National Court of Papua New Guinea

The defendant filed a notice oention to defend the motion on 20th March, 1997. He followed th by filing aing an ansn answering affidavit on 26 March 1992 pursuant to O. 4 r 44 (2) of the National Courts Rules. His evidenntains complete lete denial of allegations by the plaintiff60; Mr Gispe says in his evis evidence that as far as he is concern he is still the Chairman of the Board of Management and the Managirector and Secretary of thof the other company Mt Uri Waka Enterprises and the Nondugul Tumbo Pty Ltd. He further said, the Plff tiff has been in the former Board of Directors under the management of Mr Alfred Kalio.

Mr Gispe relies much on anotheional Court Order dated 28th February, 1996 - (see Ann. “A”). Paragraph (aph (2) ofset oset of orders that were given on 28th February 1996 provided that all contemnors were to vacate the Company premises and were to deliver up possession of tme to the second plaintiff, Mr Gispe and his executives.&#1s. Paph 4 of the same order pder prohibited all parties from taking any further proceedings in relation to the administration of the second plaintiff until such time when all contemnors have movedfrom the company premises.

Mr Gispe admits at par, 9, 10 & 11 of his affidavit that although he was there at the venue on which the General Meeting was being held, he objected to the meeting being held and chose not to attend. He merely ind the plaintifintiff and the board of directors present at the meeting that time that the meeting they were holding was illegal e decided to leave. Mr Gispe fu deposed that dhat due to the activities of the first irst plaintiff and others has led to complete destruction of the second plaintiff’s assets including coffee trees worth thousands of kina. As regards to the contemMrrs Mr Gispe says at paragraph 20 of his evidence in affidavit that they have not yet moved out from the company premises.

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This liss list contains 4ins 4 more more addi additionational board of directors than the list provided by the piff i Affi of Seaf Search conducted on 28th August 1996. (see Ann. � to1; to1; to plai plaintiff’s affidavit an affidavit of Search by Lilly Laui from the Registrar of Companies). The f7 of the Plaintiffff’s list all appear in that of efendant while the 4 additidditional ones appear on the defendant’s list do not appear in the list provided by Plaintiff. apperom this confusiofusiofusion is that, the affidavit of Search was conducted on 28th of August last year while the list of directrovided by the Defendant in Ann. “I” of the defendant’s affidavit was recs recently made on 8th of January, 1997. The list of directors provided by the Defendant is not supported by any affidavit of Searc60; The only Affidaviidavit of search included in the defendant’s evidence is the one relating to another Company Mt Uri Waka Enterprises Pty Ltd, incorpo on 3rd November 1977 and the date of search was 11th of Jaof January, 1989. The list given by efendantndant seems most recent however it is not supported by an affidavit of search nor is there any documentary evidence of any board of director’s min The defendant partially pleads to this in paragraph raph 1 of Part III of his affidavit. He shat, the shareholders ders had voted the first plaintiff out and says he would provide all proper minutes latter. To date no eve has been fien filed to su what the defendant has deposed to.

In 1996, it seem seems the parties came to Court several times and obtained two sets of junts. On 9th of February, the contemnors were found gund guilty. On 28th of the same month, orders were issued in favour of the defendant and his executives to run the company and directed that the defendant and his board of directors to take possession o plantation. On the same date turt also also directedected that no one was to file any further proceedings until all contemnors had moved out.

There may be two issues to determine. Thst is that contents of t of the orders obtained on February 28, 1996 were of specific direction that no further proceeding would be taken out by anyone of the parties until all illegal squatted moved. By that time time too,runn running of the company was placed in the hands of the Defendant and his executives. Thus tmust be evidence to e to the satisfaction of this Court whether the contemnors have moved out from the second plaintiff’s ses already or not. That is at the requiremenrement of the orders issued on 28th of h of February last year. There is ece bnfore this Chis Court first by the plaintiff and Mr Alfred Walis Kalio (see paragraphs 3 and 18 of their respective affidavihat antemnors have moved out from the second plaintiff’s premises. I take take that that to mean the contemnors have complied the Court Orrt Orders and have vacated the Nondugul Plantation grounds. On the other hand the dantndant says at para 5 of affidavit that, the contemnors are still squattiuatting on the second plaintiff’s pr;s premises. Phillip Taimil also depto this fact.

The second issue relates to allegationations raised by the first plaintiff and his witness. Evidence of Mred Kaighlighhlight certain issues which I think worth mentioning. Fihere is alle allegation tion of non compliance with the Invnt Promotion Authority Rules and lack of accountability for the last 9 years. There here has also be Diro Directors meeting forsame period of time and no d no declaration of dividends has been made by the defendant’s management. These are not only h of nve Investment Promotion Authority rules but also a br a breach of the Companies Act Ch. No. 146. A general meeting is a mg of all members of the company and all Members are entitled to attend and vote thereat.&#1t. It is upreme legislative aive auty of a company. It has powers end the comp company’s memorandum and articarticles and has other powers and duties aferred to it by the Act. A “generalingRgRg” or what is commonly known as “annual general meeting” is held at least once in every calendar year: see S. 144 (1) of the Companies Act. Other general meetingr thar than the annual general meeting are referred to as “extraordinary general meetings”.

If default is made in holding an annual genmeeting (hereinafter referred to as AGM) the officer of thef the Company is guilty of an offence and a member may apply to the Court der a general meeting, see S. 144 (4), see also Secretary for Law v New Guinea Development ment Corporation Ltd [1975] PNGLR 197. Failure to lodge annual returns also constitutes an offence under S. 166 (5) of the Act. Thedoes not specify the buhe business to be transacted at the AGM, because as usual that would be govern by the Article of Association. During the AGM mattere declaration of dividends, considerations of accounts, bal, balance sheets, report of directors and auditors or even election of newctors in place of those retiring may be discussed.

I am hampered by the fact that, Iat, I have not had the benefit of haintroduced to the evidenvidence the articles of association of the second plaintiff to determine who was entitled to call the me deposed to by Mr John Mokun - see Ann. “B”. Sectio (1) of the act ract ract requires that two or more members holding not less than 10% of the issued share capital or in the event that the company does not have a share capital, not less than number of the Memberembers of the company may call a general meeting. In accordance with S. 1) o(1) of the Companies Act, directors are required to convene an Extraordinary General Meeting on requisition of members who hold not less than 10% of the paidapital and who have voting rights and in the case of a comp company not having a share capital not less than 10% of the total voting rights S. 146 (1). The reqion must state the the subject of the meeting and must be signed by the requisitionists and be posted to the Company’s registered office. This I find to been compliomplied with by the Notice of Intention to all directors dated 2nd April 1996. (see “B” #160; to first tiff’s217;s affidavit). I find that tare two minutminutes one of a ge a general meeting held by the board of directors and shareholders and another one by the board of directors thves.& (see Ann. “#8220;C” and “D” to plai plaintiff’s affidavit). There more members presentesent in those two respective meetings to form a quorum pursuant to S. 149 (1) of the Act. (see also the cf Howbeach each Coal Co Ltdague (1860) 175 E.R. 1136).

Both minutes dated 17th 17th April 1996 show that the defendant showed up briefly then disappeared0; He gave the following reasons to those present at the mehe meeting held at 10.00 am that day. That the meeting would have to be arranged by himself and no other directors and they have no powers to organise meetings that he had his own board of directod executive to hold meetings. Agh he said he held his bois board meeting the same date date there is no evidence to support that view. The third reason he gav beas because the company had gone into bankruptcy when he took over. He may be referring to 19e7 when he took over management of the Company.

In passing, I wish to say that, unless otherwise specified by the company7;s articles powers are conferred on directors collectively as a board to be exercised at b at board meetings of which due notice has been given and at which a quorum is present: (see Modern ny Law by Gowe Gower at page 152). It has long been established that a casual meeting of directors at the company’s office cannot be treated as a board meeting at the motion of oneome o directors againsgainst the will and intention of the other or others who has/have not rece received notice of the calling of such meeting: Barron v Potter (19 Ch. 89h. 895)).

The defendant at least had until today oduce evid evidence to refute what the plaintiffs have said. Thegation of by the defendefendant that his new directors have approved the selling of the tr parts in their meeting on the 20 September 1996 ought to b to be evidenced by the minutes of a meeting. What I have before me in annexure “H” to the defendant’s affidavit is a copy of the letter from H.R. Hagon - Managing Director of Wahgi Mantation Pty Ltd, with the request to Mr Gispe to sign to signify his acceptance of sale.&#le. appears at the bottom righ right hand of that exhibit is a hand written list of directors of the second plaintiff. It does not r to me to be o be a valid ng unless supported by any other evidence. The allegallegation depos d to in PART III paragraph 1 that the shareholders voted trst plaintiff out must be evidenced by a minute of thof the proceedings of the board of directors. riginating summon filed aned and dated 2nd Januaranuary, 1997 the alleged returns by the defendant Annexure “I” was compiled on 8th of the sameh.&#1his might have beve been done to counterattack the declaratlarations sought by the plaintiffs in the originating summons. A com#8217;s article wouldwould invariably place the management and control of the business and affairs of a company in the han the of directors.&#16. It is the dors who plan than the company’s business anss and ensure that there is money availabl such business and they work out strategies to the company’s goods and services.

The learned authors of “Introduction to the Law of Business Associations in Papua New Guinea” say at page 100 that:

“...directors do not have a completely free hand when managing the company’s business and affairs. First, they comply with thth the provisions of the Companies Act and the respective articles and memorandum of association. Second, they a common law law subject tobroad categories of duties: fiduciary duties of loyalty andy and good faith; and the duties of care, deligence and skill.”

Lawyer for the Plaintiffs: Paulus Dowa Lawye>

First Floor Komkui Haus

Kuri Street

PO B>PO Box 1265

Mount Hagen

Lawyer for the Defendant: Matthew P Tamutai Lawyers

Suite F1 Hagen Plaza Building Hagen Drive

PO Box 1108

Mount Hagen