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Mineral Resources Enga Ltd v Mineral Resources Development Corporation Ltd [2010] PGNC 207; N4279 (10 November 2010)

N4279

PAPUA NEW GUINEA
IN THE NATIONAL COURT OF JUSTICE

OS 632 OF 2007

BETWEEN:

MINERAL RESOURCES ENGA LIMITED
Plaintiff

AND:

MINERAL RESOURCES DEVELOPMENT CORPORATION LIMITED
Defendant/Cross Claimant

AND:

OIL SEARCH LIMITED
First Cross Defendant

AND:

DRD (PORGERA) LIMITED
Second Cross Defendant

Waigani: Hartshorn J.
2009: 12th, 13th August
2010: 10th November

Application by Stakeholder for relief by way of Interpleader – Order 14 Rules 52 and 53 National Court Rules

Facts:

The defendant/ cross claimant Mineral Resources Development Corporation Ltd (MRDC) claims in its cross claim against Oil Search Ltd (OSL) an order for the release of retention funds that have been held in escrow (escrow funds) by Gadens Lawyers pursuant to a Share Sale Agreement dated 12th May 1999. OSL submits that it does not make any claim to the escrow funds but cannot authorise their release because of competing claims to the funds by MRDC and Mineral Resources Enga Ltd (MRE). OSL seeks a stay until final determination of MRDC's cross claim against OSL and any claim that MRE has against OSL, concerning the escrow funds.

Held:

There is nothing to suggest that MRE has a claim against MRDC in respect of the escrow funds. Consequently, the relief sought by the Applicant/First Cross Defendant in its notice of motion dated and filed 5th August 2009 is refused.

Cases cited:
Papua New Guinea Cases

Nil

Overseas Cases
De La Rue v. Hernu, Peron & Stockwell Ltd [1936] 2 All ER 411
Watson v. Park Royal (Caterers) Ltd [1961] 1 W.L.R. 727

Counsel:

Mr. H. J. Leahy, for the Plaintiff
Mr. S. Nutley and Ms. A. Salmang, for the Defendant/ Cross Claimant
Mr. W. Neill and Mr. M. Henao, for the First Cross Defendant

10th November, 2010:

1. HARTSHORN J: Mineral Resources Enga Ltd (MRE) alleges that it is entitled to a half share of a tax credit that was owed to Mineral Resources Porgera Ltd (MRP). MRE commenced proceedings against Mineral Resources Development Corporation Ltd (MRDC) seeking payment of the half share. MRDC denies that it is liable to pay MRE and has cross claimed against Oil Search Ltd (OSL) alleging amongst others that if OSL owes the tax credit, it owes it equally to MRE and MRDC (tax credit claims).

2. MRDC also claims in its cross claim against OSL an order for the release of retention funds that have been held in escrow (escrow funds) by Gadens Lawyers pursuant to a Share Sale Agreement dated 12th of May 1999.

3. OSL now seeks relief by way of interpleader in respect of the escrow funds.

History

4. This application was heard on 12th and 13th August 2009. I reserved my decision. This proceeding was then stayed by order of the Supreme Court pending the determination of an Appeal. The Appeal was determined on 30th April 2010. The matter returned to court on 16th June 2010 when this court was informed that the Supreme Court Appeal had been determined. On 12th July 2010 counsel for the parties informed this court that they had no objection to me delivering my reserved decision and I determined that the Supreme Court decision did not preclude me from so doing. I now deliver my decision.

Interpleader

5. Specifically, OSL seeks a stay until final determination, of the cross claim by MRDC against OSL and any claim by MRE against OSL, concerning the escrow funds.

6. MRDC opposes the application as it submits amongst others, that MRE does not have a claim to, and has not made any claim for, the escrow funds.

7. Counsel for MRE informed the court that MRE does not take a position on the interpleader application.

Law

8. OSL relies upon Order 14 Rules 52 and 53 National Court Rules for the relief that it seeks. These Rules are:

"52. Case for relief. (56/2)

Where-

(a) a person is under a disability (otherwise than as a sheriff) in respect of a debt or other personal property; and

(b) he is sued, or expects to be sued, in any court, for or in respect of the debt or property by two or more persons making adverse claims to the debt or property,

the Court may, on application by him, grant relief by way of interpleader.

53. Application in pending proceedings. (56/3)

(1) Where a stakeholder has, in proceedings in the Court, been sued for or in respect of the property in dispute, the application shall be by motion in the proceedings.

(2) A stakeholder applying under Sub-rule (1)-

(a) shall serve notice of the motion on each party to the proceedings who claims an interest in the property in dispute; and

(b) shall serve notice of motion personally on each claimant who is not a party to the proceedings."

9. The only cases reported in this jurisdiction concerning interpleader relief relate to sheriff interpleaders and are not relevant to the circumstances of this case. Our Order 14 Rules 52 and 53 National Court Rules are similar to and emanate from the equivalent English and New South Wales Supreme Court Rules. Cases from these jurisdictions on the equivalent Rules are therefore relevant and of persuasive value in our jurisdiction.

10. Counsel for OSL has referred this court to the decision of De La Rue v. Hernu, Peron & Stockwell Ltd [1936] 2 All ER 411 and particularly the decision of Greene LJ in which the history of the law of interpleader is considered. His Lordship cites Daniell's Chancery Practice 4th Edn, Vol. 2 p. 1418, published in 1867, at 416 as follows:

"Where two or more persons claim the same thing, by different or separate interests, and another person, not knowing to which of the claimants he ought of right to render a debt or duty, or to deliver property in his custody fears he may be hurt by some of them, he may exhibit a bill of interpleader against them."

11. Further, at 417, His Lordship states:

"What really happens is that whereas there are two claimants who are harassing a person desirous of interpleading, that person is interpleading by the interpleader proceedings calling upon the claimants to come out into the open and formulate their claims against him."

12. For interpleader relief to be granted however, it must be apparent that there is some real foundation for the expectation of a rival claim. In Watson v. Park Royal (Caterers) Ltd 1961 1 W.L.R. 727, Edmund Davies J. stated at 734:

"There is ample authority for the proposition that the discretionary relief of interpleader will not be granted unless there appears to be some real foundation for the expectation of the rival claim: see Isaac v. Spilsbury (1833) 2 Dowl. 211; Harrison v. Payne (1836) 2 Hodg 107; and Sharpe v. Redman (1837) Will.Woll. & Dav 375. The fact that these are,in the words of the district registrar, "somewhat elderly authorities" I think adds to their weight rather than diminishes it."

This application

13. OSL submits that as to the escrow funds, it does not make any claim to them except for a cash adjustment and payment of liabilities in accordance with a relevant accountant's report. OSL submits further, that it cannot authorise the release of the escrow funds to either MRE or MRDC when they make competing claims to them. The competing claims to the escrow funds according to OSL are of MRDC against OSL in its cross claim and of MRE as disclosed in its unsuccessful application that sought to restrain disbursement of the escrow funds and in the correspondence annexed to the affidavit of Ms. Joyce Agaru.

14. To whom the escrow funds should be paid OSL submits, is dependent upon the resolution of the dispute between MRE and MRDC. OSL submits that this issue can be adjudicated upon separately to the issue of the tax credit claims. OSL relies upon the affidavit of Mr. Timwapa Dawidi which amongst others, refers to the affidavit of Ms. Agaru and it's annexures.

15. MRE as mentioned, does not take a position on the interpleader application. MRE's counsel submitted by way of clarification, that there had been a representation by OSL that if the tax credit claims were payable, then payment of those claims would be from the escrow funds. Hence, the unsuccessful application by MRE in June 2009 to restrain disbursement of the escrow funds, in essence was an attempt to preserve assets and was not because of any claim that MRE has to the escrow funds per se.

16. MRDC submits that MRE does not have a claim to the escrow funds and has not made any claim for them. It further submits, that OSL has refused to comply with its contractual obligations to pay the escrow funds to MRDC and that there is no dispute between MRE and MRDC as to the escrow funds.

17. From a perusal of the pleadings and the evidence, I am not satisfied that there is a claim by MRE or that there appears to be some real foundation for the expectation of a claim by MRE to the escrow funds. The correspondence annexed to the affidavit of Ms. Agaru does not disclose any claim to the escrow funds by MRE apart from those funds being used to pay MRE's tax credit claim. The unsuccessful injunction application in respect of the escrow funds by MRE can be seen in the same light.

18. If the escrow funds were paid to someone other than MRE, there is nothing in the pleadings or evidence to suggest that MRE would have a claim against OSL in respect of that payment. The opposite would be the case if the escrow funds were paid to MRE and not to MRDC. There is also nothing to suggest that MRE has a claim against MRDC in respect of the escrow funds.

19. Consequently, the relief sought by the Applicant/First Cross Defendant in its notice of motion dated and filed 5th August 2009 is refused. The costs of the Plaintiff and Defendant/Cross Claimant of and incidental to the notice of motion shall be paid by the Applicant/First Cross Defendant.

_____________________________________________________________
H.J. Leahy Lawyers: Lawyers for the Plaintiff
Peter Allan Lowing Lawyers: Lawyers for the Defendant Cross Claimant
Blake Dawson: Lawyers for the First Cross Defendant