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Kinjakali v Nondugui Tumbo Pty Ltd [1991] PGNC 10; N965 (20 March 1991)

Unreported National Court Decisions

N965

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

WS 1384 OF 1989
BOB KEROWA KINJAKALI
V
NONDUGUL TUMBO PTY LIMITED

Mount Hagen

Woods J
6-8 February 1991
20 March 1991

OWNERSHIP OF MOTOR VEHICLE - Company guarantees Leases - Registration in individuals - Declaration of ownership.

Counsel

P. Kunai for the Plaintiff

W. Duma for the Defendant

20 March 1991

WOODS J: Taintiff is claiming a deca declaration over the ownership of two Isuzu trucks and is seeking appropriate orders for the return of such trucks and an order to ac for loss of earnings and damages.

The Plaintiff is f is a businessman from Baiyer River and in 1985 and 86 he was the Depot Manager of the Mobil Oil Agency in Mount Hagen which was operated by Mount Uriwaka Enterprises a subsidiary of the Defendant company. The Defendant is a company set up by people from the Nondugl area of the Western Highlands and apparently has a plantation interest in that area. The shareholders of the company are all people from the villages in the Nondugl area.

Evidence from Directors of the Company and the Plaintiff is that in and around 1985 the Company decided to assist the various village groups which comprise the shareholders of the company by arranging for the purchase of small trucks, what are normally called coffee trucks. The first group was five Mazda trucks costing about K14,000 each which were leased through AGC Finance Company and given to the people at Nondugl. Then early in 1986 another purchase of 6 Mazda trucks were arranged through AGC. Then again a further purchase of 3 Mazda trucks was made by a leasing arrangement through Indoniu Finance Co Ltd. And again they were given to the people from the Nondugl area. It would appear that the registration was not in the name of the Defendant company but in the name of a representative of the village groups who received the particular vehicles. The lease payments were to be made from the monies earned by the village people from the use of the vehicles and at the expiry of the lease payments the trucks were left with the people to whom they had been given and in whose name they had been registered. Kamba Mugl a director of the Defendant company at the time of the leases confirmed that money was paid in by the village groups to officers of the company who then used these payments to pay off the loans and there was reference to certain trust accounts through which these payments were made. Timothy Alep from Nondugl confirms that his village group acquired one of the Mazda vehicles in 1986 and that money from the use of the vehicle was used to repay the loans. He confirms that he still has the vehicle and it has never been claimed by the defendant as being owned by the company. He refers to some query with the finance company AGC about the ownership of the vehicle and the Manager of the finance company assuring him that the people in possession of the vehicle are responsible to repay the loan and not the company.

Then a further purchase of two larger trucks was made namely two Isuzu Highway trucks through a leasing arrangement with the Indoniu Finance Co Ltd. There was talk of the original intention of using the trucks one to do haulage for the plantation at Nondugl and the other to do the haulage for the Mobil Depot in Mt Hagen. These two trucks were leased through Indoniu Finance to the Defendant company and guaranteed by Mt Uriwaka Enterprises in the same way as the other smaller trucks were acquired. The two vehicles were then registered in the name of the Plaintiff. And at all times the registration and insurance was and has been in the name of the Plaintiff.

There is no evidence or documents to show that the arrangement for the acquisition of the two Isuzu trucks was any different than that for the smaller Mazda vehicles. Following their purchase the two Isuzu vehicles were subcontracted to trucking firms in the Western Highlands and the loan repayments were made by the trucking companies direct to the Finance company. But at all times the registration and insurance papers were still in the name of the Plaintiff although were paid by the trucking firms out of the money earned by the trucks. When the loan repayments were completed the Plaintiff claimed full control over the two vehicles.

However, the Board of Directors are now claiming full ownership of the vehicles in the Defendant company. However apart from the fact that the original lease from the Finance company was in the name of the Defendant company guaranteed by the other company, the Defendant is unable to produce any documentation or evidence to counter the fact that all the vehicles the smaller coffee tray vehicles as well as the two Isuzu Highway trucks were registered in the names of persons involved with the Defendant Company and were to be left with those persons. There are no company minutes at the time to clarify the arrangements when the vehicles were acquired although there has been some minutes of company meetings in recent years about the confusion over the ownership of the vehicles and when the Defendant company started to claim that it owned the vehicles. There are also no company balance sheets or annual returns to show any of the vehicles as being listed in the assets of the company. Instead there are directors at that time when the vehicles were acquired who talk of the company looking to help the various shareholder groups and others involved in the company with the acquisition of vehicles. The current members of the board talk about not knowing what the arrangements were on the purchase of the vehicles and the board not knowing about the arrangements for the registration. Unfortunately, there is no evidence from any Accountants of the company to help clarify the state of the company and its assets and the operation of the company and whilst the Directors say that the reasons there are no balance sheets or annual returns for the Company is because all Company documents were destroyed in a fire, a remarkable amount of documentation about the vehicles has been produced in this court. Of course if there were Balance Sheets and Annual Returns they should be filed with the Company’s Office and I note that according to the Company Search an Annual Return was lodged in 1987.

The evidence is quite clear that in about 1986 there was pressure from the people of Nondugl who were the shareholders and beneficiaries of the company for the company to give more direct assistance to the people by helping with the acquisition of small trucks. The practicalities of owning vehicles is that unless the company is properly set up as a vehicle operating company with it’s own direct control over vehicles their maintenance and employment of drivers, the vehicles should be the responsibility of owner drivers. This is for the better care and maintenance as well as for the responsibilities under the Motor Traffic Act. So a number of Mazda coffee tray vehicles were purchased, given to shareholders and village groups. Arrangements were made for the groups to pay amounts regularly to a Trust Account for the repayment of the loans through the finance company. When the lease payments were completed the vehicles were left with the village groups and at no time did the Defendant company exercise any claim of ownership or control over these vehicles. The same arrangements were made with the two Isuzu Highway trucks although after the purchase because of the value of the trucks and the amount involved to payback the lease, the company arranged for appropriate sub-contracting arrangements with a leading trucking firm. There is nothing anywhere to suggest anything different about the two Isuzu trucks. I realise that the Plaintiff himself did not come from the Nondugl area but he was a senior employee of the company managing one of their subsidiary enterprises.

There is a lot of talk about the Plaintiff’s role and negotiations over an accident involving one of the smaller vehicles and whilst that may not necessarily create any legal obligations it seems to support the casual arrangements and understanding within the company.

It seems quite clear that we have the Defendant company set up to support the aims and desires of a certain group of people but then unfortunately the company was not run properly. However in the meantime it has ventured into what is none other than the support of an owner driver scheme for some trucks. The company arranging the acquisitions and guaranteeing the lease repayments but in the end result the vehicles were the responsibility of the individual members of the company.

With the two Isuzu trucks one would have imagined that for its role in arranging the original acquisition and organising the subcontracting through the trucking company the Defendant company would have received some commission over and above the lease repayments and it appears quite clear from some documentation before the court that the earnings of the two Isuzu trucks did help to repay some of the lease repayments due on some of the Mazda trucks which may have been damaged or were not earning money and then later on once the lease repayments had been completed on the two Isuzu trucks the two trucks were then used to earn money for the liabilities of the dependent company with its Bank for the operations of the plantation.

It has been submitted to me that the meeting of the Directors in 1988 and 1989 confirmed that the vehicles were at all times assets of the Defendant Company. However one cannot confirm something that may never have been. As I have already there is no statement of accounts or Annual Returns or financial reports which confirm that the trucks were ever included as assets of the company, and the Registration was clearly never in the name of the Company. The Directors in 1988 and 1989 cannot say they never knew, some were Directors in 1986 and they must be deemed to have known what they did then.

Just because the Defendant Company arranged the subcontracting contracts with Pagini does not mean they are the owner. They were the guarantors of the lease and they were the managing agents for the ownership scheme.

The confusion that now seems to have arisen within this company since 1988 and 1989 is a good example of what happens when companies set up with all the good intentions are not run properly and efficiently. There is great confusion and the court is then asked to solve the confusion. I find no confusion here for the acquisition and purchase and ownership of the trucks. It was clearly an owner driver arrangement and with respect to the Isuzu trucks the Plaintiff was the man to incur any responsibility, he was the owner and person responsible under the Motor Traffic Act and he was liable in the eyes of the law as owner. There is no evidence that the Defendant expended any money or costs in respect of the two trucks the only thing they did was to guarantee the loan and assist with the subcontracting and in the end obtained what could be called support from the use of the trucks for the repayments of some of the leases over some of the other trucks and also for supporting it’s overdraft in the running of the plantation.

It is also submitted that the registration of the trucks in the Plaintiff’s name was through the fraud of directors of the Company. There is no evidence of that. The alleged fraud continued for 3 years yet no one said or did anything. The submission that it is common business practice for a person who is not the owner to register a vehicle in his own name instead of the lawful owner does not make sense and I do not know of such a practice. For the purposes of the Motor Traffic Act Ch 343 proof that a person registered a motor vehicle is prima facia evidence that he is the owner of the vehicle; See s. 43. There is no evidence of any special arrangement between the Plaintiff and the Defendant Company for the Registration. The Defendant Company seems to be relying on its own incompetence to prove its right to the vehicles.

I therefore find the two Isuzu trucks Registration Nos ANA 300 and ANA 391 are the property of the Plaintiff. There was no evidence of any loss of earnings or other damage so therefore I do not make any other orders.

Lawyer for the Plaintiff: J. Mek Teine

Lawyer for the Defendant: Blake Dawson Waldron