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Kupa v Joseph [2023] PGNC 501; N10813 (15 November 2023)

N10813

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

APPEAL NO.CIA 9 OF 2021

BETWEEN:
NATHAN KUPA
First Appellant

AND:
FAX YATENGME
Second Appellant

AND:
METU PAPAINATO
Third Appellant

AND:
BEN JOSEPH
First Respondent

AND:
MAURI MITA
Second Respondent

AND:
SIMON BUBIA
Third Respondent

AND:
FENIS PAPAINATO
Fourth Respondent

AND:
THE MANAGER, BANK OF SOUTH PACIFIC, BULOLO BRANCH
Fifth Respondent

Lae: David, J
2023: 15^th November

APPEAL FROM DISTRICT COURT – appeal from order made following order for dismissal of proceedings – common law principle of functus officio or functus – common law principle applies to decisions of administrative bodies and judicial officers in judicial proceedings - powers of National Court on appeal – District Courts Act, ss.25 and 230.

Cases Cited:

Papua New Guinean Cases
South Seas Tuna Corporation Ltd v Palaso (2019) SC1761

Overseas Case
Demetrio, R. (on the application of) v Independent Police Complaints Commission (IPCC) [2015] EWHC 593

Counsel:
Roger Mathias Geoctau, for the Appellants
Maik Karu, for the First, Second, Third and Fourth Respondents

JUDGMENT

15^th November 2023

1. DAVID, J: INTRODUCTION: This is a decision on an appeal against the decision of the Lae District Court made on 4 March 2021 in proceedings DC 80 of 2020, Ben Joseph & Ors v Nathan Kupa & Ors (the District Court proceedings) when the District Court made the following orders:
   

“1. The minutes of the meeting dated 3 February 2021 of the Nauti Investment Limited prepared and submitted to the court by the defendant is quashed.

2. A General Meeting should be conducted to appoint new executives of Nauti Investment Limited.
   3. All the accounts of Nauti Investment Limited will remain closed until new executives of Nauti Investment Limited are appointed.”
      

NOTCE OF APPEAL

4. The Notice of Appeal was filed on 31 March 2021.
   
5. An Amended Notice of Appeal filed on 12 August 2021 with Nauti Investment Limited added as an additional appellant and an additional ground of appeal and an additional relief was withdrawn with the leave of the Court at the hearing.
   
6. There are five grounds of appeal pleaded in the Notice of Appeal and these are that the learned Magistrate erred in law and fact by:
   
   1. Granting a restraining order against the accounts of Nauti Investment Limited when the Nauti Investment Limited was never a party to the District Court proceedings DC 80 of 2020, Ben Joseph & Ors v Nathan Kupa & Ors (the District Court proceedings).
      
   2. Not recognizing the fact that Nauti Investment Limited is a duly registered company with the Investment Promotion Authority and is to be sued and be sued in its name and style whereby it became a victim of a malicious prosecution in the District Court proceedings.
      
   3. In allowing the matter to proceed to finality when the First, Second, Third and Fourth Respondents are persons of no standing that had brought the matter to court.
      
   4. To take into consideration that the appellants are the registered shareholders on record and no other persons apart from the registered shareholders are entitled to call for an Annual General Meeting/General Meeting and to attend an Annual General Meeting.
      
   5. In dismissing the District Court proceedings by the order of 14 January 2021 and then issuing various directives for parties to comply with and return to address the court again when there was nothing on foot before the Honourable court to deliberate on.
      
7. The relief sought are:
   
   1. The decision in the District Court proceedings be quashed forthwith.
   2. The First, Second, Third and Fourth Respondents jointly or severally meet the costs of the appeal.
      

BACKGROUND

8. The dispute between the appellants and the First, Second, Third and Fourth Respondents is about the directorship of Nauti Investment Limited. The Fifth Respondent is the Manager of the Bank of South Pacific Limited, Bulolo Branch where Nauti Investment Limited operates its bank accounts. Nauti Investment Limited is a landowner company. The company was incorporated for the people of Nauti village, Wau, Watut LLG, Morobe Province which was to be used as a vehicle to participate in spin off businesses or benefits in the Hidden Valley Gold Mine project and also to represent the landowners of Nauti village in all matters affecting them in the development of the Hidden Valley Gold Mine project. The First, Second, Third and Fourth Respondents claim that the appellants are no longer directors of Nauti Investment Limited as they were unanimously removed as directors of Nauti Investment Limited and replaced by them in a meeting of shareholders of beneficiary villages within Watut LLG on allegation of mismanagement and gross misuse of finances of Nauti Investment Limited and non-payment of dividends or royalties to landowners.
   

7. In the District Court proceedings commenced by a Complaint and Summons to a Person Upon Complaint both filed on 9 December 2020 which were initially pursued in the Bulolo District Court and later in the Lae District Court, the First, Second, Third and Fourth Respondents were the complainants while the appellants (First, Second and Third Appellants) and the Fifth Respondent were the defendants. The First, Second, Third and Fourth Respondents averred that:

1. The First, Second and Third Appellants who were the former directors of Nauti Investment Limited and who had continuous access to the company’s bank account failed to pay dividends to shareholders during their reign of fifteen years.
   
2. They were newly elected board members and representatives of the wider Nauti village community people within the Watut LLG and had seen the “defendants’” unethical conducts and misuse of investment finances and resources over the last fifteen years.
   

8. The First, Second, Third and Fourth Respondents sought the following main relief:

1. The appellants as the former directors of Nauti Investment Limited be restrained forthwith from having access to the investment bank account number 1001008598 at any time for an indefinite period.
2. The appellants be restrained from going closer or entering the office of Nauti Investment Limited at any time for an indefinite period.
   
3. The appellants be ordered and directed to return the properties/assets in the possession to the newly elected Board members of Nauti Investment Ltd within thirty days.
   
4. The Fifth Respondent be restrained forthwith from authorizing, endorsing, approving and allowing the appellants from conducting or carrying out any form of transaction in Nauti Investment Limited’s bank accounts at any time for an indefinite period.
   

9. On 15 December 2020, the District Court granted ex parte, amongst others, orders restraining; the appellants from having any form of access to the company bank account number 1001008598 and from going closer to or entering the office of Nauti Investment Ltd at any time for an indefinite period; the Fifth Respondent from authorizing, approving and allowing the appellants to carry out any form of transaction in the company bank account number 1001008598; and the appellants to return all properties or assets in their possession belonging to Nauti Investment Limited to the interim board members or the First, Second, Third and Fourth Defendants within thirty days.

10. On 15 January 2021, the District Court granted ex parte orders in the following terms:

“1. The case is dismissed.

2. The restraining order on the account and assets of Nauti Investment Limited is lifted.
   
   3. The current Company Executives are to call an immediate Extra-ordinary General Meeting to resolve matters as soon as practicable within thirty days.
      
   4. No order as to costs.”
      

11. On 27 January 2021, the First, Second, Third and Fourth Respondents filed a motion seeking, amongst others, an order to set aside the orders of 15 January 2021 granted ex parte. On 4 February 2021, the District Court made the following orders:

“1. Motion by the complainants is dismissed.

2. The AGM report is to be presented to the court for consideration.

3. All accounts held in the name of Nauti Investments Limited be closed until new appointments of the officers of the company were made.”
   

12. On 4 March 2021, the District Court made the orders that are the subject of this appeal.

ISSUES

13. The main issues raised by the grounds of appeal are:
    
    1. Whether the learned Magistrate erred in law and in fact by granting restraining orders against entering into any transaction involving the accounts of Nauti Investment Limited when the company was not a party to the District Court proceedings?
       
    2. Whether the learned Magistrate erred in law and in fact by not recognizing the fact that Nauti Investment Ltd is a duly registered company and is entitled to sue and be sued in its name and style and became a victim of malicious prosecution?
       
    3. Whether the learned Magistrate erred in law and in fact when allowing the proceedings to be maintained by the First, Second, Third and Fourth Respondents when they were persons who had no locus standi and authority to institute the proceedings?
       
    4. Whether the learned Magistrate erred in law and in fact by failing to take into consideration that the appellants are registered shareholders on record and no other person apart from registered shareholders were entitled to call an Annual General Meeting/General Meeting and to attend an Annual General Meeting?
       
    5. Whether the learned Magistrate erred in law and in fact by issuing further directives for parties to comply with and return to address the court again when the District Court proceedings had been dismissed and there was nothing further on foot for further deliberations by the court?
       

14. I will address the fifth issue first as its outcome will determine whether or not the other issues should be addressed.

DISIMISSAL OF DISTRICT COURT PROCEEDINGS

Submissions

15. Mr. Geoctau for the appellants did not specifically address this issue, but said the District Court proceedings ought to have been dismissed at the outset on the basis that the First, Second, Third and Fourth Respondents were not directors of Nauti Investment Limited and therefore did not have any standing or authority to commence the District Court proceedings.

16. Mr. Karu for the First, Second, Third and Fourth Respondents submitted that the appeal should be dismissed as the District Court proceedings were dismissed by the District Court on 15 January 2021 and there were no proceedings on foot when the District Court orders of 4 March 2021 were made.

Consideration and determination

17. The common law principle of functus officio applies in Papua New Guinea to decisions of administrative bodies and judicial officers in judicial proceedings: South Seas Tuna Corporation Ltd v Palaso (2019) SC1761. In that case, the Supreme Court per Collier, J at [25] cited Demetrio, R. (on the application of) v Independent Police Complaints Commission (IPCC) [2015] EWHC 593 where Lord Justice Burnett (as his Lordship then was) described the principle of “functus officio” in the following terms:

“Functus officio means no more than that a judicial, ministerial or administrative actor has performed a function in circumstances where there is no power to revoke or modify it. It is a Latin tag still in universal use and usually abbreviated to the short statement that someone is “functus”.

18. In Black’s Law Dictionary, Ninth Edition, the principle “functus officio” is defined as:

“[H]aving performed his or her office without further authority or legal competence because the duties and functions of the original commission have been fully accomplished.”

19. On 15 January 2021, the District Court granted ex parte orders; dismissing the District Court proceedings and lifting the restraining orders issued in relation to Nauti Investment Limited bank account and assets; and for current company executives to call an immediate Extra-ordinary General Meeting to resolve matters as soon as practicable, but within thirty days; and with no order as to costs.

20. On 4 February 2021, the District Court dismissed the motion filed by the First, Second, Third and Fourth Respondents on 27 January 2021 seeking, amongst others, an order to set aside the orders of 15 January 2021 and ordered that the AGM report be presented to the Court for consideration and that all accounts held in the name of Nauti Investments Limited be closed until new appointments of the officers of the company were made.

21. District Court decisions or orders made ex parte may be challenged later by a party who was absent. This is permitted by s.25 of the District Courts Act which states:

“EX PARTE ORDER MAY BE SET ASIDE.

A conviction or order made when one party does not appear may be set aside on application to the Court on such terms as to costs or otherwise as the Court thinks just, and the Court, on service on the other party of such reasonable notice as the Court directs, may–

(a) proceed to hear and determine the information or complaint in respect of which the conviction or order was made; or

(b) adjourn the hearing and determination of the hearing to such time and place as it thinks fit and direct such notice of the adjourned hearing as it thinks fit to be given to a party.”

22. The District Court has discretion to set aside a decision or order made ex parte and order a rehearing of the decision or order made on terms the court considers just.

23. The District Court was functus officio on 4 February 2021 after exercising its discretionary power under s.25 of the District Court Act to dismiss the motion filed by the First, Second, Third and Fourth Respondents on 27 January 2021 seeking, amongst others, an order to set aside the ex parte orders of 15 January 2021. I am of the view that the District Court erred in the exercise of its discretion when after dismissing the motion went on to make other orders that were inconsistent with the orders of 15 January 2021 and this then led to the making of the orders of 4 March 2021. The District Court proceedings were brought to finality by their dismissal on 15 January 2021. It is settled law that there must be finality in litigation in the interest of the public.

24. The powers of the National Court on appeal are set out in s.230 of the District Courts Act and it states:

“(1) On the hearing of an appeal, the National Court shall inquire into the matter, and may–

(a) adjourn the hearing from time to time; and

(b) mitigate or increase a penalty or fine; and

(c) affirm, quash or vary the conviction, order or adjudication appealed from, or substitute or make a conviction, order or adjudication which ought, on the evidence before the National Court, to have been made by a District Court; and

(d) remit the case for hearing or for further hearing before the Court which made the conviction, order or adjudication or any other competent court; and

(e) exercise a power that the Court that made the conviction, order or adjudication might have exercised; and

(f) make such further or other order as to costs or otherwise as the case requires.

(2) An appeal shall be allowed only if it appears to the National Court that there has been a substantial miscarriage of justice.”

25. It appears to me that there has been a substantial miscarriage of justice for the District Court to have continued to deal with the District Court proceedings and make the orders appealed against on 4 March 2021 when the District Court proceedings had already been dismissed and not on foot. The orders made by the District Court on 15 January 2021 are valid and enforceable.

CONCLUSION

26. Given outcome above, it is now not necessary to address the remaining issues.

27. The appeal must be allowed in the circumstances.

COSTS

28. Costs is a discretionary matter. In the present case, costs shall follow the event, ie, the First, Second, Third and Fourth Respondents shall jointly and severally pay the appellants’ costs of and incidental to the appeal, which shall, if not agreed, be taxed.

ORDERS

29. The formal orders of the Court are:
    
    1. The appeal is allowed.

2. The orders of the Lae District Court made on 4 March 2021 in proceedings DC 80 of 2020, Ben Joseph & Ors v Nathan Kupa & Ors. are quashed and set aside forthwith.

3. Costs shall follow the event, ie, the First, Second, Third and Fourth Respondents shall jointly and severally pay the appellants’ costs of and incidental to the appeal which shall, if not agreed, be taxed.
4. Time is abridged.
   

Judgment and orders accordingly.

___________________________________________________________
Valorem Attorneys: Lawyers for the Appellants
Daniels & Associates: Lawyers for the First, Second, Third and Fourth Respondents