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Investment Promotion Authority v Canopus No.16 Ltd [2012] PGNC 300; N5316 (26 April 2012)

N5316

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 343 OF 2010

BETWEEN:

INVESTMENT PROMOTION AUTHORITY
Plaintiff

AND:

CANOPUS NO. 16 LIMITED
First Defendant

AND:

KEM SAN GO,
Managing Director of Canopus No.16 Limited
Second Defendant

AND:

PAPUA NEW GUINEA FOREST AUTHORITY
Third Defendant

AND:

KANAWI POURU,
Managing Director, PNG Forest Authority
Fourth Defendant

Waigani: Hartshorn J.
2012: April 17th, 26th

Application to amend Originating Summons – principles to be applied – whether plaintiff has standing to seek the relief in the proposed amendments pursuant to its functions and powers under the Investment Promotion Act – whether relief in proposed amendments interim only joinder – principles considered

Cases cited:

AGC (Pacific) Ltd v. Sir Albert Kipalan & Ors (2000) N1944
Umapi Luna Pakomeyu v. James Siai Wamo (2004) N2718
Michael Kewa & Ors v. Elias Mai Kombo (2004) N2688
Eki Investments Ltd v. Era Dorina Ltd (2006) N3176
PNG International Hotels Pty Ltd & Anor v. The Registrar of Land Titles and Ors (2007) N2307
Kara v. Public Curator of Papua New Guinea (2010) N4048
PNG Deep Sea Fishing Ltd v. Critten (2010) SC1126

Counsel:

Mr. T. L. Tape, for the Plaintiff
Mr. C. Raurela, for the First and Second Defendants
Mr. B. Lakakit, for the Fourth Defendant
Mr. I. R. Shepherd, for Delta Timber Ltd, John Hui Siew, PeterHui Sing Lau and Su Kiong Hii as directors of Delta Timber Ltd

26th April 2012:

1. HARTSHORN, J. The plaintiff, the Investment Promotion Authority (IPA) applies to join certain persons to this proceeding and to amend the originating summons so that relief is sought against those persons and others. The persons sought to be joined and against whom amongst others, relief is sought are Delta Timber Ltd, and John Hui Siew Lau, Peter Hui Sing Lau and Su Kiong Hii (Delta and its directors). I consider the application to amend the originating summons first.

Amendment of originating summons

2. IPA applies to amend its originating summons pursuant to Order 8 Rule 50 National Court Rules. The proposed amendments seek payment into court by and interim restraining orders against, Delta and its directors, the defendants and others, pursuant to Order 14 Rule 10 National Court Rules. IPA submits that the proposed amendments are necessary as there has been a change of circumstances. The first defendant Canopus No. 16 Ltd in respect of which substantive relief was originally sought, has 'transformed' itself, (to adopt the expression used by counsel for IPA), into Delta Timber Ltd. The interests of justice require that the amendments be made to enable this court to determine the real question in controversy between the parties, that is submits IPA, "the illegal operations of Canopus and now Delta in the same location and performing the same activity", both being related companies and "therefore they have to be ordered out of Magarida TRP TP 3-28"

3. IPA relies upon the decisions of Eki Investments Ltd v. Era Dorina Ltd (2006) N3176 and Michael Kewa & Ors v. Elias Mai Kombo (2004) N2688. The principles that these cases indicate are applicable in determining whether amendments should be allowed are:

(a) Where the amendment will enable the Court to determine the real question in controversy between the parties; or

(b) Where the amendment is to correct any defect or error in the proceedings; and

(c) That such amendment will not cause real prejudice or injustice to the other party; and

(d) That the application for such amendment is made bone fide and not mala fide; and

(e) That the other party can be fairly compensated with costs for such amendment; and

(f) That the party applying to amend his pleadings is not prevented by its conduct or the manner in which the proceedings have progressed from being permitted to amend its pleadings;

(g) That the interest of justice warrants the amendment sought; and

(h) That the proposed amendment will enable an efficient and effective determination of the issues between the parties.

4. Delta and its directors submit that IPA does not have the standing to seek the relief that it does in the proposed amendments. This is because the proposed amendments are concerned with logging operations. IPA is a statutory authority established pursuant to the Investment Promotion Act (IP Act) and its functions include relevantly, monitoring the activities of foreign enterprises. The regulation and control of the logging industry in Papua New Guinea however, is vested in the third defendant, the Papua New Guinea Forest Authority and not IPA.

5. Counsel for IPA submitted that pursuant to s. 44A (4) IP Act, this court may:

"...order an enterprise to cease the activity in the location the subject of the Authority's action until further order."

This submission does not address whether IPA has the standing to seek relief concerning logging operations pursuant to its functions and powers under the IP Act. Section 44A (4) IP Act does permit this court to order an enterprise to cease an activity but the words, "In any action brought by" and, "until further order", infer that this section is referring to interim relief that may be granted. The section is not referring to substantive relief and does not of itself grant to IPA the ability to commence an action.

6. The proposed amendments to the originating summons are concerned with logging operations and a perusal of sections 6 and 7 IP Act do not reveal that the regulation and control of the logging industry is a function of IPA or that it has powers in that regard. I find for Delta and its directors on this point. IPA does not have the standing to seek the relief that it does substantively in the proposed amendments either against Delta and its directors or the other entities referred to in the proposed amendments. Given this finding, although it is not necessary to consider the other submissions of counsel on the proposed amendments, I consider a further submission of Delta and its directors.

7. This submission is that the proposed amendments to the originating summons only seek interim relief against Delta and its directors. As no substantive relief is sought against them, the proposed amendments are an abuse of process. It is the case that both proposed amendments are stated to be sought pursuant to Order 14 Rule 10 National Court Rules. That Rule relates to the interim preservation of property. Further, the first proposed amendment seeks payment into court and the second proposed amendment seeks restraining orders until further order of the court. These proposed amendments do seek interim relief only.

8. As to there being no substantive relief sought against Delta and its directors, IPA's submission, if I understand correctly, is that Canopus has transformed into Delta, and therefore the relief sought against Canopus is sought against Delta. IPA submits that Delta now operates in Magarida TRP instead of Canopus, Delta is related to Canopus, is operating at the same location, is engaging in the same activity and also operates illegally without IPA certification.

9. The only evidence upon which IPA relies to support its contention that Canopus has transformed into Delta is that of Mr. Alvin Waru. Mr. Waru in his affidavit sworn 20th October 2011 deposes that he is the Deputy Chairman of the fifth defendant, Magarida Timbers Ltd, the landowner company and permit holder of Magarida TRP. He further deposes that Canopus, "seemed to have ceased operation but in fact it is still operating in the form of Delta Timber Ltd". He further deposes that Canopus is an agent company of Delta, that the second defendant Mr. Kem San Go is involved in Delta, all the machinery used by Canopus is the same as that used by Delta and this "includes the employees". No documentary evidence is relied upon by Mr. Waru in support of his contentions.

10. Counsel for Magarida Timbers submitted that Mr. Waru is no longer the Deputy Chairman and that Magarida Timbers now supports Delta. This is supported by the affidavit of Mr. Boroa Mae sworn 2nd November 2011 in which he deposes that he is the Deputy Chairman. Annexed to his affidavit are copies of minutes of meetings which amongst others are indicative of support by Magarida Timbers representatives for Delta. Counsel for Canopus submitted that Canopus and Delta are different and separate companies, that the extracts from the companies' office show that they do not have the same directors or shareholders and none of the persons on one extract appear on the other. He further submitted that Canopus ceased operations in Magarida TRP in 2011 following a decision of this court that was adverse to Canopus.

11. Counsel for Delta and its directors submits that Delta has no connection with Canopus, the directors and shareholders are not at all the same and in fact one of the shareholders of Canopus is a major shareholder of Koranas Investment (PNG) Ltd, a rival contractor for Magarida TRP.

12. A perusal of the company extracts for Canopus and Delta reveals that the directors and shareholders are not the same. There is no evidence of any agency agreement between them. The fact that the same machinery is being used and employees are working for Delta who formerly worked for Canopus is not on its own evidence that Canopus has transformed into Delta as submitted by IPA. The evidence is that Canopus and Delta are separate and distinct legal entities, they are not related and that there is no agency agreement between.

13. Given this I am not satisfied that it can be said that the relief sought against Canopus is now to be considered as relief being sought against Delta. Consequently as the relief sought against Delta and its directors in the proposed amendments to the originating summons only seek interim relief against them and no substantive relief is sought against them, to permit the proposed amendments would be to permit an abuse of process. Further, contrary to the submission of IPA, it cannot be said that to allow the proposed amendments would enable the real questions in controversy between the parties to be determined as the real questions or substantive questions pleaded do not concern Delta and its directors. In addition the relief sought in the proposed amendments is interim only.

14. Given the above it is not necessary in my view that the other principles concerning proposed amendments be considered. IPA does not have the necessary standing to seek the relief in the proposed amendments against any of the entities that it does and to allow the amendments against Delta and its directors would be to contribute to an abuse of process. Further the proposed amendments would not enable or contribute to the real questions in controversy between the parties to be determined.

15. Consequently for the above reasons, the proposed amendments to the originating summons are refused.

Joinder

16. IPA relies upon Order 5 Rule 8 (1) National Court Rules. The principles on joinder under this Rule are well-established: PNG International Hotels Pty Ltd & Anor v. The Registrar of Land Titles and Ors (2007) N2307, Umapi Luna Pakomeyu v. James Siai Wamo (2004) N2718, AGC (Pacific) Ltd v. Sir Albert Kipalan & Ors (2000) N1944, Kara v. Public Curator of Papua New Guinea (2010) N4048 and PNG Deep Sea Fishing Ltd v. Critten (2010) SC1126.

17. These principles are:

a) whether the proposed party has sufficient interest in the proceedings,

b) whether the proposed party's joinder as a party is necessary to ensure that all matters in dispute in the proceedings can be effectively and completely adjudicated upon.

18. In considering whether a proposed party has a sufficient interest in the proceeding or whether his joinder is necessary to ensure that all matters in dispute in the proceeding can be effectively and completely adjudicated upon, certain factors warrant consideration.

19. These include whether:

a) any relief is sought against the proposed party,

b) the plaintiff opposes the application for joinder,

c) the proposed party will be affected if the relief sought in the statement of claim is granted,

d) the joinder of the proposed party is necessary to satisfy any orders made in the proceeding.

20. As to whether any relief is sought against Delta and its directors, I have already determined that there is none. IPA seeks the joinder of Delta and its directors. Delta and its directors will not be affected if the relief sought in the originating summons is granted and the joinder of Delta and its directors is not necessary to satisfy any orders made in this proceeding.

Orders

21. The Orders of the Court are:

a) the relief sought in the amended notice of motion of the plaintiff filed 21st October 2011 is refused.

b) the costs of the first, second and fifth defendants and the costs of Delta Timber Ltd, John Hui Siew Lau, Peter Hui Sing Lau and Su Kiong Hii of and incidental to the amended notice of motion of the plaintiff filed 21st October 2011, shall be paid by the plaintiff.

_____________________________________________________________

Japson & Associates Lawyers: Lawyers for the Plaintiff
Raurela Lawyers: Lawyers for the First and Second Defendants
Lakakit & Associates: Lawyers for the Fifth Defendant
Ashurst Lawyers: Lawyers for Delta Timber Ltd and its directors