N4277

PAPUA NEW GUINEA
IN THE NATIONAL COURT OF JUSTICE

OS 350 OF 2009

BETWEEN:

KURUBU IPARA, RUBEN NALEPE, NIXON MANGAPE and JOHN KULINA in their Capacity as Trustees and parents and guardians of beneficiaries of PORGERA SML CHILDRENS INVESTMENT TRUST FUND
Plaintiffs

AND:

DANIEL YALUMA and BARRICK (NIUGINI) LTD as Manager of the Porgera Joint Venture
Defendants

Waigani: Hartshorn, J.
2010: 13th April,
: 8th September

Declaratory orders - whether trustees properly elected - with the trustees ceases to have powers, duties and responsibilities under Trust Deed upon the expiry of his term

Facts:

Porgera SML Landowners Children Investment Fund was established for the benefit of its beneficiaries, the children of the Special Mining Lease landowners. The Fund has provided assistance since its establishment particularly by paying or contributing towards the beneficiaries' school fees. The plaintiffs have commenced this proceeding seeking amongst others, declaratory orders in respect of the duties of the trustees of the Fund. They also seek declaratory orders that the purported election of 3 of the plaintiffs as trustees of the Fund on 4th May 2009 was valid.

Held:

1. The application for a declaration that the terms of appointment of Messrs Yaluna, Paraia and Kulina as trustees representing the SML landowners expired on or about 2nd May 2008, in accordance with clause 10.3 (a) of the Trust Deed, is granted.

2. A trustee ceases to have any power, duty or responsibility under the Trust Deed upon expiry of his term.

3. The orders sought concerning Mr. Callister's appointment and the purported election of Messers Ipara, Nalepe and Kulina are refused.

4. In the exercise of this court's discretion, I refuse the declaration sought in paragraph 1 and the consequential relief sought in paragraphs 5, 6, 7 and 8 of the Originating Summons. 

Cases cited:

National Capital District Interim Commission v. Bogibada Holdings Pty Ltd [1987] PNGLR 135 
Ok Tedi Mining Ltd v. Niugini Insurance Corporation (No. 2) [1988-89] PNGLR 45 
TS Tan v. Elcom (2002) SC683

Counsel:

Mr. D. M. Steven, for the Plaintiffs 
Mr. R. Bradshaw, for Mr. Daniel Yaluma
Mr. T. Boboro, for Barrick (Niugini) Limited

8th September, 2010

1. HARTSHORN, J: In 1992 the Porgera SML Landowners Children Investment Fund was established for the benefit of its beneficiaries, the children of the Special Mining Lease landowners. The Fund has provided assistance since its establishment particularly by paying or contributing towards the beneficiaries' school fees.

2. The plaintiffs have commenced this proceeding seeking amongst others, declaratory orders in respect of the duties of the trustees of the Fund. They also seek declaratory orders that the purported election of 3 of the plaintiffs as trustees of the Fund on 4th May 2009 was valid.

3. The defendant Daniel Yaluma was a trustee of the Fund and the other defendant, Barrick (Niugini) Ltd is the manager of the Porgera Joint Venture. 

4. The parties have agreed the issues that are to be determined by this court.

Issues for trial
Whether the term of the office of the trustees appointed in May 2005 has expired?

5. Clause 10.1 of the Trust Deed specifies who shall be appointed trustees of the Fund. There is provision for 3 nominees to be appointed at an annual general meeting of SML landowners and a further 3 non SML landowners to be appointed respectively by the Secretary of the Department of Finance and Planning, the Porgera Development Authority and the Porgera Joint Venture.

6. It is agreed by the parties that Daniel Yaluma, John Kulina, Nixon Mangape and Jonathan Paraia were appointed under clause 10.1(a) of the Trust Deed in May 2005 as the SML landowner trustees. However as stated, clause 10.1(a) provides for 3 nominees to be appointed at an annual general meeting and not 4. Further, from a perusal of the evidence, it is apparent that Nixon Mangape is a trustee representing Porgera Development Authority and so would have been appointed under clause 10.1(b)(ii). I assume therefore that Nixon Mangape being one of the SML landowner trustees under clause 10.1 as an agreed fact, is a mistake.

7. A person under clause 10.1(a) is appointed for 3 years, reviewable after 2 years and is eligible for reappointment: clause 10.3(a). It is agreed by the parties that the term for the appointment of the trustees Daniel Yaluma, John Kulina and Jonathan Paraia expired in or around May 2008. Accordingly I find that the term of these 3 trustees expired in or around May 2008.

Was the meeting of 4th May 2009 held at Porgera a Special General Meeting, called in accordance with clause 9 of the Trust Deed?

8. Clause 9 of the Trust Deed provides for special general meetings of SML landowners. Clause 9 is as follows:

"9.1 The SML Landowners may call a special general meeting to consider any aspect of the operation of the Fund by a written request to the Trustees, signed by twenty-five SML Landowners, stating the nature of the business to the (sic) considered.

9.2 Before the expiry of thirty days after the receipt of the request, the Trustees shall call a meeting of the SML Landowners, and give notice of the time, place and business of the meeting in accordance with Clause 8.2.

9.3 A quorum for a special general meeting shall be fifty SML Landowners present in person at the meeting, and the meeting shall be held in accordance with the procedures for an Annual General Meeting so far as they are appropriate.

9.4 The Trustees and the beneficiaries may attend a special general meeting and shall have speaking rights but, unless they are also an (sic) SML Landowners, no voting rights."

9. It is clear that it is SML landowners that may call a special general meeting. A written request must be signed by 25 SML landowners and before the expiry of 30 days after receipt of the request, the trustees shall call a meeting of the SML landowners.

10. In the affidavit of Jonathan Paraia filed 7th July 2009 on behalf of the plaintiffs Mr. Paraia deposes amongst others that, "....relevant agencies of the National Government called a meeting of all of the stakeholders including the Land Owners and former Trustees", that he attended the meeting in Port Moresby on 8th April 2009, "…that the meeting resolved for the National Government (MRA) to appoint the District Administrator of the Porgera District to convene a Special General Meeting of the 24 representatives of the Porgera SML Landowners to appoint new landowner Trustees who would then form a legally constituted Board of Trustees…."

11. In the affidavit of Mori Iarume the Acting District Administrator Porgera District, Mr. Iarume deposes that he was directed by MRA to conduct a special general meeting of SML landowner agents and he annexes a copy of a letter from MRA dated 8th April 2009 to the effect. 

12. There is no evidence of the required written request for a special general meeting by not less than 25 SML landowners to the trustees stating the nature of the business to be considered at the meeting, as required by clause 9.1 of the Trust Deed. Further, from Mr. Iarume's evidence filed on behalf of the plaintiffs, it is evident that the meeting on 4th May 2009 at Porgera was called by him as directed by MRA. There is no evidence that the meeting was called by the trustees as required by clause 9.2 of the Trust Deed. There is also no evidence that notice of the meeting was given as required by clause 8.2 of the Trust Deed.

13. Given the above, I am not satisfied that the requirements of clauses 9.1 and 9.2 of the Trust Deed have been satisfied. I find that the meeting of 4th May 2009 held at Porgera was not a special general meeting, as it was not called in accordance with clause 9 of the Trust Deed.

Whether the purported election of Messrs Kurubu Ipara, Reuben Nalepe and John Kulina as Trustees [representing the SML Landowners] pursuant to clause 10.1(a) of the Trust Deed on 4th May 2009 was in accordance with the requirements of the Trust Deed?

14. Clause 10.1 (a) of the Trust Deed and the definition of annual general meeting provide that 3 of the Trustees of the Fund shall consist of 3 nominees appointed by an annual general meeting of SML landowners in accordance with clause 8. Clause 8.5 (e) provides that part of the regular business of the annual general meeting shall be the appointment of trustees in place of those whose term has expired, or is to be reviewed, and the filling of vacancies.

15. It is clear that the appointment of SML landowner trustees must be made at an annual general meeting and not at a special general meeting. The only other ways for an SML landowner trustee to be appointed is pursuant to clause 8.8 which allows for a meeting of agents of SML landowners to deal with the business of an annual general meeting where an annual general meeting fails to take place for want of a quorum, or by a meeting of agents where there is a vacancy: clause 10.5. That did not happen here. There is no evidence that the meeting of 4th May 2009 was an agents meeting and there is no evidence that it was either an annual general meeting or a failed annual general meeting.

16. Accordingly I am not satisfied that the purported election of Messrs Ipara, Nalepe and Kulina as trustees representing the SML landowners pursuant to clause 10.1 (a) Trust Deed on 4th May 2009 was in accordance with the requirements of the Trust Deed.

Whether the Trustees cease to have any powers, duties and responsibilities as Trustees under the Trust Deed upon expiry of their term?

17. The defendants submit that in regard to trustees appointed under clause 10.1 (a), where the term of appointment expires and new trustees are not appointed, the existing trustees continue to act in office and can exercise the powers and perform functions as trustees under the Deed.

18. This issue is not specifically addressed in the submissions of counsel for the plaintiffs. In oral submissions, if I understand correctly, counsel for the plaintiffs conceded that a trustee remains in office at the expiry of his term if no other trustee was appointed to replace him.

19. Regardless of whether counsel for the plaintiffs conceded to the defendant's submission, I am not satisfied that the defendant's submission is correct. The primary source of a trustee's authority to act is the instrument creating the trust: Principles of the Law of Trusts, second edition, Ford and Lee p 345 para 811, and, "The creator of the trust may make provisions in the deed of settlement….. to meet such cases as he considers likely to arise and give certain named or described persons the right to appoint new trustees where circumstances require such appointment. The instrument … may limit the power by stating the precise circumstances in which the power is to be exercised.": Jacobs Law of Trusts, third edition, Meagher and Gummow, p 365.

20. The Trust Deed is quite specific as to the appointment and term of a trustee appointed under clause 10.1 (a). Such a trustee shall be appointed for a term of 3 years, renewable after 2 years and is eligible for re-appointment. I am not aware of any legislative provision or case authority and none was cited to me, to the effect that in the absence of a provision in the relevant instrument providing otherwise, a trustee whose term has expired continues to act as trustee until another person is appointed as a replacement. I did not find the passages from Ford and Lee (supra) cited to me, of assistance. 

21. I find that trustees cease to have any powers, duties and responsibilities as trustees under the Trust Deed upon expiry of their term.

Whether Mr. Jeff Callister is a Trustee appointed by the PJV pursuant to clause 10.1 (b) of the Trust Deed and whether his appointment to the board of Trustees is correct pursuant to the Trust Deed?

22. Mr. Callister deposes that on 26th January 2009 the General Manager of Porgera Joint Venture wrote to the chairman of the Porgera Development Authority, Nixon Mangape regarding his appointment as the PJV trustee. A copy of the letter is annexed to Mr. Callister's affidavit. Since then Mr. Callister has attended numerous meetings as the PJV trustee and no objection was taken to his appointment by the trustees prior to this proceeding being commenced.

23. PJV has no issue with Mr. Callister's appointment and it is PJV that purportedly appointed him as its trustee pursuant to clause 10.1 (b) (iii) of the Trust Deed. There is no credible evidence to suggest that Mr. Callister is not the PJV trustee.

24. I am satisfied that Mr. Callister is a trustee appointed by PJV pursuant to clause 10.1 (b) (iii) of the Trust Deed and that his appointment is correct pursuant to the Trust Deed.

Relief 

25. Having considered the above agreed issues I make the following observations concerning the relief sought:

26. As to the declaration sought in paragraph 2 of the Originating Summons that the terms of appointment of Messrs Yaluna, Paraia and Kulina as trustees representing the SML landowners expired on or about 2nd May 2008, in accordance with clause 10.3 (a) of the Trust Deed, I grant that declaration.

27. As to the declarations sought in paragraphs 3 and 4 of the Originating Summons concerning Mr. Callister's appointment and the purported election of Messers Ipara, Nalepe and Kulina, these are refused.

28. The other relief sought in paragraph 1 of the Originating Summons which seeks a declaration that the trustees are in breach of their duties, in my view, falls within the category referred to in the Supreme Court decision of TS Tan v. Elcom (2002) SC683 and the National Court decisions of National Capital District Interim Commission v. Bogibada Holdings Pty Ltd [1987] PNGLR 135 and Ok Tedi Mining Ltd v. Niugini Insurance Corporation (No. 2) [1988-89] PNGLR 45. That is, it is relief that will not resolve the issues between the parties and it is not relief that will finally settle the real dispute between the parties. I also note as an aside, that one of the plaintiffs appears to be a trustee against whom the declaratory relief in paragraph 1 of the Originating Summons is sought.

29. I therefore exercise this court's discretion and refuse the declaration sought in paragraph 1 of the Originating Summons and the consequential relief sought in paragraphs 5, 6, 7 and 8 of the Originating Summons. As a consequence it is not necessary for me to consider the other agreed issues to determine the substantive relief sought.

30. Of immediate concern is the question of the appointment of the SML landowner trustees under clause 10.1 (a) of the Trust Deed. Given my findings, there currently are no such trustees. My reading of clause 10.5 (a) is that it provides for vacancies to be filled by a meeting of agents of SML landowners. It does not appear that the term 'vacancy', is restricted to a circumstance arising out of clause 10.4. I stress however that I have not heard argument on this point. If it is considered that there are impediments to the appointment of SML landowner trustees under the Trust Deed, appropriate relief may be sought under the Trustees and Executors Act.

Orders

31. The orders of the Court are: 

a) the relief sought in paragraphs 1, 3, 4, 5, 6, 7, and 8 of the Originating Summons filed 7th July 2009 is refused.

b) the relief sought in paragraph 2 of that Originating Summons is granted.

c) 75% of the costs of and incidental to the proceeding are to be paid by the plaintiffs to the defendants.

_________________________________________________
Stevens Lawyers: Lawyers for the Plaintiffs 
Bradshaw Lawyers: Lawyers for the Mr. Daniel Yaluma 
Barrick Niugini Ltd: Lawyers for Barrick (Niugini) Ltd