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In the Matter of Canopus No 101 Ltd [2022] PGNC 200; N9651 (7 June 2022)

N9651


PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]


MP (COMM) NO 55 OF 2019 (IECMS


BETWEEN:


In the Matter of the COMPANIES ACT 1997


AND:


In the matter of CANOPUS NO. 101 LIMITED


Waigani: Anis J
2021: 5th, 6th, 7th and 8th July, 4th August,
2022: 7th June


COMPANIES ACT 1997 – Claim premised on petition filed under s 152 of the Companies Act 1997 – alleged oppression, unfair discrimination and unfair prejudice – consideration – whether the actions of the respondent and interested persons in purchasing and acquiring the shares in the respondent, appointing and terminating directors of the respondent, and other related conducts, were in breach of the provisions of the Companies Act 1997 – if so, whether these actions amount to oppress, unfairly discriminate and unfairly prejudice the petitioner as a shareholder – if so, what would be the appropriate compensation and relief to be awarded under s 152(2) of the Companies Act 1997


Cases Cited:


Gawan Kuyan v Andrew Sallel (2008) N3376
In the matter of Canopus No. 101 Ltd (2020) N8459
Rondulg Investment Ltd; In the matter of the Companies Act 1997 (2021) N9317
Culture Shock (1-61817) In re (2016) N6786
In the matter of the Companies Act 1997; In the matter of Canopus No. 101 Ltd (2019) N8162
Sabatica Pty Ltd v. Battle Mountain Canada Ltd (2003) SC709
In the matter of the Companies Act 1997; In the matter of Petroleum Exploration Joint Venture Ltd (2021) N9027
Lakunda Plantation Pty Ltd v. Maluvil (1981) N308(L)


Counsel:


I. Molloy with C. Joseph, for the Petitioner
C. Wara, for the Respondent
D. Mel with N. Pilamb, for interested parties S Pup and Komkaeli Holdings Ltd
C Kos, for interested parties Melpa Properties Ltd, P Timbi and N Wantepe


JUDGMENT


7th June, 2022


  1. ANIS J: This was an action brought by petition under s 152 of the Companies Act 1997 (the CA). The trial was heard on liability and quantum. The hearing was contested, and it was completed on 4 August 2021 before I reserved my decision to a date to be advised.
  2. The parties have been notified so I will now give my ruling.

BACKGROUND


  1. The petitioner is Pate Wamp (petitioner). He is the aggrieved director and a shareholder of the respondent Canopus No. 101 Ltd (Canopus/respondent/company), and he is represented by Ashurst PNG. The respondent is represented by Wara Lawyers. The other interested parties to this proceeding are, (i), Steven Pup (Mr Pup) and (ii) Komkaeli Holdings Ltd (Komkaeli Holdings), who are represented by mel & henry lawyers, (iii), Melpa Properties Ltd (Melpa Properties), (iv) Paul Timbi (Mr Timbi) and (v) Nathan Wantepe (Mr Wantepe), who are represented by Charles Kos Lawyers.
  2. The petitioner holds 20% or 20 shares in Canopus. Komkaeli Holdings holds the balance, namely, 80% or 80 shares in Canopus. Mr. Pup is the Managing Director and owner of Komkaeli Holdings. In 2013, his company purchased the 80 shares in Canopus from Melpa properties. Melpa Properties is a business company (subsidiary) which is owned by the Western Highlands Provincial Government (WHPG) through its holding company called Western Highlands Development Corporation Ltd.
  3. The petitioner’s grievance is this. He claims that he had been left in the dark when Canopus’s 80 shares were sold and transferred by Melpa Properties to Komkaeli Holdings on 6 September 2013. He claims that as a result, he was never given the benefit or the right to purchase the shares of Melpa Properties based on an alleged agreement, which he says, exists between himself and Melpa Properties. He said he only learnt of the sale and purchase of the 80 shares by Komkaeli Holdings in 2016 after he conducted a company search at the office of the Investment Promotion Authority (IPA) in Konedobu in Port Moresby, NCD. He said he tried to resolve the matter by holding 2 meetings with Mr. Pup and other leaders of their Kombulka Tribe, namely, Jack Kugl, Councilor Samuel Put Karai and John Hui. After the meeting and after no amicable resolution, the petitioner files this petition. He asserts in summary that Canopus, Mr. Pup, Komkaeli Holdings, Melpa Properties, Mr. Timbi and Mr. Wantepe have all acted in concert and orchestrated, (i), the purported appointment and termination of the directors of Canopus, (ii), the purported sale and acquisition of shares in Canopus from Melpa Properties to Komkaeli Holdings Ltd, and (iii), the management and affairs of Canopus since 2013, thus have caused him to suffer and continues to suffer oppression, unfair discrimination and unfair prejudice, as a shareholder of Canopus.

PETITION


  1. The petitioner’s original petition was filed on 4 September 2019. It was later amended with leave of the Court. The amended petition was filed on 5 March 2020.
  2. The petition is premised on s 152 of the CA, which states:

152. PREJUDICED SHAREHOLDERS.


(1) A shareholder or former shareholder of a company, or any other entitled person, who considers that the affairs of a company have been, or are being, or are likely to be, conducted in a manner that is, or any act or acts of the company have been, or are, or are likely to be, oppressive, unfairly discriminatory, or unfairly prejudicial to him in that capacity or in any other capacity, may apply to the Court for an order under this section.

(2) Where, on an application under this section, the Court considers that it is just and equitable to do so, it may make such order as it thinks fit including, without limiting the generality of this subsection, an order–

(a) requiring the company or any other person to acquire the shareholder’s shares; or

(b) requiring the company or any other person to pay compensation to a person; or

(c) regulating the future conduct of the company’s affairs; or

(d) altering or adding to the company’s constitution; or

(e) appointing a receiver of the company; or

(f) directing the rectification of the records of the company; or

(g) putting the company into liquidation; or

(h) setting aside action taken by the company or the board in breach of this Act or the constitution of the company.

(3) No order may be made against the company or any other person under Subsection (2) unless the company or that person is a party to the proceedings in which the application is made.

(4) Failure to comply with any of the following sections is conduct which is unfairly prejudicial for the purposes of this section:–

(a) Section 45;

(b) Section 47;

(c) Section 51;

(d) Section 57;

(e) Section 63;

(f) Section 98;

(g) Section 110.

(5) The signing by the directors of a company of a certificate required by this Act without reasonable grounds existing for an opinion set out in it is conduct that is unfairly prejudicial for the purposes of this section.

......


  1. The relief the plaintiff seeks as pleaded in the amended petition reads:
    1. That pursuant to section 152(2)(h) of the Companies Act 1997 the Court set aside action taken by the Company or the board of the Company in breach of the Companies Act 1997.
    2. That pursuant to section 152(2)(b) of the Companies Act 1997 the Company and or Melpa Properties and or Paul Timbi and or Nathan Wantepe and or Komkaeli Holdings and or Steven Pup be ordered to pay compensation to the Petitioner in such sum as shall be just.
    3. That pursuant to section 152(2) of the Companies Act 1997 the Court set aside the actions taken by Melpa Properties and Komkaeli Holdings and or their relevant officers in relation to the share transfer between Melpa Properties and Komkaeli Holdings in breach of the terms of the Melpa Joint Venture and or in breach of the reasonable expectation of the Petitioner so that Melpa Properties is restored or is confirmed as the shareholder or the 80 ordinary shares in the Company.
    4. That pursuant to section 152(2) of the Companies Act 1997 the Court declare illegal, unenforceable, invalid and void and of no effect each and all action taken in breach of the Companies Act 1997 or in breach of any other law or in breach of the reasonable expectation of the Petitioner by each of the Company, any director of Melpa Properties, Melpa Properties, Komkaeli Holdings, Steven Pup or any of their servants and agents.
    5. Further or in the alternative to paragraph 3 above, pursuant to section 152(2) of the Companies Act 1997, the Court makes orders to enable the Petitioner to acquire or to become the holder of the 80 ordinary shares in the Company held by Melpa Properties and or Komkaeli Holdings on such terms and for such sum as shall be just.
    6. That further or in the alternative to paragraphs 1 – 5 above, pursuant to section 152(2)(c) of the Companies Act 1997 the Court regulate the future conduct of the Company’s affairs.

EVIDENCE


  1. Evidence have been tendered by the parties and marked as exhibits. Witnesses have been cross-examined. I have considered and will make references to them where required in my decision.

ISSUES


  1. The main issues, in my view, are as follows, (i), whether Melpa Properties’ sale of its shares was illegal or in breach of the laws governing provincial government and private companies under the CA, (ii), whether the appointment of director Mr. Pup in Canopus, was illegal or breached provisions in the CA (iii), whether the CA was breached by the sale of Melpa Properties’ 80 shares in Canopus to Komkaeli Holdings, (iv), whether Canopus is a joint venture company which was created by the petitioner and Melpa Properties or whether there is valid agreement between the petitioner and the Western Highlands Provincial Government (WHPG) whereby it is agreed, amongst others, that the WHPG would purchase 80% of the shares in Canopus where it would later sell them to the petitioner or give the petitioner the first right of refusal (i.e., to purchase the shares), (v), whether the petitioner has been and or continues to be, oppressed, unfairly discriminated and unfairly prejudiced by the actions or inactions of the respondent and the interested parties, (vi), and subject to liability being established, what orders or relief should this Court grant to the petitioner?

PRELIMINARY CONSIDERATIONS


  1. I wish to address some of the issues which I think may not be relevant for one reason or another.
  2. The first is the issue of whether Melpa Properties breached its internal processes such as whether its acquisition of the 80% shares in Canopus was a major transaction, and if so, whether it had failed to obtain special resolution from its board; whether Melpa Properties had failed to obtain permission or resolution from the Western Highlands Provincial Assembly to sell its 80% shares in Canopus to Komkaeli Holdings. In my view, I do not see the issue, or these series of issues, relevant to this cause of action. The petitioner is a director and shareholder of Canopus. His claim is premised in his capacity or status as a shareholder of Canopus. His claim is made against Canopus and those whom he says had collaborated with Canopus thus purportedly caused him to suffer damages as a shareholder. Let me restate s 152(1) of the CA herein to elaborate:

(1) A shareholder or former shareholder of a company, or any other entitled person, who considers that the affairs of a company have been, or are being, or are likely to be, conducted in a manner that is, or any act or acts of the company have been, or are, or are likely to be, oppressive, unfairly discriminatory, or unfairly prejudicial to him in that capacity or in any other capacity, may apply to the Court for an order under this section. (Underlining mine)


  1. A complaint or petition that is filed under s 152 shall be confined to the affairs of a company. In this case, it is Canopus. And the affairs or conduct of a company shall be examined or construed by the Court to ascertain whether they were or are likely to be oppressive, unfairly discriminatory, or unfairly prejudicial to a shareholder or former shareholder or an entitled person. In this case, it is the petitioner who is the aggrieved person or the complainant.
  2. Making claims based on facts that have their foundations outside of Canopus and its affairs, in my view, do not fall within the purview of s. 152 of the CA. I also find that the petitioner does not have standing to make such allegations, that is, on internal matters of Melpa Properties regarding sale of their shares in Canopus to Komkaeli Holdings. That was a private matter and transaction that had taken place between the 2 parties at the material time. A private written share agreement I note had been purportedly entered into between the parties to it, namely, Melpa Properties and Komkaeli Holdings for the sale of Melpa Properties’ 80 shares in Canopus. The said agreement is tendered in evidence before this Court. I therefore dismiss these issues or claims by the petitioner.
  3. The next preliminary matter I wish to raise concerns the petitioner’s claim of Canopus being a purported joint venture company that he and the late Walter Perdacher (Mr. Perdacher) created. It is not disputed that prior to the creation of Canopus, the petitioner and Mr Perdacher had operated a company called Rui Trading Ltd (Rui Trading). Rui Trading had 100 shares. Mr. Perdacher held 80 shares in Rui Trading through his company called Pous Trading Company Ltd (Pous Trading). The petitioner held 20 shares in Rui Trading as trustee to his company called Komi Trading Co. Pty Ltd. Mr. Perdacher later wanted to sell his shares in Rui for K1 million. The petitioner claims that he did not have finance to purchase Mr Perdacher’s 80 shares at that time. He said given the situation, he, Mr. Perdacher and the then Governor for WHP Hon. Paias Wingti entered into an oral agreement. He said it was agreed, amongst other things, that Melpa Properties would purchase Pous Trading’s 80 shares in Rui Trading. The petitioner said it was agreed that in the event Melpa Properties intends to sell its shares, that it would offer its shares to the petitioner or allow him the right of first refusal. The petitioner is now also alleging in his petition that the terms and conditions of the oral agreement or joint venture were breached by the conduct of Melpa Properties, that is, when Melpa Properties sold its shares in Canopus to Komkaeli Holdings without his knowledge or involvement.
  4. I repeat my reasonings in relation to the first preliminary issue here. This claim or allegation is outside the purview or jurisdiction of what may be claimed by a petitioner under s 152. The petitioner appears to raise a different cause of action that may be raised in a different mode of proceeding other than in this manner. The claim also appears to involve a private matter or affair that is separate to what is really before this Court for determination. It was the petitioner, and not Canopus, that had purportedly entered into or witnessed this alleged private agreement with Hon. Pais Wingti and Mepla Properties. The petitioner may, if he so wishes, commence a cause of action for breach of contract or joint venture against Melpa Properties and seek damages for that. This Court’s jurisdiction is not invoked to determine that issue which apparently is highly contested, and I note that it would be grossly unfair if I were to make presumptions, assertion, or findings on the matter in this proceeding. I therefore also dismiss the arguments and related matters raised under this issue.
  5. In regard to the alleged collateral contract, I find that claim or issue totally baseless. It is a purported agreement made between parties who are not parties to this proceeding, namely, Mr Wingti and Mr Perdacher. It appears vague to say the least and cannot be a relevant issue for consideration under this petition which is filed under s 152. I also repeat all the reasons I give herein under this sub-heading and in so doing dismiss it.

REMOVAL OF AND APPOINTMENT OF DIRECTORS


  1. Let me now consider the substantive issues. First is the petitioner’s claim that he was kept in the dark in relation to the whole process, namely, the sale and purchase of Melpa Properties’ shares and also in relation to the removal of and appointment of some of the directors of Canopus. These claims, in my view, concern the actions or business of Canopus and are properly raised by the petitioner for consideration under s 152.
  2. Canopus does not have a constitution. Section 29 of the CA reads in part, Where a company does not have a constitution, the company, the board, each director, and each shareholder of the company have the rights, powers, duties, and obligations set out in this Act. A company as such shall operate or be governed by the provisions of the CA.
  3. The CA has mandatory or express provisions on appointment or termination of company director. The case law is also settled on this, and I note that these were drawn to my attention in the submissions of the parties. In so far as the CA is concerned, PART VIII is relevant as it deals with these. Before and at the time of the purported sale of the 80 shares in Canopus, the directors of Canopus were, (i), the petitioner, (ii), John Rur Kunjil, (iii), Benn Temon and (iv), Pais Kar Tiki (initial directors of Canopus). It is not disputed that 2 of the directors, John Kunjil and Benn Temon, passed-on prior to the purported Share Sale Transfer Agreement (SSTA). It is also not disputed, as revealed in the evidence of the parties, that after the purported SSTA, the directors of Canopus, as shown in the IPA records were Mr. Pup and the petitioner. The 2 persons continue to hold their directorship positions in Canopus to this day.
  4. The only other director from the initial directors of Canopus whose name is missing or not showing in the IPA record, is Pais Kar Tiki. Mr. Tiki has given evidence before this Court. One of his evidence, which is marked as P2(a), supports the petitioner’s claim, and I will paraphrase it as follows. He says he was never lawfully removed as a director of Canopus. He claims that his removal was made in breach of the provisions of the CA. He claims that as far as he is aware, he is still a director of Canopus. The petitioner’s depositions on the matter are located in his evidence. For example, I refer to paragraph 30 to Exhibit P1 and paragraph 17(p) of Exhibit P19, to name a few. The petitioner has also given sworn oral testimonies in that regard in Court. The petitioner’s evidence is that he was never formally notified by Canopus of its intention to remove Mr. Tiki as a director nor of its intention to appoint Mr, Pup as a director.
  5. As for the respondent Canopus, let me see what it has to say on the matter. The first thing I notice is that it has filed no evidence in defence, in response to this issue, or in response to the petition at large. Counsel, however, indicated that Canopus will rely on the affidavits that have been filed by Mr. Pup and Komkaeli Holdings. The lack of evidence by Canopus is significant and may substantially affect the outcome of this case.
  6. But let me consider what the interested parties have said on the issue of appointment and termination of directors of Canopus. Their evidence and if I may paraphrase is that since or because of the purchase of the 80 shares in Canopus by Komkaeli Holdings, that Mr. Tiki’s appointment as a director had ceased, and that Mr. Pup was appointed in his place. Mr. Pup gave sworn testimony to that effect. Mr. Pup also tendered a total of 8 affidavits which were marked as Exhibit DD2(i) to DD 2(viii). I make particular mention to Exhibit DD2(iv). At paras 3 and 4, Mr. Pup deposes:
    1. KHL owns 80 of 100 shares in Canopus No. 101 Limited (Canopus). I am a director of Canopus.
    2. I can recall there were three (3) shareholder/director meetings since 2014. There were no formal Minutes Kept but I am able to provide brief descriptions of the meetings.
  7. Mr. Pup proceeds thereafter to state what occurred in the 3 meetings. He does not, however, state or mention how Canopus terminated or removed Mr. Tiki and appointed him as a director of Canopus. When he was examined by his counsel, he confirmed that there was no directors’ meeting or meeting by Canopus in regard to his appointment as a director of Canopus. When it was put to Mr. Pup in cross-examination that there was no resolution by shareholders to appoint him, he responded that there was no management company at that time. When it was put to Mr. Pup that none of the 3 meetings were directors or shareholders meeting, he responded that there was no co-operation, that is, implying or referring to the petitioner. On the same issue, Mr. Timbi gave also gave oral and written evidence. At para 23 of Exhibit D1, he states:
    1. The nominee directors of Melpa to Canopus, each Benn Temon, Pais Kar Tiki and John Rui Kunjil ceased to be directors after SP and Komkaeli acquired Melpa’s shares in Canopus on 6 September 2013. Benn Temon and John Rui Kunjil ceased to be directors by reason of their respective deaths prior to the transfer. John Rui Kunjil died on 2 August 2011 whilst Benn Temon in 2012.
  8. Mr. Wantepe also gave evidence on this issue. At para 12 of Exhibit D2, he said:
    1. The nominee directors of Melpa to Canopus, each of Benn Temon, Pais Kar Tiki, and John Rui Kunjil ceased to be directors after SP and Komkaeli acquired Melpa’s shares in Canopus on 6 September 2013. Benn Temon and John Rui Kunjil ceased to be directors by reason of their respective deaths prior to the transfer. John Rui Kunjil died in 2011 whilst Benn Temon in 2012.
  9. I note that the quoted written evidence of Mr. Timbi and Mr Wantepe are identical.
  10. Having considered the evidence on the issue, my findings of facts are as follows. I find that there was no shareholders meeting held by Canopus to remove Mr. Tiki and to appoint Mr. Pup, as a director of Canopus. Canopus is the respondent to this proceeding. Yet, it has filed no evidence in response to the petition. On the subject matter, Canopus, in a rather odd fashion relies on evidence of third parties, that is, in regard to challenges of its conducts under s 152 of the CA, and in particular, concerning the appointment and termination of its directors. But even then, the interested parties have given evidence admitting that no such meeting ever occurred. I also find as a matter of fact that, upon the signing of the purported SSTA on 6 September 2013, Mr. Pup, with the assistance of Mr. Wantepe and Mr. Timbi of Melpa Properties, facilitated the removal of Mr. Tiki as a director of Canopus, and secondly, they also facilitated the appointment of Mr. Pup as a director of Canopus.
  11. As such, I find their conducts to have constituted blatant disregard and breaches of the provisions under PART VIII Division 5 of the CA, that is, for removal and appointment of directors of a company, in particular, under ss 103(1), 133, 134, and 135. These provisions read,

103. RESOLUTION IN LIEU OF MEETING.


(1) Subject to Subsections (2) and (3), a resolution in writing signed by not less than 75% of the shareholders who would be entitled to vote on that resolution at a meeting of shareholders who together hold not less than 75% of the votes entitled to be cast on that resolution is as valid as if it had been passed at a meeting of those shareholders.

......


133. APPOINTMENT OF DIRECTORS TO BE VOTED ON INDIVIDUALLY.


(1) Subject to the constitution of the company, the shareholders of a company may vote on a resolution to appoint a director of the company only where–

(a) the resolution is for the appointment of one director; or

(b) the resolution is a single resolution for the appointment of two or more persons as directors of the company and a separate resolution that it be so voted on has first been passed without a vote being cast against it.

(2) A resolution moved in contravention of Subsection (1) is void even though the moving of it was not objected to at the time.

(3) Subsection (2) does not limit the operation of Section 136.

(4) No provision for the automatic reappointment of retiring directors in default of another appointment applies on the passing of a resolution in contravention of Subsection (1).

(5) Nothing in this section prevents the election of two or more directors by ballot or poll.


134. REMOVAL OF DIRECTORS.


(1) Subject to the constitution of the company, a director of a company may be removed from office by ordinary resolution passed at a meeting called for the purpose or for purposes that include the removal of the director.

(2) The notice of a meeting referred to in Subsection (1) shall state that the purpose or a purpose of the meeting is the removal of the director.


135. DIRECTOR CEASING TO HOLD OFFICE.


(1) The office of director of a company is vacated where the person holding that office–

(a) resigns in accordance with Subsection (2); or

(b) is removed from office in accordance with this Act or the constitution of the company; or

(c) becomes disqualified from being a director pursuant to Section 129; or

(d) dies; or

(e) otherwise vacates office in accordance with the constitution of the company.

(2) A director of a company may resign office by signing a written notice of resignation and sending it to the address for service of the company and such notice is effective when it is received at that address or at a later time specified in the notice.

(3) Notwithstanding the vacation of office, a person who held office as a director remains liable under the provisions of this Act that impose liabilities on directors in relation to acts and omissions and decisions made while that person was a director.


  1. The case law is also settled. In the leading case of Gawan Kuyan v Andrew Sallel (2008) N3376, Cannings J sets out with clarity the steps and processes for appointment and removal of a company director under the CA. In regard to appointment of directors, I adopt para 35 of his judgment, which reads:

35. This means that, in most cases, unless the company’s constitution provides otherwise or if directors are appointed by the court (s 132), if a director is to be lawfully appointed, the following procedure applies:


  1. And in regard to the processes for removal of directors, his Honour stated at para. 32, which I also adopt and quote:

32. This means that unless the company’s constitution provides otherwise, if a director of a company is to be lawfully removed from office the following procedure applies:


  1. At this juncture, I find Mr. Pup’s appointment as director to be contravention of the provisions of the CA and therefore unlawful. There was no supportive foundation or basis for his appointment which, in my view, is a blatant disregard to the provisions under PART VIII of the CA. Canopus, who has the primary burden to disprove the allegation, has failed to file a scintilla of evidence to show that Mr. Pup was duly appointed as a director following the due processes as provided under the CA, that is, for appointing a company director. I also find that Mr. Tiki has not been duly removed as a director of Canopus. I find that his purported removal was made in contravention of the provisions of the CA and therefore unlawful and baseless. I find no evidence adduced by Canopus or the interested parties to show that he was lawfully removed following the due processes for removal of directors under the CA.

80 SHARES – WHETHER THEY HAVE BEE VALIDLY REGISTERED


  1. The petitioner also complains that the 80 shares that had been purportedly acquired by Komkaeli Holdings were not transferred or registered following the processes under the CA. The respondent and the interested parties submitted that the processes had been followed or observed.
  2. The best place to begin, in my view, is to set out ss 40 and 65 of the CA. They read:

40. TRANSFERABILITY OF SHARES.


(1) Subject to any limitation or restriction on the transfer of shares in the constitution of the company, a share in a company is transferable.

(2) A share is transferred–

(a) by entry in the share register in accordance with Section 65; or

(b) in accordance with the terms of any exemption given by the Registrar under Section 77.

(3) The personal representative of a deceased shareholder may transfer a share even though the personal representative is not a shareholder at the time of transfer.

......


65. TRANSFER OF SHARES.


(1) Subject to the constitution of the company, shares in a company may be transferred by entry of the name of the transferee on the share register.

(2) For the purpose of transferring shares, a form of transfer signed by the present holder of the shares or by his personal representative shall be given to–

(a) the company; or

(b) an agent of the company who maintains the share register under Section 67(3).

(3) The form of transfer shall be signed by the transferee.

(4) On receipt of a form of transfer in accordance with Subsections (2) and (3), the company shall forthwith enter or cause to be entered the name of the transferee on the share register as holder of the shares, unless–

(a) the board resolves within one month of receipt of the transfer to refuse or delay the registration of the transfer, and the resolution sets out in full the reasons for doing so; and

(b) notice of the resolution, including those reasons, is sent to the transferor and to the transferee within five days of the resolution being passed by the board; and

(c) the Act or the constitution expressly permits the board to refuse or delay registration for the reasons stated.

(5) Subject to the constitution of a company, the board may refuse or delay the registration of a transfer of shares under Subsection (4) where the holder of the shares has failed to pay to the company an amount due in respect of those shares, whether by way of consideration for the issue of the shares or in respect of sums payable by the holder of the shares in accordance with the constitution.

(6) Following entry of the name or names of a transferee or transferees on the share register the company shall submit to the Registrar notice in the prescribed form of that entry unless–

(a) the company is subject to a listing agreement with a stock exchange; or

(b) the total number of shares transferred since the date of incorporation or the last annual return under Section 215 is less than 50% of the issued shares; or

(c) the company submits to the Registrar its annual return under Section 215 within one month of the date of entry of the transfer.

(7) Where a company fails to comply with Subsection (4) or (6)–

(a) the company commits an offence and is liable on conviction to the penalty set out in Section 413(1); and

(b) every director of the company commits an offence and is liable on conviction to the penalty set out in Section 414(1).


  1. Cannings J in Gawan Kuyan also sets out the processes for validation or registration of transferred shares under the CA. I adopt paragraph 48 where his Honour states:

48. This means that, in the usual case, for a valid transfer of a share to take place:


  1. In making his findings on the issue, his Honour stated at paragraphs 52 and 53:

52. There is no evidence of any instrument of transfer showing an agreement or assignment or any other transaction or process recognised by law by which property in the shares was passed. There are no transfer forms signed by the transferor and transferee. There is no evidence of the entry of any transfers in the share register; and the share register was not admitted into evidence.


53. The form 13, stating that the shares were transferred on 29 December 2006, which was submitted by the company secretary, Mr Dembi, signed by Mr Kuyan and lodged with the Registrar in late December 2006-early January 2007, is of no legal effect. It cannot be evidence of something lawfully done when the events underpinning it were not lawfully done. The fact that the Registrar accepted the form and amended the register of companies in accordance with the changes stated is also of no legal consequence. The Registrar cannot, by amending the register, make good a defect in transfer of a share. The entry in the share register of a person’s name as a shareholder is only prima facie evidence that legal title to the share vests in that person (s 69). I am satisfied that that evidence is rebutted by evidence of the true state of affairs and that there was no valid transfer of shares.


  1. Let me turn to the evidence of the parties on the subject matter. I make the following observations. There is evidence of the purported SSTA. Apart from the preliminary issues which included the agreement and where I have already made a ruling on, its existence is not disputed by the parties. It is marked as annexure PT7 to Exhibit D1. There is also evidence of a signed form 13 under s 65 of the CA. Evidence of that may be located at annexure NW3 to Exhibit D1 or annexure E to Exhibit P1.
  2. Evidence deposed to by Mr. Pup and the interested parties show that there are no proper company records or a company share register. It is not disputed but regardless and based on the adduced evidence, I find that Mr. Pup was practically in charge of Canopus; he was running its affairs after his company’s purported acquisition of 80 shares in Canopus. It is also not disputed that Komkaeli Holdings is also providing managerial services for Canopus over the Rui Plantation.
  3. I will be upfront with my findings after having considered the evidence of all the parties. It is obvious that there were dissatisfactions between the petitioner and Mr. Pup. They both come from the same area where the Rui Planation is situated. However, their animosities are of no consequence to the issue at hand. What is material is this. Mr. Pup, through his company Komkaeli Holdings, purportedly acquired 80 of the shares that Melpa Properties had in Canopus on 6 September 2013. Evidence shows that he has, and I find as such, discreetly liaised with Mr Wantepe, Mr. Timbi and the other directors or executives of Melpa Properties and purportedly purchased the said 80 shares of Canopus. The petitioner has been kept in the dark at the material before and after the purchase of the shares. I need not go through great lengths to see or establish that in the evidence. The petitioner and Mr. Tiki were the directors of Canopus immediately before 6 September 2013. There is corroboratory evidence as well as the fact that it is not disputed that the 2 directors (the petitioner and Mr. Tiki) were not informed or notified of the intentions of Melpa Properties and Komkaeli Holdings in regard to the 80 shares that were held by Melpa Properties in Canopus. Canopus has not called any evidence to dispute this. And Mr. Pup’s own evidence at Exhibit DD2(iv) admits or confirms that there was no meeting before 2014. The only 3 meetings he referred to were in 2014, 2017 and 2018 but I note that these were not proper shareholders or board meetings. I also note that the shares were purportedly purchased on 6 September 2013 so any meetings before that by Canopus, Mr. Pup would obviously have no knowledge of. So, what I have is undisputed evidence from the 2 directors of Canopus that no notification or meeting was ever held by Canopus regarding the intended share sale, and secondly or consequently, that Canopus did not complete its internal registration process, that is, by registering into its share register the purported acquired shares of Melpa Properties by Komkaeli Holdings.
  4. I observed Mr. Pup in cross-examination. By his various responses, I observe that he appears to picture Canopus like his own company that he owns through Komkaeli Holdings. Evidenced adduced shows that he kept changing Canopus’s registered office; he eventually moved it to a private location in Port Moresby; attempts by the petitioner to have access to the company records have all failed or were denied by Mr. Pup; he has used his company Komkaeli Holdings to manage the plantation without notifying the company or without following the processes for engaging management company where there may be conflict of interest; he has spent money or resources outside or in addition to what Canopus has to offer. What I saw from Mr. Pup was a general lack of understanding of the proprieties, that is, firstly of Canopus as a legal person, secondly, him as a separate person to Canopus, and thirdly, his company also as being a separate legal person and purported shareholder in Canopus. Mr. Pup’s line of responses and his sworn evidence shows that as a purported director and also as a purported majority shareholder through his company Komkaeli Holdings, he took over the management of Canopus in September of 2013, and has since then managed its affairs on his own terms or will through his company Komkaeli Holdings. I find that to be the case therein, that is, based on the evidence that have been adduced by the parties herein.
  5. The processes for share purchases in a company are set out in the CA and as summarized by Cannings J in Gawan Kuyan. It is Canopus itself that will decide whether or not to accept the share transfer. When it accepts the transfer, an entry will be made on the share register to confer legal title to the shares to Komkaeli Holdings. Let me elaborate. The parties to a share transfer shall sign a share transfer form. The form is required to be submitted to the company; the company receives the form and, if satisfied, approves the entry of the share transfer on the share register of the company; ss 65(4) and 70 of the CA makes it mandatory for the board of the company to approve the transfer of the shares in the company and its registration to its share register. That is not all. After that process, the company concerned must cancel the transferor’s share certificate. Also, it must issue a new share certificate to the transferee. The final process after completing these legal formalities and documentation is that the company shall procure/lodge a Form 13 with the Registrar of Companies for the benefit of the public (s 65(6).
  6. So, I note that Canopus has provided no scintilla of evidence to show that it had complied with the processes for the transfer, registration and cancellation of the shares in question between Melpa Properties and Komkaeli Holidngs. one of the interested parties including Mr. Pup have provided evidence of compliance in this regard. In fact, Mr. Pup, openly and under oath, gave evidence which showed that he was running the operation of Canopus as if it was his own company. Given my findings regarding his unlawful status as a director of Canopus, none of his actions or operations where he claims that he was acting as a director or an employee of Canopus is, in my view, valid. Given my findings in this regard, what this means is that Komkaeli Holdings, except for existence of the SSTA, cannot justify itself as a valid shareholder of Canopus. There is no trace of compliance with the transfer, registration and cancellation of the 80 shares from Melpa Properties and Komkaeli Holdings.
  7. I find that there was no valid transfer of the 80 shares by Melpa Properties to Komkaeli Holdings. And I must say that given the want of evidence to establish compliance with the provisions of the CA on acquisition of shares by Komkaeli Holdings, I find the record as shown by the Registrar of Companies in regard to the ownership of shares of Canopus to be inaccurate and wrong. There is therefore an immediate need to rectify that. I also find that there were no valid share acquisitions by Komkaeli Holdings in Canopus.

PREJUDICED SHAREHOLDER


  1. Based on my findings, it is obvious, in my view, that the petitioner, as a shareholder of Canopus, has satisfied this Court on the balance of probabilities, that the affairs of Canopus were conducted in manners that were oppressive, unfair, discriminatory, and unfairly prejudicial to him. The burden of proof has shifted. However, Canopus, on the other hand, has failed to provide any evidence to disprove the allegations and claims. Evidence adduced by the interested persons are of little or no assistance to Canopus’s obligation to defend against the petition. But regardless, I also find their evidence relevant in so far as they support the contentions raised by the petition on the substantive issues.
  2. I am satisfied that the petitioner has established his grievances as per his amended petition under s 152 of the CA. I find that the petitioner had been kept out of the operations of Canopus at the material time of the purported SSTA and also in regard to the purported appointment of Mr. Pup as a director of Canopus. I find the actions and inactions of Canopus, Mr. Pup, Komkaeli Holdings, Melpa Properties, Mr. Timbi and Mr. Wantepe, to be, with respect, highly suspicions. The whole processes for the purported transfer of shares in Canopus, the removal of Mr. Tiki as a director of Canopus, the purported appointment of Mr. Pup as a director of Canopus and the engagement of Komkaeli Holdings as Canopus’s operating company on Rui Plantation, were all carried out without any material paperwork or trail, in particular, in view of the mandatory processes that are provided for under the CA. In my view, the petitioner has raised these serious allegations against Canopus. He has given evidence to support his contentions and, in my view, has discharged his burden of proof on the balance of probabilities. Canopus and the interested parties, on the other hand, cannot or did not show compliances of the mandatory processes thus have failed to discharge or disproved the allegations raised. What the evidence as a whole show in summary, are dealings between Canopus and these interested parties, in total breach of the requirements and provisions under the CA for the reasons as explained above herein.

CONSIDERATION


  1. What do I make of the above findings? Well, it obvious to perceive as well as establish from the evidence of the petitioner, that the petitioner was and continues to be kept out in the dark after the purported signing of the SSTA on 2013. I note that Canopus and the interested parties have accused the petitioner of not managing Canopus or the Rui Plantation properly prior to 2013. However, I note that these claims are not the subject of the petition. The company and the interested parties are responding to the petition. They not making a claim against the petitioner in this proceeding. And the petition concerns what transpired since 6 September 2012 to-date.
  2. Requests by the petitioner to Canopus and Mr. Pup to furnish details of the affairs of the company have not been met as revealed in the evidence of the petitioner as well in the evidence of Mr. Pup during cross-examination. There is no record of annual meetings held by Canopus. Also, there is no company records that disclose whether the company was making profits or losses at the material time.
  3. Mr. Pup gave evidence as the director of Komkaeli Holdings. There is no independent evidence from Canopus to explain its operations and affairs. In fact, the manner in which Mr. Pup and Canopus’s lawyer have come to the Court to defend the matter, in my view, says a lot in that they support or confirm the submissions of the petitioner on the manner in which Mr. Pup has conducted himself and has been operating and controlling the affairs of Canopus through Komkaeli Holdings. As a legal person, Canopus, however, has no evidence at all but rather and in its submissions, relies totally on the evidence of Mr. Pup and Komkaeli Holdings. How can that be, I ask myself? Komkaeli Holdings, as a purported shareholder of Canopus, has engaged itself in managing Rui Plantation on behalf of Canopus. So, I ask myself these questions. Who authorized that arrangement? And because Komkaeli Holdings is a purported shareholder of Canopus, did it declare its interest to Canopus beforehand? Or did Mr. Pup declare his interest to Canopus as the owner of or absolute shareholder of Komkaeli Holdings before Canopus purportedly engaged Komkaeli Holdings to manage the plantation? If so, where is the evidence of that from Canopus or from the interested persons including Mr. Pup? (ss 117, 118 and 123 of the CA). The answers to these queries remain unanswered and, as such, they go against Canopus and the interested persons.
  4. These conducts by the respondent and the interested persons have caused and continue to cause the petitioner to suffer oppression, unfair discrimination, and unfair prejudice as a shareholder of Canopus.
  5. The relief that requires further clarity, in my view, is unfair prejudice. It has express provisions under the CA so, in my view, requires further consideration. Sections 152(4) & (5) and 110 state:

(4) Failure to comply with any of the following sections is conduct which is unfairly prejudicial for the purposes of this section:–

(a) Section 45;

(b) Section 47;

(c) Section 51;

(d) Section 57;

(e) Section 63;

(f) Section 98

(g) Section 110.


(5) The signing by the directors of a company of a certificate required by this Act without reasonable grounds existing for an opinion set out in it is conduct that is unfairly prejudicial for the purposes of this section.

......


110. MAJOR TRANSACTIONS.


(1) A company shall not enter into a major transaction unless the transaction is–

(a) approved by special resolution; or

(b) contingent on approval by special resolution.

(2) In this section–

“assets” includes property of any kind, whether tangible or intangible;

“major transaction”, in relation to a company, means–

(a) the acquisition of, or an agreement to acquire, whether contingent or not, assets the value of which is more than half the value of the assets of the company before the acquisition; or

(b) the disposition of, or an agreement to dispose of, whether contingent or not, assets of the company the value of which is more than half the value of the assets of the company before the disposition; or

(c) a transaction which has or is likely to have the effect of the company acquiring rights or interests or incurring obligations or liabilities the value of which is more than half the value of the assets of the company before the transaction.

(3) Nothing in Paragraph (c) of the definition of the term “major transaction” in Subsection (2) applies by reason only of the company giving, or entering into an agreement to give, a floating charge secured over the assets of the company the value of which is more than half the value of the assets of the company for the purpose of securing the repayment of money or the performance of an obligation.

(4) Nothing in this section applies to a major transaction entered into by a receiver appointed pursuant to an instrument creating a charge over all or substantially all of the property of a company.

......


  1. I find that the applicable provision breached herein is s 110 re Major Transaction. I refer to the decision by Canopus to engage a management company, namely, Komkaeli Holdings to manage its huge coffee plantation which is Rui Plantation. That, in my view, was a major transaction of the company given that the plantation was (and still is) the only valuable asset of Canopus. The purported management arrangement poses a real risk of Mr. Pup’s company, which is a purported shareholder of Canopus, to operate outside the terms or requirements of the provisions that are set out under the provisions of the CA. As such, Komkaeli Holdings’ operations on Rui Plantation, without any proper control and lawful authority including serious breaches of the provisions of the CA, puts Canopus under a real risk of losing its only valuable property or of incurring debts or liabilities, that would or are likely to exceed the value of its total assets. I find the actions of Canopus, in purporting to engage Komkaeli Holdings, to qualify under s 110(2)(c) which states,...a transaction which has or is likely to have the effect of the company acquiring rights or interests or incurring obligations or liabilities the value of which is more than half the value of the assets of the company before the transaction. Canopus has not produced any evidence to prove otherwise. Evidence adduced by the petitioner has shown and it is sufficient for me to conclude, given these unlawful actions or transactions by the company, Mr. Pup, and the interested parties, that they would or are likely to cause Canopus to suffer substantially in losses or incur liabilities that would or may be far greater than half of the value of its assets. That includes putting Canopus’s only major asset, which is Rui Plantation, at a great risk of being disposed or lost completely.
  2. Further, I also find the actions of the purported director Mr. Pup and the interested persons to breach s 152(5). Upon Mr. Pup’s unlawful appointment as a director of Canopus, he has, as evidence revealed, run the company (i) like his own company or (ii) without any control or observance of the provisions of the CA for operating a company. He has taken steps and signed company documents and certificates and has made representations for Canopus. There is, however, no record of cancellation of share certificates nor confirmation or issuance of new share certificates by Canopus to Melpa Properties and Komkaeli Holdings as at 6 September 2013 or thereafter. They are captured above in my decision. I find the actions of Canopus in registering the shares in the public record of IPA as evidence of breach of s 110(5) of the CA. There is also no justification or evidence that shows how the shares could have been validly changed or altered despite the existence of the SSTA. It is also, in my view, safe to make this assumption given what had transpired since 2013 to the date when the petitioner took the company to Court and obtained restraining orders against the company and its conduct. The assumption is also made based on the want of evidence adduced by Canopus in this proceeding.

DEFENCE OF LACHES


  1. Mr. Pup and Komkaeli Holdings raise the equitable defence, laches.
  2. Equity is part of the underlying law which forms part of the laws of this country (s 9(f) of the Constitution). It was adopted from England immediately before independence on 16 September,1975. The defence or doctrine of laches applies to actions that are founded in equity. The present action, however, is not based in equity but rather under statute, namely, s 152 of the CA. The petitioner is seeking various relief based on his rights conferred by law. I have addressed this in my earlier decision, that is, In the Matter of the Companies Act 1997, In the matter of Canopus No. 101 Ltd (2020) N8459. I would also, for clarity, refer to the case, Lakunda Plantation Pty Ltd v. Maluvil (1981) N308(L). Miles J stated as follows:

The right to bring proceedings to recover compensation under the Workers Compensation Act 1958 is clearly a legal right conferred by statute and not an equitable right. In line with the authorities just referred to, the employer is not entitled to rely on an equitable defence of laches in order to resist a claim for workers compensation. The only possibility is that the employer might raise a defence of waiver or release.


  1. I dismiss this defence raised by Mr. Pup and Komkaeli Holdings.

LIABILITY


  1. The petitioner has established liability. Let me now proceed to consider what orders or compensation orders I should make.

RELIEF


  1. I now address relief. Subsection 2 of s 152 states:

(2) Where, on an application under this section, the Court considers that it is just and equitable to do so, it may make such order as it thinks fit including, without limiting the generality of this subsection, an order–

(a) requiring the company or any other person to acquire the shareholder’s shares; or

(b) requiring the company or any other person to pay compensation to a person; or

(c) regulating the future conduct of the company’s affairs; or

(d) altering or adding to the company’s constitution; or

(e) appointing a receiver of the company; or

(f) directing the rectification of the records of the company; or

(g) putting the company into liquidation; or

(h) setting aside action taken by the company or the board in breach of this Act or the constitution of the company. [Underlining mine]


  1. The discretion I have herein is extensive, as expressly stated therein, that is, to grant relief beyond what is provided for under s 152(2)(a) to (h). However, I note that the discretion may apply provided that it is just and equitable to do so. See also cases: Sabatica Pty Ltd v. Battle Mountain Canada Ltd (2003) SC709; In the matter of the Companies Act 1997; In the matter of Petroleum Exploration Joint Venture Ltd (2021) N9027. I note what is being sought by the petitioner in his amended petition and submissions and submissions before this Court. I also note the submissions of the respondent and the interested parties.
  2. As a start and based on the evidence of the petitioner, and also and I must say based on the evidence as a whole, I am satisfied that the petitioner, as a shareholder, has suffered real damages by the actions or inactions of Canopus. The primary considerations are as follows, (i), the unlawful conduct of Canopus that had led to the purported and unlawful transfer of shares from Melpa Properties to Komkaeli Holdings in 2013, (ii), breaches of the provisions of the CA for the termination and appointment of the directors of Canopus, (iii), breaches of the provisions of the CA for the appointment of Komkaeli Holdings to manage Rui Plantation, (iv), breaches of provisions of the CA in the manner in which Mr. Pup has managed and operated Canopus, that is, outside its legal status as a legal person and proprietorship of its asset namely Rui Plantation, (v), breaches of the provisions of the CA by Canopus in failing to hold shareholders meetings including keeping company records of its affairs such as records of minutes of meetings, a share register of its issued shares and evidence of issuance and cancellation of share certificates, and (vi) breaches of the provisions of the CA by Canopus by appointment unlawful persons including Mr. Pup and Komkaeli Holdings to its board and as shareholders.
  3. There is another consideration which, in my view, should be regarded separately to consider the type of relief and damages that I may award in this matter, which is this. I have found the appointment of Mr. Pup as a purported director of Canopus unlawful. I have also found the purported shares held in Canopus by Komkaeli Holdings to be unlawful. The immediate status quo therefore may be that the Melpa Properties may retain its 80 shares of Canopus. Also, it may be that the previous directors, Mr. Tiki, and the petitioner, would remain as directors of Canopus. That said, I note from the submissions that there is no intention by Melpa Properties to want its shares back. Evidence adduced have shown that it had wanted out of the business arrangement which was the reason why it had purportedly sold its shares in Canopus to Komkaeli Holdings.
  4. The 80 shares appear to have been purportedly sold at an undervalued price of K100,000 to Komkaeli Holdings. I say this because there is no valuation report or evidence provided from any reputable persons of the share value before its purported sale by Melpa Properties to Komkaeli Holdings. Secondly, I note that the value of Rui Plantation itself at the material time would have been worth several millions of kina even say if the company was not operational or was not making any money at the material time. Canopus’s only asset, which is the land itself, is an Agricultural Lease, Volume 7 Folia 105 Portion 1215 Milinch Hagen, WHP (Rui Plantation/the Land). A copy of the State Lease is marked as annexure A to Exhibit P1. The land mass consists of 1,050 hectares. The Land itself, discounting the vast number of coffee trees on it as well as grown eucalyptus trees that are ready for harvest over its 1, 050 hectares, would have easily worth several millions of kina. Undisputed evidence adduced shows that Canopus purchased Rui Plantation from Rui Trading Pty Ltd, in 2005 for K1,000,000. A copy of the contract for sale is evident in annexure PT1 of Exhibit D1. The value of the Land alone would have increased over time or since then. And if we were to add the value of coffee trees and timber to it as of 2013 or 2014, it would have been worth several more millions of kina.
  5. With these, I have to ask myself this. What would be the just and equitable thing or things to do under the present circumstances of this case? I think the answer to that would be to grant several or various relief including awarding compensation, to the petitioner with perhaps other alternative or consequential orders that may follow.

RELIEF (ASSESSMENTS)


  1. Canopus has offered no evidence regarding its assets, company records and books to show its operations and whether it is making any profits or not. I refuse to consider as credible, the evidence of Mr. Pup, Komkaeli Holdings, and the interested persons, concerning the operations of Canopus. They having no standing to speak for or on behalf of Canopus. I also find their evidence to be compromised given my findings regarding the purported illegal or unlawful appointment of Mr. Pup as a director of Canopus, and also regarding my findings concerning the purported acquisition of Canopus’s shares by Komkaeli Holdings.
  2. In Rondulg Investment Ltd; In the matter of the Companies Act 1997 (2021) N9317, I awarded at total of K100,000 as compensation against the respondents to the petitioner, in a petition that was filed under s 152. The petitioner, Patmilia Investments (PNG) Limited, was aggrieved that its 100 shares in Rondulg Investment Ltd, were transferred without his knowledge or consent. In the matter, I considered the case more serious to an earlier case, namely, Culture Shock (1-61817) In re (2016) N6786 thus awarded K50,000 each against the 2 respondents as compensation awards.
  3. In Culture Shock, the petitioner’s 25 shares in the company were transferred without her knowledge or consent by the other directors of the company to a third party. She was aggrieved and filed her petition where she sought various relief under s. 152 of the Companies Act. She sought orders including compensation against the company and the individuals concerned who had participated in the said dealing. Hartshorn J stated at para 8,...I am satisfied that this action in transferring Ms. Taraka’s shares without her consent and without any consideration constitutes amongst others, an act that has been, or is, or is likely to be oppressive, unfairly discriminatory or prejudicial to Ms. Taraka in her capacity as a shareholder. In so doing, His Honour awarded amongst others compensation against the actions of the company and the respondents, in a sum of K25,000.
  4. The present case however and in my view, is far more serious compared to the 2 cases. As such, an award that is much higher is warranted. This case concerns what had transpired in the period leading up to 6 September 2013 till the time when restraining orders were obtained by the petitioner on 20 December 2019. Refer to my decision in In the matter of the Companies Act 1997; In the matter of Canopus No. 101 Ltd (2019) N8162. This is a case where the respondent, as stated, had and has continued to act in concert, and I must say bordering on conspiracy, with Mr. Pup, Mr. Timbi, Mr. Wantepe, and Melpa Properties, to, (i), purportedly appoint Mr. Pup as a director of Canopus, (ii), purportedly remove Mr. Tiki as a director of Canopus, and (iii), purportedly transferred Melpa Properties 80 shares in Canopus to Komkaeli Holdings, whilst keeping the petitioner in the dark but regardless, without following the due processes that are provided for under the CA. But Mr. Pup himself has clearly established in evidence where he has admitted directly and impliedly that he controls or operates Canopus and Komkaeli Holdings unilaterally without any due or proper consideration to the processes that are provided under the CA, or without observing the company laws and rules. As evidence revealed, Mr. Pup appears to have limited appreciation and knowledge of the company laws and rule or the laws that govern companies under the CA. He responded during cross-examinations in manners where it suggests or implies that since his company was the majority shareholder in Canopus, that he could do as he please as a purported director of Canopus.
  5. The other considerations are as follows. I have found the appointment of Mr. Pup as a director to be in direct contravention or breach of the provisions of the CA. I have also found the removal of Mr. Tiki to be in direct contravention or breach of the provisions of the CA. And thirdly, I have found the purported purchase and record of transfer of shares from Melpa Properties to Komkaeli Holdings in Canopus to be direct breach of the provisions of the CA. What these all mean is that as at 6 September 2013, Canopus has been operated illegally by persons who had no authority to do so. Consequently, and as I have found above, the petitioner, as the only other shareholder, has suffered oppression, unfair discrimination and unfair prejudice.
  6. Based on the evidence of the petitioner, and in consideration of the matter as a whole including its history, I will award a reasonable compensation award of K3 million to the petitoner. The sum shall represent compensation payment for oppression, unfair discrimination, and unfair prejudice that have been caused by Canopus, Mr. Pup, Komkaeli Holdings, Mr. Timbi and Mr Wantepe of Melpa Properties, and Melpa Properties Ltd, to the petitioner as a shareholder of Canopus. In my view, the conducts of these persons were grossly unlawful and were in serious breaches of the provisions of the CA. It appears that the respondents have all orchestrated themselves in such a manner that they kept out or ‘ambushed’ so to speak, the petitioner of his rights and privileges, as a shareholder in Canopus with the aim to allow Mr. Pup and his company Komkaeli Holdings to try to take over the operations or affairs of Canopus. And they have succeeded for over 8 years. And in so doing, they have essentially attempted to re-write the company laws or rules in regard to appointment of directors, termination of directors, purchase and registration of shares in a company, declaration of a director’s interest in the operation or transaction of the company, and the principle or law that a company is a separate legal person. They therefore ought to be severely punished, in my view, for their unlawful actions with a reasonable but firm compensation award.
  7. It is on that basis that I consider K3 million to be a reasonable sum.
  8. I will also declare that Mr. Pup has been unlawfully appointed as a director of Canopus and I will order Canopus and the Registrar of Companies to immediately reflect that in their various or respective kept records.
  9. I will also declare Komkaeki Holdings’ purported acquired 80 shares in Canopus invalid and unlawful.
  10. I will issue orders that shall require Canopus, Mr. Pup, Komkaeli Holdings, Melpa Properties, Mr. Timbi and Mr. Wantep to pay the K3 million compensation award within 3 months from the date of the judgment, failing upon which I will order that K1 million from the K3 million, shall be deemed or regarded as payment by the petitioner to Melpa Properties for the acquisition of the 80 shares of Melpa Properties in Canopus, and I will issue orders for Canopus and the Registrar of Companies to take immediate steps to show that in their respective records. If that occurs, I will also issue further orders that Canopus, Mr. Pup, Komkaeli Holdings, Mr. Timbi and Mr. Wantepe shall, after the purchase of the 80 shares of Melpa Properties by the petitioner, be liable to the petitioner for the balance which shall be K2 million and that they, except for Mr. Timbi and Mr. Wantepe, shall all be liable equally or severally to the petitioner for the said sum.
  11. I note that Mr. Wantepe and Mr. Timbi are directors of Melpa Properties Ltd. They are petitioned in their said capacities, and I note that their actions or inactions as determined by this Court are made on their said capacities. It would therefore not be correct to hold the 2 persons personally liable for their actions. The same, however, does not apply to Mr. Pup. His appointment as a director has been invalidated and he is therefore liable in his personal capacity as well as in his capacity as the director or representative of Komkaeli Holdings Ltd.

COST


  1. Awarding of cost in this case is discretionary. I note the submissions of the parties on this. In exercising my discretion, I will award cost of the proceeding to the petitioner to be assessed on a party/party basis which may be taxed if not agreed.

ORDERS OF THE COURT


  1. I make the following orders:
    1. The petitioner has proven that he had and continues to suffer oppression, unfair discrimination, and unfair prejudice as a shareholder by the actions of the respondent Canopus No. 101 Limited and the interested persons namely Steven Pup, Komkaeli Holdings Ltd, Paul Timbi, Nathan Wantepe and Melpa Properties Ltd.
    2. The petitioner is awarded compensation in the sum of K3 million against Canopus No. 101 Limited, Steven Pup, Komkaeli Holdings Ltd and Melpa Properties Ltd. The sum shall be paid within 3 months from the date of this order.
    3. Steven Pup’s appointment as a director of Canopus No. 101 Limited is invalid and he shall be removed as a director of Canopus No. 101 Limited. The Registrar of Companies and Canopus No. 101 Limited shall correct their records to reflect this order of the Court.
    4. Pais Kar Tiki’s removal as a director of Canopus No. 101 Limited is invalid and he shall be reinstated as a director of Canopus No. 101 Limited. The Registrar of Companies and Canopus No. 101 Limited shall correct their records to reflect this order of the Court.
    5. Komkaeli Holdings Ltd’s purported acquisition of 80 shares in Canopus No. 101 Limited is invalid. The Registrar of Companies and Canopus No. 101 Limited shall correct their records to reflect this order of the Court.
    6. If Canopus No. 101 Limited, Steven Pup, Komkaeli Holdings Ltd and Melpa Properties Ltd fail to fully settle the K3 million within the 3 months period, K1 million from the K3 million shall be regarded as full payment by the petitioner to Melpa Properties Ltd for the 80 shares in Canopus No. 101 Limited, and the petitioner shall own 100 shares in Canopus No. 101 Limited. Should that happen, the Registrar of Companies and Canopus No. 101 Limited shall correct their records to reflect this order of the Court. And should that happen, Canopus No. 101 Limited, Steven Pup, Komkaeli Holdings Ltd and Melpa Properties Ltd shall immediately after the 3 months period, owe and be liable to pay the petitioner the balance of the compensation payment of K2 million. They shall be liable for this compensation sum jointly and severally.
    7. Canopus No. 101 Limited, Steven Pup, Komkaeli Holdings Ltd and Melpa Properties Ltd shall pay the petitioner’s cost of the proceeding on a party/party basis which shall be taxed if not agreed.
    8. Time for entry of these orders is abridged to the date and time of settlement by the Registrar of the National Court which shall take place forthwith.

The Court orders accordingly.


_________________________________________
Ashurst PNG: Lawyers for the Petitioner
Wara: Lawyers for Canopus No. 101 Ltd
Mel & Henry: Lawyers for Steven Pup and Komkaeli Holdings Ltd
Charles Kos: Lawyer for Paul Timbi, Nathan Wantepe & Melpa Properties Ltd


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