintiff. For it is settled law in our system of justice that he who alleges must prove it. A failure to do so should result in a dismissal of his claim. I could therefore end the case here without going any further. However, given that the matter has been in Court for quite a long while and for the proper assistance of the parties in future, I consider it necessary to find what the real facts are and then determine the issues the parties have agreed that this Court should determine.
Issues
Speaking of the issues, I note that the parties agree that the main issue for this Court to determine is "who is the actual or real owner of the 500 shares in Starwest?" The parties are agreed that this is a factual issue, which can be determined on the facts. They further agreed that there are a number of ancillary issues, which the Court must consider and determine.
These are:
I agree with the parties that the main issue is a factual question, which must be determined on the relevant facts. I am also of the view that questions 1,2 and 5 of the ancillary issues are factual questions too. Further, I am of the view that a determination of these issues will help determine question number 1 on the ancillary list and the main question. Thus, I proceed to deal with the ancillary questions first.
Facts
The facts and the backgroup to this action are set out in the statement of agreed and disputed facts, except for only two factual issues that became the subject of the trial. The facts set out in the statement of agreed and disputed facts and agreed issues are not complete as already noted. They are however complemented by the affidavits of Mr. Iweropnok and Mr. Bubec being the only witnesses I have found to be credible and decided to accept their evidence and in some respects the evidence called by the company.
It is clear from the agreed facts and the other evidence before the Court that the Business Group was incorporated on 10 September, 1982, by its founder and the main person behind the incorporation, Mr. Barton Magasim, who was its Chairman and only educated person in the area. He wanted to unite both his father and mother's side economically. Mr. Iweropnok who was appointed as his Deputy assisted him in that endeavour.
The name "Igiseng Okmanip Family Business Group Inc." was taken out of "Igiseng," who is Mr. Magasim's paternal grandfather while "Okmanip" came from Mr. Magasim's mother, both coming from the one big clan of "Kialikmin" occupying the villages of Drolengam and Ankevip.
In 1983, contributions were called for and a total of K1,009.00 was collected from the Okmanip side and nothing from the Igiseng side. These money was used to purchase1000 shares valued at K1.00 each in Starwest Earthmoving and Construction Pty Ltd, the forerunner to Starwest.
Around 1984 the Business Group ran into some financial difficulty in relation to a small tradestore it owned and ran. To make matters worse, no dividends on the shares it bought in Starwest were yet paid. Further various claims including court summons were issued against the Business Group. So both Mr. Magasim and Iweropnok approached Starwest and asked for a shareholder loan in the sum of K10,000.00. They filled out a loan application form and Mr. Iweropnok delivered it to a Mr. Peter Kilcoyne's office with the original share certificate, who received the documents and delivered a cheque for K6,000.00. At that time Mr. Iweropnok was asked to see Mr. Kilcoynes two weeks later.
Two weeks later, Mr. Iweropnok returned to Mr. Kilcoynes at his office. There, Mr. Kilcoyne informed him that Starwest was not in a good financial position to meet the Business Group's request. He therefore sold the shares to CIL and he had done the same with another business group, Trabulok Business Group's shares. Mr. Iweropnok expressed great shock and protested the sale. Trabulok confirmed the illegal transaction in writing to Mr. Iweropnok by letter dated 21 August 2000 under hand of Jeffery Atirep.
Almost immediately, Mr. Iweropnok notified Mr. Magasim by telephone of the situation. Mr. Magasim took the matter up with OTML's business development office and found out that, the office was not aware of the transaction. He also found out that the Board of the Starwest was not aware of the transaction either. On the legal advice obtained and through the efforts of Mr. Bubec, Starwest resolved to return the shares to the Business Group and Trabulok Business Group Inc.
Pursuant to that resolution, the shares of the two business groups were returned by a buy back from CIL around the end of August 1984 at the same price at which they were sold, K6,000.00 each. The funds were raised in terms of K4000 accrued dividend from Starwest and the balance being cash contributions from members of the respective business groups.
The buy back was confirmed by the issuance of a share certificate in the name of "Igiseng Business Group Inc." As far as Mr. Bubec was concerned, this was for the Business Group (the second defendant) with whom Mr. Barton Magasim was associated and nobody else as this was the only business group that he recalls having ever dealt with. At the same time, Mr. Bubec says, as he was not directly involved in the administration, he was not aware that there was this miss description.
In 1986, Mr. Barton Magasim fell ill and subsequently passed away in 1988. While Mr. Magasim was taken ill, a Levi Bineng was appointed to the board of Starwest to represent the Business Group. There was no accounting to the Business Group by Mr. Bineng.
Then in 1989, Starwest went into receivership and Coopers Lybrand was appointed as the receiver/manager. Through some special arrangement with Curtain Brothers (PNG) Ltd, Starwest was revived. Unfortunately, this resulted in a reduction in the shareholding by 50%. So that the Business Group's share of 1000 was reduced to 500 shares. At this time, Starwest formally changed its name to its present name.
In 1990, Mr. Iweropnok learned of the share certificate being in the name of "Igiseng Business Group Inc." which omitted the "Okmanip Family". He therefore queried Mr. Levi Bineng, whereupon Mr. Bineng became angry saying, he was instrumental in collecting the K2,000.00 and so those shares were for him and his family and not the "Okmanip family." Mr. Iweropnok took the issue up with Starwest by letter dated 10 December, 1990.
Nothing further appears to have happened until 1995. that was when Mr. Levi Bineng wrote to IPA on 20 April, 1995, asking for a search of "Igiseng Business Group." At that time, he informed the IPA that, that business group was incorporated on 10 September, 1982 and had since ceased to carry on business. He thus asked for information as to whether it was still operational. IPA responded by letter on the same day addressed to the Business Group (the second defendant) stating that the Business Group had failed to lodge its annual returns and had also failed to respond to numerous letters. IPA was therefore going to take steps to have the business group wound up and asked for a return of the original certificate. This prompted a response from Mr. Iweropnok by letter dated 26 April, 1995 to the IPA asking for a release of copies of letters to and from Mr. Bineng and copy of the certificate of incorporation. IPA responded as requested. Equipped with these documents, Mr. Iweropnok asked Starwest amongst others as to what was happening and asked for an explanation for the omission of "Okmanip Family."
Meanwhile in May of 1995, the Business Group was de-registered from the register of business groups for not filing its annual returns and all of the assets became vested in the Registrar. A dispute then arose between Mr. Iweropnok and Mr. Bineng as to who was entitled to benefit from the business interests of the Business Group. Mr. Bineng did not live long enough to see to a resolution of that dispute as he passed away the following year, 1996 due to an illness.
Following Mr. Bineng's death, Mr. Iling Kalbiok from the Kassangeng family appears to have taken over. Mr. Iweropnok protested over that and sent him a letter dated 11 June, 1996, highlighting problems that needed to be resolved.
On 1 July, 1996, the company came into existence without resolving the existing disputes between the parties. That was brought about by a purchase and change of name of a shelf company under the name of "Suara N. 54 Limited" which was incorporated on 6 February,1996.
Finally, in 1997, a meeting between all of the families involved was called and conducted at Telefomin. That meeting addressed the issue of new office bearers. Mr. Iweropnok was elected the interim Chairman. The meeting also resolved to authorise Ram Business Consultants to investigate and renew the registration of the Business Group.
Following the above meeting and resolutions, attempts to get a hearing and have representation on the Starwest board were made by Mr. Iweropnok. Despite follow-ups, none of these requests received a response. Meanwhile, application was successfully made to IPA for a reinstatement of the Business Group to the list of registered business groups. It was restored on 8 May, 1998. Further attempts, including personal attendance at the offices of Starwest after the reinstatement, for representation of the Business Group on the board of Starwest proved unsuccessful and Mr. Iweropnok was told to sort out Igiseng Group first.
In 1998, there was an attempt at transferring the shares in Starwest by the Registrar of Companies on the application of the Company. A Faith and Grace Barton lodged an objection to that. That prompted the Registrar to direct the dispute be resolved amicably. After some initial difficulty, a meeting was eventually called and held on 6, March 2001. Both those behind the Company and the Business Group attended this meeting. Representatives from OTML, Starwest, a Pastor and a District Court Magistrate witnessed this meeting. The meeting resolved that the 500 shares be registered in the name of the Business Group.
The Registrar of Business Groups was notified of the above resolution. At the same time, the objection raised by the Bartons was removed. The formalization of the resolutions experienced some delays because of the description of the name of the Business Group. Instead of spelling the name "Okmanip" in that way it added the letter "a" between the "k" and "m", making it to read "Okamanip". This has now been corrected and a new certificate in the name of "Igiseng-Okmanip Family Business Group Inc." has been issued.
Then on 13 March, 2001, the Company issued these proceedings, naming Starwest the only defendant. In the following month, the Company successfully sought and obtained an order for a transfer of the 500 shares in Starwest to it. Then as noted, on learning of the orders obtained by the Company, the Business Group appealed to the Supreme Court on 30 April 2001. The Supreme Court decided in favour of the company and ordered the Business Group to be joined as a party and the matter be reheard by the National Court.
Decision on the issued presented
With these facts in mind, I now turn to determine the specific questions raised. I start with the questions of whether there was in fact a legal entity under the name of "Igiseng Business Group" and whether such an entity purchased shares in Starwest?
The facts as set out above make abundantly clear that, the only duly registered business group that has some resemblance to "Igiseng Business Group" is "Igiseng Business Group Inc." Yet the evidence called for the Company, apart from being unreliable, admits that it was not registered. In these circumstances, it is beyond any doubt that, there was no legal entity under the name or description of "Igiseng Business Group" or "Igiseng Business Croup Inc." in terms of it being registered under the relevant Act.
It follows from this finding that, no business group with the description "Igiseng Business Group" or "Igiseng Business Group Inc." existed to purchase any shares from Starwest. The evidence is however very clear the "Igiseng-Okmanip Family Business Group Inc." was incorporated in 1982 and following its incorporation, it purchased shares from Starwest.
These answers or findings of facts also make it inevitable to answer the 5 ancillary question in the affirmative. The question then is, "whether Igseng-Okmanip Family Business Group Inc." is the same as "Igseng-Okamanip Family Business Group Inc." The affidavit of Mr. Reynold Pus, which was admitted into evidence for the Business Group without any objection from the defence, makes this very clear. If this is not the case then, it was incumbent on the party preferring a different answer to provide the factual basis for it, but that was not done. The Court can only be guided by what is properly admitted into evidence and is before it.
I now turn to the question of "whether the Business Group through Robin Iweropnok actually sold its shares to CIL? Again the facts make it very clear that, there was a purported sale of the Business Group's shares. There is however no evidence of the Business Group making a decision, informed or not, for a sale of its shares. Also there is no evidence of the Business Group, itself either through Iweropnok or someone else actually selling the shares. The evidence clearly demonstrates that the purported sale was possibly a fraud against the Business Group, and hence its members, by Mr. Peter Kilcoyne.
Bearing these factual questions and their answers in mind, I now turn to the legal question of what happens to the assets of a business group upon it being removed from the list of registered business groups and on it being reinstated? This question should be answered by reference to the governing legislation. The relevant legislation here is the Business Groups Incorporation Act.
Section 29 of the Act provides for the circumstances and the way or manner in which a registered business group may be wound up and removed from the register of business groups. There is however, no provision in the Act that deals with the question of restoration to the register after a business group has been removed from the register for failure to file its annual returns. When this position is contrasted with the Companies Act 1997, an Act which the IPA also administers and the Registrar of Business Groups is also the Registrar of Companies, there is no such vacuum.
Under the Companies Act 1997, ss 365 to 381 deals with the whole question of removal of the companies from the register of companies and their restoration. These provisions set out the ground and the way in which removal and restoration may take place. They also provide for the vesting of the properties and or assets of the company concerned in the hands of the registrar and his powers to deal with them, including a disposal of them by the Registrar. The provisions of s 381 is specifically on the question of restoring back to the company concerned its assets from the date of its restoration and the company continuing to function as if not removed from the register.
The purpose of the Business Group Incorporations Act and the Companies Act in my view, amongst others, in so far as lodgments of annual returns are concerned, is to ensure that they are functioning in accordance with the provisions of the Act. Bearing that in mind, I am of the view that, the legislature has vested power in the Registrar to take steps including the ultimate of removing a business group or a company from the register to compel compliance, rather than shut them down people would be reluctant to register their companies or business groups for fear of losing their assets to the Registrar and therefore the State. If such were the case, it would go against the need for proper regulation and control of conduct of business in the country, through the registration process.
In these circumstances, I am of the view that there is no reasonably justifiable reason for the process that is available under the Companies Act 1997 to apply to a business group that gets restored to the register after being de-registered for non-lodgement of its annual returns. Section 184 of the Constitution empowers the Courts to 'give ad hoc directions to remedy" any "lack or inadequacy" in a practice or procedure in a particular case before them. The authority is only in respect of a practice or procures as opposed to creating a new right or authority.
In so far as is relevant here, the right to apply for incorporation and the powers to accept such an application is already created by Parliament in terms of the Business Groups Incorporation Act. The Act does not prohibit the re-incorporation of a business group that has been struck out and so by inference it encourages re-incorporation. But the Act has not provided for the consequence that should follow where a business group is de-registered for non-lodgment of its annual returns and is subsequently restored. This is particularly important where the business group in question has had registered in its name, assets. Once the outstanding returns are filed, there is no reason why the business group should not be restored and so should its assets.
What actually happened in this case on the facts went in line with the view expressed. According to the affidavit of Mr. Pus, I note that, the Registrar of Business Groups was only interested in getting the business group to file its outstanding annual returns. It gave the required notice and warnings but to no avail due to the death of Mr. Magasim who was the main educated person behind the Business Group. Eventually, the Business Group realized what had happened and through the assistance of Ram Business Consultants had the outstanding returns filed and proper application was made to have it restored by way of re-incorporation which was done. Upon that happening, the assets reverted in my view to the Business Group, in the absence of any decision by the Registrar as to the disposal of the assets to a third party or parties. In the absence of any other evidence, the only assets the Business Group had as at the time of its removal from this list were the shares in Starwest. I therefore find that these shares got vested in the Registrar of Business Groups upon removal from the list and reverted to the Business Group upon its re-incorporation.
This leads me to now give consideration to the remaining and main question of who is the actual or real owner of the 500 shares. As will be apparent from the foregoing, the only business group that got incorporated in 1982, subsequently de-registered and re-instated is the Business Group (the second defendant) and none other. This is so in so far as a business group or business groups bearing the name "Igiseng" or "Okmanip" or both are concerned.
Mr. Barton Magasim and Iweropnok incorporated the Business Group, with Mr. Magasim being the only educated person behind it. This brought together, both the Igiseng Family and Okmanip Family, the paternal and maternal sides of Mr. Magasim in an economic undertaking. Through that vehicle they acquired the shares initially in the forerunner of Starwest and later redeeming it from CIL. Mr. Bubec and Mr. Iweropnok are the only persons of all the witness that have been called that have had something to do personally with both of these transactions. They confirm that the Business Group is the owner of those shares and through the Business Group both the Igiseng and Okmanip Family sides own these shares in line with its original intent.
The only problem is that the relevant share certificate and receipts have been written out in the name of "Igiseng Business Group inc." It is settled law that, generally where parties have reduced their agreement in the case of an agreement into writing the document should be allowed to speak for itself. No extrinsic evidence can be allowed to add to, subtract from or contradict what is stated in the document. The same goes for any other written record. An authority on point is the Supreme Court judgement in Curtain Brothers (QLD) Pty Ltd & Kinhill Kramer Pty Ltd v The Indepndent State of Papua New Guinea. This case ha been cited with approval in a large number of cases, which includes my own judgement in Odata Ltd v Ambusa Copra Oil Mill ltd and Papua New Guinea Forest Authority v Concord Pacific Limited, Paiso Company Limited and the Independent State of Papua New Guinea.
However, this rule is general. Extrinsic evidence can be admitted to help resolve any ambiguity in a written document or record. Lord Davey in the Privy Council stated this principle in these terms:
"Extrinsic evidence is always admissible, not to contradict or vary the contract: but to apply it to the facts, which the parties had in their minds and were negotiating about"
It is apparent that this rule concerns the admissibility of evidence and the purpose for which extrinsic evidence can be admitted when there is a written record. Hence the issue of whether or not extrinsic evidence should be allowed has to be addressed before the evidence in question is admitted. Once the evidence is admitted, the issue no longer arises. Thus, the Court is entitled to consider the evidence before it and arrive at a decision whether or not to accept it. In the present case, the defence took no issue on the admissibility of the evidence on point. In any case, I note that the evidence seeks to clarify an apparent ambiguity in relation to the entry on the share certificate as well as the receipt evidencing the buy back of the shares from CIL. Proceeding on that basis, I have accepted the evidence called by the Business Group as credible and have made a find of fact based on that evidence.
At the same time, I find on the evidence before me that, Mr. Iling Kalbiok established the Company with the aim of depriving the Opkmanip family members of their share and interest in the Business Group in the form of the 500 shares. This is despite the fact that the shares were initially and subsequently re-bought by funds raised by the Okmanip family members. The intention to deprive the Okmanip family members is apparent from the shareholding and board and management distributions in the Company and resorting to Court action seeking to have the shares in Starwest transferred to the Company instead of a resolution by the members of the Business Group. It is thus apparent to me that Mr. Iling Kalbiok and those with whom he had been acting are continuing to do nothing less than trying to defraud the Okmanip family members of their ownership and interest in the 500 shares in Starwest through the Business Group.
I further find that, Mr. Iling Kalbiok's conduct is contrary to the spirit of the mediated settlement which has agreed to both the Igiseng and Okmanip families having interests in the Business Group an through it, the 500 shares in Starwest. That settlement has also agreed upon the level of interest in the Business Group for both the families. That, in my view, appears to be the fairer way of resolving the dispute.
Given all of these, the answer to the main question is obvious, the Business Group is the actual and real owner of the 500 shares in Starwest. Then through the Business Group, both the Igiseng and the Okmanip Families as well as Grace and Faith Barton own these shares in the propositions agreed upon in the mediated settlement. There is therefore no issue for this Court to resolve in terms of the proportion of interest the respective family members have in these shares, as is being asked for by the Company its submissions.
In the end, I find that the company as the plaintiff has failed to make out its claim in any way. I therefore order judgement for defendants and order costs against the Company and failing any recovery from it against Mr. Kalbiok personally for three reasons. Firstly, the company appears to be a company without any asset, which has been promoted by Mr. Kalbiok purposely to take the shares, the subject of these proceedings, away from its lawful and legitimate owners. Secondly, he has come to Court without having any good factual or legal basis, and more so after the mediated settlement had resolved the issue as between the members of the Igiseng and Okmanip Families.
Lawyers for the plaintiff: Ninai Lawyers.
Lawyers for first
defendant: Rageau Elemi & Kikira Lawyers.
Lawyers for the second
defendant: Warner Shand Lawyers.
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URL: http://www.paclii.org/pg/cases/PNGLR/2003/27.html