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Raikos Holdings Ltd v Porche Enterprise Ltd [2011] PGNC 129; N4300 (24 May 2011)

N4300

PAPUA NEW GUINEA
IN THE NATIONAL COURT OF JUSTICE

OS NOS 616 & 924 OF 2008

RAIKOS HOLDINGS LIMITED
Plaintiff

V

PORCHE ENTERPRISE LIMITED
Defendant

Madang: Cannings J

2011: 20, 24 May

PRACTICE AND PROCEDURE – interlocutory order sought for payment of levy fees due under a logging and marketing agreement – alleged uncertainty as to ownership and control of plaintiff company.

The plaintiff sought interim orders regarding payment of levy fees due under a logging and marketing agreement with the defendant. It also sought an order that the defendant deal with its managing director until the substantive proceedings are determined, and an order restraining the defendant from making any changes to the Company Register until the substantive proceedings are determined.

Held:

(1) The defendant had presented no good reason not to be ordered to pay to the plaintiff the levy fees for which it was liable.

(2) It was appropriate to make an order as to which individual the defendant should be dealing with.

(3) It was also desirable to make an order that there be no changes to the Company Register without the leave of the court.

Cases cited

The following cases are cited in the judgment:

Asivo v BSP (2011) N4252
David Yaga v Andrew Sallel (2011) N4253
Gawan Kuyan v Andrew Sallel (2008) N3376
Raikos Holdings Ltd v Porche Enterprise Ltd (2011) N4254

NOTICE OF MOTION

This was a motion for interlocutory orders.

Counsel

T Anis, for the plaintiff
S Toggo, for the defendant

24 May, 2011

1. CANNINGS J: This is a ruling on a motion by the plaintiff seeking interim orders regarding payment of levy fees due under a logging and marketing agreement with the defendant. The proceedings have a complex history with which I am very familiar, as I have made numerous interlocutory orders in the past in these proceedings. I also handed down a judgment in May 2008 in related proceedings, OS 19 & 33 of 2007, in which the defendant was involved, concerning a dispute as to ownership and control of the plaintiff (Gawan Kuyan v Andrew Sallel (2008) N3376).

2. In the substantive proceedings the plaintiff is seeking damages for breach of contract against the defendant. The plaintiff says that the matter is ready for trial, however I have been hearing that for quite some time now, and I place little store in that claim.

3. I made an interim order on 9 April 2009 allowing the defendant to continue its operations on the Rai Coast TRP pending further order of the court or determination of the substantive proceedings. While the plaintiff and the defendant have been preparing for trial, another dispute has erupted within the plaintiff as to its management and control. At the risk of oversimplification there seem to be two factions, one led by Andrew Sallel (who was the leader of the successful group in the 2008 case), the other by David Yaga. I recently refused an application by Mr Yaga for interim orders, in OS 369 of 2010, that Mr Sallel and other members of his group be restrained from holding themselves out as shareholders, directors or officers of the company and that all money payable to the plaintiff by the defendant under the LMA be put on hold (David Yaga v Andrew Sallel (2011) N4253).

4. Another development is a recent one. On 15 April 2011 I found the defendant guilty of contempt of court for deliberately disobeying an order of this court dated 10 February 2010 that it pay to the plaintiff levy fees of K76,847.64. I rejected the defence that the defendant could not comply with the order of 10 February 2010 because of confusion over who the proper representatives of the plaintiff were (Raikos Holdings Ltd v Porche Enterprise Ltd (2011) N4254).

5. Getting back to the plaintiff's motion that I am now ruling on, it is threefold. First it seeks an order that levy fees due to it under three logging shipments that have been made since the July 2009 shipment (that led to the February 2010 order), be paid within five working days. Secondly, it seeks an order that the defendant deal with Mr Sallel, as Managing Director, and his management team (ie the team recognised by the 2008 decision) until the substantive proceedings are determined. Thirdly, it seeks an order restraining the defendant or any of its agents or any third parties from making any changes to the Company Register until the substantive proceedings are determined.

FIRST ORDER SOUGHT: PAYMENT OF LEVY FEES

6. As to the first order sought, the defendant appears to concede that it owes levy fees to the plaintiff. The defendant's managing director, Chua Han Hwee, states that a cheque has been drawn in favour of "Raikos Holdings Ltd" in the sum of K235,977.47, post-dated 1 July 2011, and implies that it has been given to a representative of the plaintiff. The reason that it has been post-dated is to allow time for the current dispute as to ownership and control to be resolved. Mr Chua states that the cheque was "demanded" by the plaintiff in OS 369 of 2010 (ie Mr Yaga). In short, the explanation for non-payment of the levy fees is the continuing confusion about who the "real" Raikos Holdings Ltd is.

7. I am very unimpressed by this explanation. There should be no confusion about who the "real" Raikos is, viz the directors and shareholders, and the Managing Director – Mr Sallel – recognised by the 2008 decision. Mr Yaga is in no position to be demanding any payments on behalf of the plaintiff; and Mr Chua should not be entertaining them. It should be crystal clear, following my decisions in the contempt proceedings and in OS 369 of 2010, both handed down on 15 April 2011, how the defendant should be discharging its obligations to the plaintiff under the LMA and who it should be dealing with. I am beginning to think that Mr Chua is either deliberately playing dumb (he is pretending to be confused in order to gain an advantage for or delay payment by the defendant) or, with respect, that he is just dumb (in that he genuinely does not understand or appreciate the effect of orders of a court of law). In either case his lawyers have a special duty to advise him of the defendant's obligations and his own individual obligations to comply with the law and in particular with orders of the National Court. It is now time to warn Mr Chua that he, as an individual, as distinct from the company, is at risk of being charged with contempt of court if he does not change his attitude to orders of the National Court.

8. As the defendant has presented no good reason for not paying the plaintiff, I will make orders generally in terms of those sought, with two qualifications. First, concerning the amount. Though the plaintiff, through an affidavit by Mr Sallel, claims that the amount due is K238,004.40, I think it would be better to make an order for payment of the amount that the defendant concedes that it owes: K235,977.47. The discrepancy of K2,026.93 can be argued about in court later if the parties cannot sort it out amongst themselves. Secondly, the time for payment. Five days is unreasonably short. I will allow 21 days for the payment to be made, and order that the matter be mentioned on 17 June 2011 for the purpose of determining whether the payment has been made.

SECOND ORDER SOUGHT: DEALING WITH MR SALLEL

9. An order along the lines sought (see para 3 of the notice of motion filed on 13 May 2011) follows naturally from the first order. It obviously needs to be spelt out to the defendant who it should be dealing with. It is not an abuse of process for the plaintiff to seek such an order. Nor is it res judicata. It is correct that I rejected an application for a similar order in the contempt proceedings. But it is necessary to recall exactly what I said:

Raikos seeks other relief under that motion: that Porche be ordered to deal only with Mr Andrew Sallel and other persons whose appointment as company officers was sanctioned by the court in Gawan Kuyan v Andrew Sallel (2008) N3376 and that no changes be made to the Company Register regarding Raikos. However, I decline to grant that relief. The present proceedings have been focussed on the question of whether Porche is guilty of contempt of court. Contempt proceedings – as they are tantamount to criminal proceedings – should be dealt with separately from any related matters. Raikos can, of course, seek those sorts of orders by a separate notice of motion. [Emphasis added.]

So, this issue has not been determined previously. The plaintiff has done exactly what I suggested it could do.

10. It must also be observed that the defendant's submission appeared in Mr Chua's affidavit. An affidavit is not an avenue through which legal submissions should be made. An affidavit is a statement of facts. Mr Chua, who I understand is not a lawyer admitted to practice in PNG, is not expected to know this. But the lawyer who witnessed the affidavit and relied on it, should know it. And I warn Mr Toggo that this should not happen again (see Asivo v BSP (2011) N4252).

I will therefore make an order in terms of para 3 of the notice of motion.

THIRD ORDER SOUGHT: CHANGES TO THE COMPANY REGISTER

11. I accept that it is desirable that there be an order to prevent any untoward changes in the Company Register while the question of ownership and control of the plaintiff is still before the court. So I will make an order to that effect.

COSTS

12. The plaintiff clearly deserves costs.

ORDER

13. For the reasons set out above the court makes the following order –

(1) The defendant shall pay K235,977.47 to the plaintiff by cheque deposited into its bank account within 21 days after the date of entry of this order.

(2) The defendant shall until further order of the court conduct its business with the plaintiff regarding the LMA dated 31 January 2007 with Andrew Sallel, as Managing Director, and not with David Yaga or others associated with him.

(3) No changes shall be made to the Company Register in respect of Raikos Holdings Ltd without the leave of the National Court.

(4) This matter shall be mentioned at the National Court Madang at 9.00 am on 17 June 2011 for the purpose of monitoring compliance with these orders.

(5) The defendant shall pay the costs of the motion filed on 13 May 2011 on a party-party basis, to be taxed if not agreed.

(6) Time for entry of the order is abridged to the date of settlement by the Registrar which shall take place forthwith.

Ordered accordingly.
___________________________

Blake Dawson Lawyers: Lawyers for the Plaintiff
Daniels & Associates Lawyers: Lawyers for the Defendant