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Landu v Hitron Ltd [2023] PGNC 156; N10231 (16 March 2023)

N10231

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]


OS (JR) NO. 95 OF 2022


MARTIN LANDU
First Plaintiff


AND
BILL ADAMS IN HIS CAPACITY AS THE NEXT FRIEND, HEIR, AND SUCCESSOR OF HIS DECEASED MOTHER LATE ATO BERNADETTE ADAMS
Second Plaintiff


V
HITRON LIMITED
First Defendant


AND
HARIET KOKIVA AS REGISTRAR OF COMPANIES
Second Defendant


AND
CLARANCE HOOT IN HIS CAPACITY AS THE MANAGING DIRECTOR FOR INVESTMENT PROMOTION AUTHORITY FOR AND ON BEHALF OF THE INVESTMENT PROMOTION AUTHORITY
Third Defendant


AND
INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Defendant


Waigani: Miviri J
2023: 16th March


JUDICIAL REVIEW AND APPEALS - PRACTICE & PROCEDURE – Leave for Judicial Review – Order 16 Rule 3 NCR – Amended Originating Summons – Amended notice of motion – Amended Statement in support – Amended affidavit verifying facts – Amended undertaking to pay damages – Notice of Application for leave to apply for Judicial Review – Section 395A (1) (a) (b) & (4) Companies Act 1997 – Application by Any Person – Rectify The Registrar –Public Notice Issued Before Rectifying – Setting Out Name of Applicant – Name of Company or Overseas Company – Reasons for And Changes to be made to Register – Objection within 20 working days After Date of Notice – Objection to Registrar who Shall give Copy of it to Applicant – Registrar No Rectification upon Receipt of Objection.


PRACTICE & PROCEDURE – Judicial Review & appeals – Leave for Judicial Review – Order 16 Rule 3 NCR – Plaintiffs Letter to Rectify Register – No Mention in the Notice Under Section 395A of Plaintiffs as Applying to Rectify – Hitron Limited Status to Rectify – Reasonable Cause to Believe Changes to Company Records Illegal unauthorized – Process to Rectify Records On Register – Plaintiffs Effected By The Notice under Section 395A Companies Act 1997 As Amended – Sufficient Interest & Locus Standi – Arguable Case – Time No Substantial Issue To Avoid – Section 408 Companies Act 1997 Appeals From Register Act Decision – Balance for Leave Discharged – Leave granted for Judicial Review – Cost Follow the Event.


Cases Cited:


Innovest Ltd v Pruaitch [2014] PGNC 288; N5949
Pipoi v Seravo, National Minister for Lands [2008] PGSC 7; SC909
Aihi v The State (No 1) [1981] PNGLR 81
NTN Pty Ltd v The Board of the PTC, PTC and Media Niugini [1987] PNGLR 70
Ragi and State Services & Statutory Authorities Superannuation Fund Board v Maingu [1994] PGSC 3; SC459


Counsel:


J. Napu, for Plaintiffs
Z. Rekeken, for Fourth Defendant


RULING

16th March, 2023

  1. MIVIRI, J: This is the ruling on the plaintiff’s application for leave for Judicial Review pursuant to Order 16 Rule 3 of the National Court Rules against the Second defendant to perform her statutory duties under section 395A of the Companies Act 1997. And to rectify the Company records for Hitron Pty Ltd and to reinstate Mr Martin Landu and Ms Ato Bernadette Adams as Shareholders of Hitron Pty Ltd. That in essence at the outset is the plea in the Originating summons filed of the 29th August 2022 by the plaintiffs. And it is invoking Order 16 Rule 3 (1) of the National Court Rules for leave. Which by Order 16 Rule 3 (5) shall not be granted unless the applicant has sufficient interest in the matter to which the application relates.
  2. The plaintiffs rely on the following; amended originating summons, amended Statement in support, amended notice to the Secretary for Justice for leave to apply for Judicial review, a notice similar, amended affidavit verifying the facts relied, Supplementary Affidavit of the first plaintiff Martin Landu, further amended statement and the Affidavit of Bill Adams in place of his mother now deceased.
  3. It is an application for leave in essence. It therefore must be settled on the balance of preponderance that the plaintiffs have sufficient interest, or locus standi in the matter sought. Further that there is no delay in bringing forth the matter. And it is arguable and all avenues internal have been exhausted to bring it here. In this regard the State is always initially engaged in open court on the subject because of the requirements of Order 16 Rule 3. Service the notice of the application made to the Secretary of Justice within two clear days. Sealed copies of the originating process, originating summons served on that office. In this regard is also the mandatory terms of s. 8 of the Claims By and Against the State Act, 1996. Specially leave for Judicial Review, “Notwithstanding anything in any other law, a court hearing an application for leave to apply for judicial review in a matter in which the State is a defendant shall not grant leave unless the State has been afforded an opportunity to be heard.” So, it is mandatory that the State is heard.
  4. In the case of all other parties all will be heard when the substantive notice of motion is called in the matter after grant of leave: Innovest Ltd v Pruaitch [2014] PGNC 288; N5949 (17 March 2014). That is when the substantive matter or the dispute is taken out scrutinized for all its worth. In this regard all parties named now including any others on application maybe heard. As it is, the plaintiff at leave is only justifying why he must be heard in the dispute. It is an ex parte application for justification to be heard. He must justify that he has an arguable cause. He has sufficient interest in the matter. He has not delayed in bring the matter. He has exhausted all internal procedure to find a solution to the matter. It is not the complaint but the reason why it ought to be given a day in Court. It will not involve the dispute as it were. So, there is no real need for any other parties other than the State initially. For these reasons the application to be heard by the First and Second Defendants are refused except for the fourth defendant, the State.
  5. The facts of this case are set out in the Statement pursuant to Order 16 Rule 3 (2) (a) of the National Court Rules filed 29th August 2022 by the plaintiffs that, the first defendant Hitron is a company incorporated by the plaintiffs on the 07th January 1982. Of which the shareholders at that time were Martin Landu and Ato Bernadette Adams both from Ungai Bena in the Eastern Highlands. It was a cable TV Company. Ato Bernadette Adam’s husband Theo Adams, a Patrol Officer in Goroka introduced Lindsay Jorgensen technical expert employed by Post and Telecommunication Corporation to manage Hitron for and on behalf of the first plaintiff and late Ato Bernadette Adams. Both were joint proprietors and share holders of Hitron. They also were both directors and held shareholding jointly since its incorporation.
  6. The second defendant in the course of her duties transferred the Equity holding and directorship from the first plaintiff and late Ato Bernadette Adams to Lindsay Jorgensen and Anne Margaret Ames on the 31st May 1997. Which altered the share structures as Lindsay Jorgensen and Anne Margaret Ames who were seized of the shares at 50% a piece. Ownership of Hitron Pty Ltd was transferred to them Lindsay Jorgensen and Anne Margaret Ames. And the former transferred his 400 shares being 40% of the total shares there in Hitron Pty Ltd to the National Superannuation Fund on the 12th May 2014 for a consideration of K36 million being the agreed sale price.
  7. And the transfer of the shares initially in Hitron from the first Plaintiff and Ato Bernadette Adams to Lindsay Jorgensen and Anne Margaret Ames was made under the following circumstances:
  8. Following that publication Lindsay Jorgensen and Anne Margaret Ames instructed their lawyers, Young & Williams to object to the Notice. Which notice objecting was filed outside of the notice period. And it was not on the merit of the allegation raised but the form of the notice. To which the second defendant did not rectify the records following the published notice and the gazettal up to this date. And on the 04th July 2022 the plaintiffs wrote to the second Defendant to proceed and rectify the First Defendant Companies record pursuant to that publication notice but up to date, the second defendant did not do that performing the statutory duty owing to rectify the records under the law. And under section 395A (4) Companies Act 1997 the Second defendant can proceed with the rectification of the Companies record if no objections are made, the objections are withdrawn, or the objection is furnished outside the time limit prescribed in the notice.
  9. And the plaintiffs argue that the Registrar of Companies did not comply with section 65 of the Companies Act 1997 process regarding the transfer of shares because the transfer of shares relinquished its ownership or proprietorship interest of the First Plaintiff and late Mrs Ato Bernadette Adams to Lindsay Jorgensen and Anne Margaret Ames. Here the objection was outside the time prescribed and therefore did not amount to objection within the law. And it was made against the form of the notice not the merits or substance of the notice. And therefore, given the second defendant was lawfully required to under section 395A (1) and (4) of the Companies Act 1997 to rectify the records.
  10. And in so failing the plaintiffs had a cause for leave to be granted for judicial review because they had standing as they were affected by the decision of the second defendant fulfilling Order 16 Rule 3 (5) of the National Court Rules. And therefore by section 155 (4) of the Constitution and Order 16 Rule 1 of the National Court Rules, an order in the nature of Mandamus was in view to compel her discharge of her duties to rectify the First Defendant’s Companies record to reflect that the shareholding structure is reflective of the original record bearing particulars of the initial incorporation of the Company; pursuant to her powers under section 395A (1) (a) (b) and (4) of the Companies Act 1997.
  11. Here the second defendant issued the notice fulfilling section 395A (1) (a) (b) because an application had been made to her to rectify the Companies record, Hitron Pty Ltd. She fulfilled subsection 2 (a) (b) (i) (ii) (iii) (iv) of that Section. But did not go on to rectify the records because of the reason she gave that the status of HITRON LIMITED (1-8400) to its post 20th February 1988 status as there is reasonable cause to believe that the change made to the Company’s records were illegal and unauthorized. She has not gone on to carry into effect the assertions by that notice given that the notice objecting primae facie is late. Her inaction has caused the application lodged by the Plaintiff to hang in limbo to await her discretion by that section, 395A of the Companies Act. As to why she has not carried out that discretion is a matter in her hands. But subsection (4) says it that if the objection is received within time prescribed, she will not rectify the records. Here the objection is primae facie late, she must exercise her discretion to rectify the records in satisfying that status of HITRON LIMITED (1-8400) to its post 20th February 1988 status as there is reasonable cause to believe that the change made to the Company’s records were illegal and unauthorized. It must come from the discharge of her duties pursuant that there is satisfaction to this query she raises in the notice. And that is outstanding yet to be discharged one way or the other. She has given no reason for the delay in discharging since the 07th day of January 2020. And on the 04th July 2022 the plaintiffs wrote to the second Defendant to proceed and rectify the First Defendant Companies record pursuant to that publication notice but up to date, the second defendant did not do that performing the statutory duty owing to rectify the records under the law.
  12. It is clear by this facts that there is satisfaction and discharge on the balance of preponderance that the plaintiffs, first and second have sufficient interests in the matter satisfying Order 16 Rule 3 (5) of the Rules of Court. They have locus standie accepting that Judicial review is a very restrictive domain and is not open at the discretion of busy bodies and the like because the grounds to invoke leave are very restrictive and stringent: Pipoi v Seravo, National Minister for Lands [2008] PGSC 7; SC909 (10 April 2008). And these are not mere assertions but is the law enforced time over and over again Innovest (supra). Because the process under that Act Section 395A must be completed by the second defendant to discharge her duties called there. It will not bypass that Act and having considered it by the pleading, it is clear that there is internal process by law set out for very good reasons at the discretion of the second defendant. And this is clear by section 408 of that Act, that a person who is aggrieved by the act or decision of the Registrar may appeal to the Court with a month after the same. And the Court will either approve what the Registrar did or give such directions as it considers fit in the matter. To leave it without recourse will deny the arguable case they profess primae facie. Given that both have locus standie and have resorted to bringing the matter as it is.
  13. Denying that because of the time that has taken will deny them substantial justice as was the case of Aihi v The State (No 1) [1981] PGSC 9; [1981] PNGLR 81 (27 March 1981). Appeal period of 40 days had expired but giving effect to that would have denied substantial justice in the voice against the sentence she served. Similarly, to give effect that this is a long time matter would deny both plaintiffs a day in court considering now that they have an arguable case on the merit to be pursued. Time must not defeat Justice overt and apparent given the facts here. Both were assisted by the late husband of Ato Bernadette Adams. To my mind it brings out incapacity to understand and comprehend the language spoken and the contents of what was happening to a valuable and substantive matter as shares in a company. Value of Shares are not as set out by the evidence filed. Leaving it as reasoned by the time taken to bring the cause will deny substantial justice that is apparent and due following from the discretion by the second defendant. And Section 155 (4) canvassed by Aihi (supra) has not denied justice but served it. Given similar by the facts and circumstances here, that would be the cause apparent for the Plaintiffs by their cause here. Time will not deny them that opportunity this ground is discharged on the balance of preponderance in their favour.
  14. There is no power in the Court to circumvent an internal process and procedure by law in this case upon the second defendant: NTN Pty Ltd v The Board of the PTC, PTC and Media Niugini [1987] PGNC 54; [1987] PNGLR 70 (6 May 1987). She must fulfill and there are arguable basis discharged for the call to grant leave. Section 65 is specific procedure that sets out how Shares in a company are transferred records maintained with the Register. And what forms are necessary and come out in that process to fulfill the requirements of keeping the records of the Company in the Register. It is in itself an intricate and delicate process because of the value attached to Shares in the life of a company. Hitron is no different. It is the end of the road and must come into Court by operation of section 408 Appeals from Registrar’s decision or act. Prima facie that is the case here and ought by that fact evidence arguable basis to bring the matter to proper scrutiny by a notice of motion.
  15. Shares are personal properties of an individual. They are at liberty to do as they please to it. Either it is sold by a contract of sale entered into between the parties as vendor and purchaser. And the records of the company is maintained in accordance with section 65 of the Act. It is therefore private law not public. But where the Registrar of Companies is a public official holding a public office is called to discharge duties pursuant to that office set out by the Companies Act, his discretion if questioned as here must be examined in the light of that enabling legislation, the Companies Act in particular Section 395A Rectification or correction of Papua New Guinea Register and overseas register. Procedures under that section either benefit the plaintiffs or not in the exercise of by the Registrar. She has left it in abeyance and therefore have aggrieved the plaintiffs. It is a public function by that public official and not privity in the sense of contract. Hence it is the subject of the institution as here, Ragi and State Services & Statutory Authorities Superannuation Fund Board v Maingu [1994] PGSC 3; SC459 (29 June 1994). In all the circumstances the aggregate is that the plaintiffs have demonstrated a case for leave to be granted. The application is made out leave is granted the plaintiffs for the substantive notice of motion to be filed to institute Judicial Review. Costs will be following the event.
  16. The formal orders of the court are:

Orders Accordingly.

__________________________________________________________________

Napu & Company Lawyers : Lawyers for the Plaintiff/Applicant

Office of the Solicitor General : Lawyers for Defendants

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