N8382
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS (COMM) NO. 1075 OF 2018 (No. 2)

BETWEEN
DAVIDWESTERN ADVERTISING LIMITED
Plaintiff

AND
HIRI 152 DEVELOPMENTS LIMITED
First Defendant

AND
PAPA RESOURCE DEVELOPMENTS LIMIETD
Second Defendant

AND
BURIA REAREA CAUTION BAY LIMITED
Third Defendant

AND
BOERA ENTERPRISES LIMITED
Fourth Defendant

AND
POREBADA INVESTMENTS LIMITED
Fifth Defendant

AND
HIRI SPECIAL PURPOSES AUTHORITY
Sixth Defendant

Waigani: Anis J
2020: 22nd & 25th June

INTERLOCUTORY APPLICATION – Notice of motion – interim restraining order – mareva injunction – section 155(4) – Constitution – requirements for grant of mareva injunction considered
PRACTICE & PROCEDURES – Order 4 Rule 37 – National Court Rules – interlocutory relief in existing proceeding may be sought by way of a notice of motion – inapplicable

PRACTICE & PROCEDURES – Order 14 Rule 9(a) – National Court Rules –interim preservation of assets – its application – sought prior to commencement of proceedings - inapplicable

Cases Cited:

Davidwestern Advertising Limited v. Hiri 152 and 5 Ors (2019) N7951
Mauga Logging v. South Pacific Oil Palm Development Corporation [1977] PNGLR 80
Ewasse Landowners Association v. Hargy Oil Palm Ltd (2005) 2878
Nangamanga Ltd and Ors v. Gold Export Ltd and Ors (2011) N4570
Paul Paraka v. Eastern Highlands Provincial Government (2005) SC809
Mt. Uriwaka Enterprises Pty Ltd v. Bernard Baxter & Ors [1988] PNGLR 244
Bromley v. Finance Pacific Limited (2001) N2156

Counsel:

Mr J Fongenmale, for the Plaintiff
Mr M Phillip, for the Sixth Defendant

RULING

25th June, 2020

1.	ANIS J:	The plaintiff seeks interim mareva injunctions against the 6th defendant.  Its application was heard at 1:30pm on 22 June 2020.  I reserved my ruling thereafter to a date to be advised.

2.	Parties have been notified so I will rule on it now.

BACKGROUND

3.	I restate the background of this case from an earlier decision involving this matter, that is, Davidwestern Advertising Limited v. Hiri 152 and 5 Ors (2019) N7951, as follows:

3.	The Hiri Local Level Government (LLG) is part of Central Province or the Central Provincial Government.  A portion of its land area is regarded as part of the Papua New Guinea Liquefied Natural Gas (PNGLNG) impact area.  Landowners from within the impact area created various companies including the 5 defendants.

4.	In 2012, various developments were undertaken at the impact area in Hiri in the Central Province.  The plaintiff was engaged to carry out civil works including engineering, construction, road grading and sealing to and from the various Hiri villages that were within the LNG impact area.  The plaintiff had alleged that despite the work that it had undertaken as agreed to, the 5 defendants and the Central Provincial Government, had failed to settle its claim.  So in an earlier proceeding, that is, WS 654 of 2014, the plaintiff claimed a total sum of K9, 122,101.40 against the 5 defendants and the Central Provincial Government.  That matter was discontinued after consent orders were signed between the parties whereby a sum of K4, 500,000 was paid out by the Central Provincial Government, to the plaintiff.  The plaintiff has since commenced the present proceeding against the 5 defendants and the 6th defendant, to claim the remaining balance of K4, 622, 101.40 which it says is still outstanding.  So far, the plaintiff has obtained default judgment against the 1st, 2nd, 4th and 5th defendants. 

4.	The position has not changed much since.  The matter has not progressed to trial in regard to the plaintiff’s claim against the 3rd and 6th defendants.  

MOTION

5.	In the meantime, the plaintiff had recently learnt, through the mainstream media, that monies were paid by the Central Provincial Government to the 6th defendant.  On 2 June 2020, it filed this notice of motion.  The main relief sought are terms 2 and 3, and I set them out herein in part:

2.	Pursuant to Section 155(4) of the Constitution, Order 14 Rule 9(a), Order 4 Rule 37 of the National Court Rules, the Sixth Defendant and the Hiri Local Level Government, whether by its representatives, officers, members or agents or howsoever be restrained from dealing with, transferring and or interfering with any funds transferred to it by the Central Provincial Government or any other State Entities until the determination of this proceeding.

3.	Pursuant to Section 155(4) of the Constitution, Order 14 Rule 9(a), Order 4 Rule 37 of the National Court Rules, the Sixth Defendant and the Hiri Local Level Government whether by its representatives, officers, members or agents or howsoever be restrained from dealing with, transferring and or interfering with infrastructure Development Grants and Development Levies contained in the following bank account namely….until the final determination of this proceeding or until the judgment debt is settled.

SOURCE

6.	I note that the plaintiff refers to Order 4 Rule 37 and Order 14 Rule 9(a) of the National Court Rules, as part of the source of its application.  In regard to Order 4 Rule 37, I note that it is a general source or rule which simply states that a person who intends to apply for an interlocutory relief in an existing proceeding, whether it be under a writ of summons or originating summons, may do so by way of a notice of motion.  The said rule, in my view, cannot be a relevant source based on the intention of the plaintiff.  I turn to the second source, that is, Order 14 Rule 9(a).  I set it out herein:

Division 2.—Interim Preservation, etc.

9.	Order before commencement of proceedings. (28/1)
In an urgent case, the Court may, on the application of a person who intends to commence proceedings —
(a)	grant an injunction; or
(b)	make any order which the Court might make in proceedings in the nature of an application for habeas corpus ad subjiciendum; or
(c)	make orders for the custody of minors; or
(d)	appoint a receiver,
to the same extent as if the applicant had commence, the proceedings and the application were made in the proceedings.

(Underlining is mine)

7.	The key words in my view in the rule are as underlined.  The plaintiff in this case is not intending to commence a Court proceeding.  It has already filed this proceeding which is on foot.  Therefore and in my view, it is misconceived or incorrect for the plaintiff to refer to Order 14 Rule 9(a) as a relevant source for its application for mareva injunction.

8.	The plaintiff also relies on section 155(4) of the Constitution.  The section states, and I quote in part, Both the Supreme Court and the National Court have an inherent power to make, in such circumstances as seem to them proper, orders in the nature of prerogative writs and such other orders as are necessary to do justice in the circumstances of a particular case.  I note that the provision had been applied over the years in practice as evident in the case law.  See cases:  Mauga Logging v. South Pacific Oil Palm Development Corporation [1977] PNGLR 80; Ewasse Landowners Association v. Hargy Oil Palm Ltd (2005) 2878 and Nangamanga Ltd and Ors v. Gold Export Ltd and Ors (2011) N4570.  I find the source relevant or sufficient and in so doing, I will proceed to consider the application.

MAREVA INJUNCTION

9.	The plaintiff, as stated, seeks interim mareva injunctions.  So on that basis, I ask myself this.  What do I need to be satisfied of first before I may grant this relief?  I refer to the case law, and in particular, to the Supreme Court’s case of Paul Paraka v. Eastern Highlands Provincial Government (2005) SC809.  The Supreme Court stated and I quote: 

The order granted in terms of paragraph 2 (a) (i) and (ii) of the respondent’s notice of motion are in the nature of a mareva injunction.  A mareva injunction is an interlocutory injunction restraining the defendants from removing assets from or dissipating assets within the jurisdiction.  The name is derived from the famous case of Mareva Compania Naviera SA v. International Bulkcarriers SA [1975] 2 Lloyds Rep 509; [1980] 1 All ER 213, which established the principle that the Court has jurisdiction to grant such an injunction to prevent a defendant from disposing of his assets in order to defeat a judgment.

There are criteria for the grant of a mareva injunction at common law, however the guidelines were established by Lord Denning MR in Third Chandris Shipping Corp v. Unimarine SA [1979] QB 645 at 668-669.  These are:-

(i)	The plaintiff should make full and frank disclosures of all matters in his knowledge which are material to the Judge to know.

We say this is the appellant’s duty of disclosure and we say no more of that criteria

(ii)	The plaintiff should give particulars of his claim against the defendant, stating the ground of his claim and the amount thereof, and fairly stating the ground of his claim and the amount thereof, and fairly stating the points made against it by the defendant.

(iii)	The plaintiff should give some grounds for believing that he has assets within the jurisdiction.

(iv)	The plaintiff should give some grounds for believing that there is a risk of the assets being dissipated before the judgment.

(v)	The plaintiff must give an undertaking as to damages.

10.	The Supreme Court also, amongst others, referred to the National Court’s decision in Mt. Uriwaka Enterprises Pty Ltd v. Bernard Baxter & Ors [1988] PNGLR 244.  Justice Hinchliffe held, and I quote: 

(1)  A mareva injunction may be granted where it appears likely that the plaintiff will recover judgment against the defendant for a sum of money and where there are reasons to believe that the defendant has assets within the jurisdiction to meet the judgment, wholly or partly, but might deal with those assets, whether by removal out of the jurisdiction or disposal within the jurisdiction, so as to make them unavailable in satisfaction of the judgment when given.

11.	Justice Lay in Bromley v. Finance Pacific Limited (2001) N2156, when granting an application for extension of interim orders, stated under the heading balance of convenience, as follows:

But, it is clear that the purpose of the 2nd Defendant, and indeed the State is for the disposal of those assets, and disposal upon terms and conditions over which the Plaintiff and the Court may exert no control. Disposal of the assets to another or others can only further complicate the present situation. I am satisfied the balance lies in granting an extension of the orders. (Underlining is mine)

12.	I adopt these case authorities herein.  Let me now consider the issues.

ISSUES

13.	The main issues, in my view, are as follows, (i), whether the plaintiff has fully disclosed relevant matters that are within its knowledge to the Court, (ii), whether the plaintiff has disclosed valid grounds for believing that there is a real risk of the assets being dissipated before the judgment and (iii), whether a valid undertaking as to damages has been filed.

FULL DSCLOSURE

14.	I begin with the first issue by referring to the affidavits in support that have been relied upon by the plaintiff.  Both affidavits were sworn by David Western who is its managing director.  They were filed on 2 and 5 June 2020.  

15.	Of relevance for this purpose is this.  Mr Western deposes that on 27 May 2020, there was an announcement made on the EM TV News where he said that the Governor for Central Province had announced that he would pay a total sum of K2 million to the 6th defendant for infrastructure development and as benefits for villages surrounding the PNG-LNG Project.  Evidence adduced reveals that the first K1 million has been paid with the next K1 million to shortly follow.

16.	Payment of the said fund to the 6th defendant is not disputed.  But counsel for the 6th defendant submits that the K2 million was paid to the 6th defendant for or in regard to its administrative functions.  Counsel submits that these were not development grants.  Counsel submits that development grants are different and that if they are paid, they would be paid by the National Government directly to the Central Provincial Government for distribution and that they would not be paid to the 6th defendant.  I refer to the 6th defendant’s affidavit in support.  It is an affidavit of Joel Oli who is the Chief Executive Officer of the 6th defendant.  His affidavit was filed on 19 June 2020.  I note that none of what Mr Oli had said therein supports or justifies the submissions of the plaintiff’s counsel as summarized above in this paragraph.  Mr Oli deposes matters concerning the name of the 6th defendant and the merit of the claim, and his affidavit also contains submissions on law rather than depositions of facts.  I am unassisted by it on the issues at hand.

17.	That aside, the burden of proof in this application of course rests with the plaintiff.  And what I gather from all the evidence is that the funds were development levies that were due to the impacted villages of Hiri in the Central Province.  The money was paid based on the Umbrella Benefit Sharing Agreement UBSA) that had been signed in Kokopo in 2009, in regard to the PNG Liquefied Natural Gas development in the Hela Province.  So these monies, in my view, are or may not be regarded as assets of the 6th defendant.  I will also say this.  There is nothing or no evidence disclosed, that says that the monies will later be transferred to or are assets of the 1st, 2nd, 4th and 5th defendants.  These defendants are legal entities that are established under the Companies Act 1997.  And even if the monies were to be paid to these defendants, wound it not be that the correct process may be for the plaintiff to seek enforcement orders against these defendants directly?  And if these funds belong to the impacted village people of Hiri as it is revealed in evidence, then they cannot be regarded or treated as assets of the 6th defendant where a mareva injunction may be obtained against to preserve them pending the determination of the proceeding.

18.	I am therefore not satisfied that the plaintiff has fully disclosed the material facts that would assist me to fully appreciate the submissions and its claim in its application.  I am also not satisfied that the K2 million is or may be regarded or treated as an asset of the 6th defendant where the plaintiff may seek mareva injunction over.

REAL RISK OF DISSIPATION

19.	I turn to the next issue, that is, whether the plaintiff has disclosed valid grounds for believing that there is a risk of the assets being dissipated before the judgment.  Again, I refer to the evidence of the parties but most importantly to Mr Western’s affidavits.  On this point, I note that there is nothing disclosed in the evidence that says that the 6th defendant is distributing or dissipating its assets where the outcome will seriously affect its ability to pay in the event that it is held liable in this proceeding.  The plaintiff, it seems, is relying totally on the K2 million payment announcement that had been made by the Governor for Central Province in March of 2020.  To me, assuming that the K2 million may be regarded as an asset of the 6thdefendant, it was a one off payment.  And I ask myself this.  Where is the evidence, apart from the K2 million claim, that shows that the 6th defendant is deliberately attempting to dissipate its assets to an extent that it would or may be difficult if not impossible, for the plaintiff and the Court to assert control (i.e., over the assets)?

20.	I find no such evidence.

UNDERTAKING AS TO DAMAGES

21.	In regard to the third issue, I note this.  The plaintiff has filed an Undertaking as to Damages (the undertaking).  It was filed on 2 June 2020 together with its application documents.  The undertaking is signed by Mr Western who is the plaintiff’s managing director.  

22.	At the hearing, I recall querying the plaintiff’s counsel of why the undertaking did not have a company seal of the plaintiff.  The plaintiff’s counsel, in reply, submitted that the managing director’s signature was sufficient and therefore submitted that the undertaking was valid.  Counsel for the 6th defendant disputed that and referred to the case law to support his objection to the undertaking.

23.	I will say what I have already indicated to the plaintiff’s counsel, which is this.  The case law is settled in regard to the requirement, in the case of a company, that is, that its undertaking must bear its company or common seal.  The Supreme Court in Bougainville Copper Ltd v. Chief Collector of Taxes (2007) SC853 and PNG Deep Sea Fishing Ltd v. Luke Critten (2010) SC 1126, have both stated common seal as one of the mandatory pre-requisites to be had or evident in an undertaking as to damages, before a Court may consider whether it is valid.  In practice and in the case of urgent matters, sometimes the Court may accommodate situations like for example in a case where a company may have overlooked the requirement to include its common seal into its undertaking as to damages.  The Court would normally require verbal guarantee or assurance from counsel or from the company whereupon once received, proceed to issue specific directions to the company to immediately file a proper undertaking with its common seal inserted.  In such a case, the Court may accept the unsealed undertaking and grant interim relief, subject of course to the other requirements being met, whilst it awaits a fresh undertaking as to damages to be filed by the company.  I note that no such request or submissions was made by the plaintiff.

24.	In conclusion, I find the undertaking given by the plaintiff invalid.  I find that it is filed contrary to a mandatory requirement, that is, that it does not bear the common seal of the plaintiff.

SUMMARY

25.	In summary, I am not inclined to grant the relief sought by the plaintiff in its notice of motion of 2 June 2020.  I will therefore dismiss it.

COST

26.	Granting cost in this instance is discretionary.  I will order cost to follow the event, that is, on a party/party basis to be taxed if not agreed.

THE ORDERS OF THE COURT

27.	I will make the following orders:

1.	The plaintiff’s notice of motion filed on 2 June 2020 is dismissed.

2.	The plaintiff shall pay the 6th defendant’s cost of the application on a party/party basis which may be taxed if not agreed.

3.	Time for entry of these orders is abridged to the date of settlement by the Registrar which shall take place forthwith.

The Court orders accordingly.

________________________________________________________________
Chesterfield Lawyers:    Lawyers for the Plaintiff
Korerua & Associates:   Lawyers for the Sixth Defendant