N8121

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

O.S. NO. 241 OF 2019

BANK OF SOUTH PACIFIC LIMITED
Plaintiff

-V-

ROSELYN INUGU, WENDY INUGU, ANA INUGU, MARGARET INUGU & VERONICA INUGU as members of the purported Management Committee of YAKAINGI BUSINESS GROUP INC. appointed by decision of the Minister for Commerce Trade and Industry on 10 January 2019
First Defendants

ADRIAN INUGU, NELSON NEA INUGU & NAKAINDA KAMALAN as members of the purported Management Committee of YAKAINGI BUSINESS GROUP INC. appointed by decision of the Minister for Commerce Trade and Industry on 15 December 2016
Second Defendants

Waigani:  Kariko, J
2019: 7th October & 5th November

CIVIL PRACTICE & PROCEDURE – application for inter-pleader relief – principles

Cases Cited

Mineral Resources Enga Limited v Mineral Resources Development Corporation Limited (2010) N4279 

Legislation

Business Groups Incorporation Act Ch. 144
National Court Rules

Counsel:

Mr A Waffi, for the Plaintiff
Mr S Dewe, for the First Defendants
Mr B Lai, for the Second Defendants

DECISION

5th November, 2019 

1.	KARIKO, J: This case relates to an ongoing dispute between members of the Yakaingi Business Group Inc. (Yakaingi) as to which of them, the first defendants or the second defendants, are the lawful Management Committee of the Business Group and therefore has control and management of the affairs of Yakaingi.

Background

2.	The person largely responsible for the establishment and successful growth of the business of Yakaingi was one Daniel Inugu who died in 2010. The current dispute between the two purported Management Committees arose soon after, and has resulted in continuing litigation both in this Court and the Supreme Court, and also interventions by the Minister for Commerce, Trade and Industry (the Minister) purportedly acting pursuant to the Business Groups Incorporation Act Ch. 144(the Act).  

3.	In 2012, the Registrar of Business Groups (the Registrar) recognized the first defendants as the Management Committee of Yakaingi. 

4.	Adrian Inugu unsuccessfully sought judicial review of the Registrar’s decision. He then appealed the decision to the Minister pursuant to s. 43 of the Act. On 15th December 2016, the then Minister, Hon. Richard Maru, quashed the decision of the Registrar and recognized the second defendants as the Management Committee. 

5.	The first defendants filed for judicial review of the Minister’s decision (OS(JR) 366/17) but that proceeding was dismissed ex parte for want of prosecution on 24th October 2018. An application by the first defendants to set aside the ex parte order was also dismissed on 12th March 2019, as a result of which the first defendants filed an appeal to the Supreme Court.

6.	When the application to set aside was pending, BSP restricted Yakaingi’s bank account until the outcome of the application.  

7.	By then, Hon. Wera Mori was the Minister in office. Earlier on 17th July 2018, the Minister made a Determination revoking the decision of former Minister Maru. On 10th January 2019, Minister Mori issued another Determination that revoked all previous Ministerial determinations regarding the Management Committee of Yakaingi and reinstated the first defendants as the Management Committee.

8.	Following the final decision in OS (JR) 366/17 the Registrar caused the records of Yakaingi to change to reflect the second defendants as the Management Committee. 

9.	Relying on those records, the second defendants claimed the right to operate Yakaingi’s account maintained with BSP. On the other hand, the first defendants asserted they are entitled to that right based on Minister Mori’s decision of 10th January 2019. 

10.	On 10th April 2019, BSP filed this proceeding by way of an inter-pleader and sought interim relief for the funds held in the Third Defendant’s bank account with BSP to be paid into the National Court Trust Account pending the resolution of the substantive issues between the First and Second Defendants. That relief was granted on 17th May 2019.

Applicable law

11.	The plaintiff relies on 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.”	

12.	Order 14 Rule 55(b) sets out the powers of the court and includes an order that the applicant pay or transfer any or all of the property in dispute into Court.

13.	The only relevant case authority in this jurisdiction on inter-pleader applications, apart from applications by the sheriff, is Mineral Resources Enga Limited v Mineral Resources Development Corporation Limited (2010) N4279 per Hartshorn J, in which His Honour referred to and discussed case authorities from England and New South Wales that have equivalent Rules to ours. I endorse the observations by his Honour and note that His Honour found that interpleader relief may be ordered where:

(a)	there are rival claims in respect of a property.
(b)	The property is in the possession of the applicant, who is neutral and has no claim or interest in the property.
(c)	There is a real threat of the applicant being sued by either of parties who have the competing claims. 

Submissions

14.	BSP basically submits that it has been unnecessarily dragged into legal proceedings in the past between the first two defendants.The bank fears it may be subject to legal action if it entertains the claim of one or the other of the defendants, and it therefore wants the monies in Yakaingi’s account to be parked with a neutral custodian until the dispute between the two is properly resolved.

15.	The second defendants neither support nor oppose the inter-pleader application, while the first defendant takes issue arguing that there is no dispute over property, that is the funds held with BSP. Neither the first nor the second defendant claim ownership to the monies as they both concede it belongs to Yakaingi. 

Consideration

16.	I accept the proposition submitted by the second defendants. The controversy giving rise to the various court proceedings including the present case is which of the groups, the first or the second defendants, properly constitute the Management Committee that is empowered to manage the affairs of Yakaingi. The competing defendants are not claiming any interest in the monies. They are fighting over who is rightfully responsible for the control and management of the business group. That of course would include control and management of the funds of the business group, including monies in the bank.

17.	Consequent to this finding, I refuse the interpleader application with costs against the plaintiff. 

18.	It is noted that pursuant to the interim orders of 17th May 2019, the monies held in Yakaingi’s BSP bank account were transferred to the National Court Trust Account and the bank account with BSP was closed. Notwithstanding my refusal of the interpleader application and subject to hearing from the parties, I consider it appropriate that the monies remain in the Trust Account until the dispute between the first and second defendants is properly and finally settled. Neither of the disputing groups would be prejudiced by this. The group then recognized as the rightful Management Committee of the Yakaingi can lawfully deal with the monies as it deems fit, including investing them with a bank of their choice. 

19.	I will hear from the defendants before I issue my formal orders. 
_______________________________________________________________
BSP Legal Services:  Lawyer for the Plaintiff
Jema Lawyers: Lawyer for the First and Third Defendants
B S Lai Lawyers: Lawyer for the Second Defendants