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Marato v Bank South Pacific [2012] PGNC 371; N4624 (27 March 2012)

N4624

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 334 OF 2011

RODNEY MARATO, KAYONI AYAPAO, MANDAO ITA, DESIAN MANIE, AMISA UYA, ORE YATNA, AKO ONISE, WAGI PIRANO, LENNIE APARIMA, MICHAEL ROY, MARK KENI.

First Plaintiff

And

ARONA VALLEY DEVELOPMENT AUTHORITY INC.

Second Plaintiff

And

DAVID TUVISUVI, TONY AMAO, JOE TOHA, BENJAMIN TUSE,
First Defendant

And

PNG POWER LTD
Second Defendant

And

BANK SOUTH PACIFIC
Third Defendant

Goroka: Ipang AJ
2011: December 13, 14 & 19
2012: March 27

CIVIL LAW – Motions for interim orders considerations to take into account when determining application to set aside interim orders

CIVIL LAW – Interim Ex-parte Orders made on the 21st July, 2011. Inter-parte orders made varying these orders of 21 July, 2011 on the 12th August, 2011. Orders of 24th August, 2011 maintains status quo of the orders of 12th August, 2011. Currently application by First Defendants to set aside or vary these orders.

CIVIL LAW – Facts substantially disputed – Evidence based purely on affidavits – Need to ascertain credibility and reliability of evidence by cross-examing deponents of the affidavits. See KK Paradise trading as Koreane Enterprises v Jack Tepi (2010) N3979

Cases Cited
Ekepe v Gaupe N2694 (13th October, 2004),
KK Paradise trading as Koreane Enterprises v Jack Tepi (2010) N3979
Monalika Konia v Nickson Buka N4186 CIA No. 48 of 2007 (2010)
Mainland Holdings Ltd & Ors v Stabbs & Ors OS 418 of 2003

Counsel

Ms. M.Irai & Mr. Punau, for the First & Second Plaintiffs
Mr. K Pilisa, for the First Defendants

Mr. G. Aiyawa for the Second Defendants

RULING ON MOTION

27th March, 2012

1. IPANG AJ: There are on foot two (2) motions filed before this Court. The first motion dated 8th December, 2011 was filed by the First Defendants followed by their subsequent amended Notice of Motion filed on the 20th December, 2011. The Second motion was the Cross – motion filed by the First Plaintiffs dated 21st December, 2011.
   
2. I intend to deal with the motion filed by the First Defendants and later deal with the cross-motion by the First Plaintiffs. As I understand what the First Plaintiffs are seeking is based on what they expressed as "purported' recognition of them as duly appointed Board of AVDA by orders of Yagi, J dated 24th August, 2011 pending substantive determination of the matter. Basically, First plaintiffs sought consequential orders from Yagi J's order.
   
3. I now will deal with the First Defendants' motion. In the original motion filed on the 8th December, 2011 the First Defendants sought for the following orders;
   
   1. Pursuant to Order 12 Rules (1) and (8) of the National Court Rules, and the inherent jurisdiction of the National Court pursuant to Sections 155 (4) and 166 of the Constitution of the Independent State of Papua New Guinea, the interim injunctions of 23rd July, 2011 which were varied on the 16th August, 2011 be discharged and set aside forthwith.
      
   2. Further and in the alternative, that the interim injunctions against the Arona Valley Development Inc. (AVDA) be varied to allow the management of AVDA such sums of money earmarked for the First and Second Quarters for 2011 to meet AVDA's financial objections, overheads, wages, administrative, Audit fees, professional and other administrative costs.
      
   3. The funds referred to in paragraph 2 above be administrated by PNG Power Limited on such terms and conditions imposed by the Court until further orders of the Court.
      
   4. Paragraph 3 of the Court Orders of 12th August, 2011 be varied to allow Arona Security Services (ASS) full access to the contractual amount of K162,568.01 per month to fund its security operations under the Memorandum of Agreement signed between PNG Power Limited and Arona Security Services.
      
4. On the 20th December, 2011 the First Defendants filed an amended Notice of Motion amending their original motion filed on the 8th December, 2011. By their amended motion the First Defendants sought for the following orders.
   
   1. Pursuant to Order 12 Rules (1) and (8) of the National Court Rules, and inherent jurisdiction of the National Court pursuant to Sections 155 (4) and 166 of the Constitution of independent State of Papua New Guinea, the Interim Injunctions of 21st July, 2011 which were varied on 12th August, 2011 be discharged and set aside forthwith;
      
      1. The first Defendants together with Petrus Apure of Karu People's Association, Anao Unasi of Anonantu Peoples Association, Wati Wau of Inomaka Association, Nawa Epe of Opeyoka Peoples Association and Tisa Yaopi of Kundana Association together with ex oficio Board Members of AVDA namely Alvin Yano and Kalip Salo the representative of PNG Power Limited be appointed by the Court as Interim Board members of AVDA until the substantive hearing.
         
      2. Further Order that the existing signatories namely Joe Toha, Alvin Yano and Benjamin Tuse to AVDA Bank Account No. 100251539 held at Bank South Pacific Limited at its Kainantu Branch be authorized to re-active such account and to conduct the bank account under Direction of the Interim Board of Management appointed by the Court until further orders of the Court.
         
   2. In the event that the relief sought in paragraph 1 and 2 is refused, the interim injunction against the Arona Valley Development Inc (AVDA) such sums of monies earmarked for the first and second quarter for 2011 to meet AVDA's financial obligations overheads, wages, administrative cost, audit fees, professional and other administrative costs for an amount to be approved by the Court.
      
   3. The funds referred to in paragraph 2 above be administered by PNG Power Limited on such terms and conditions imposed by the Court until further orders of the Court.
      
   4. Paragraph 3 of the Court Orders of 12th August, 2011 be varied to allow Arona Security Service (ASS) full access to the contractual amount of K162,568.01 per month to fund its security operations under the Memorandum of Agreement signed between PNG Power Limited and Arona Security Services Ltd (ASS).
      
5. In support of their application, the First Defendants rely on the following affidavits;
   
   1. The affidavit of David Tuvisuvi sworn on the 28th July, 2011 and filed on the 29th July, 2011.
   2. Affidavit of David Tuvisuvi sworn on the 6th December, and filed on the 8th December 2011.
   3. The supplementary affidavit of David Tuvisuvi filed on the 19th December 2011.
   4. Affidavit of Alvin Tano sworn on the 5th December and filed on the 8th December, 2011.
   5. Supplementary affidavit of Alvin Yano filed on the 19th December, 2011.
   6. Affidavit of Albert maru sworn on the 5th December and filed on the 8th December, 2011.
   7. Affidavit of Joe Tohe filed on the 29th July, 2011.
   8. Affidavit of Petrus Apure filed on the 29th July, 2011and
   9. Affidavit of Ben Tuse filed on the 29th July, 2011.
      
6. The first Defendant argued that the First plaintiff are not entitled to relief sought in paragraph 1 of the originating summons as there was no election of new Board Members conducted on the 20th April, 2011, electing the plaintiffs as the Board of Directors. They also argued that there was no appointment of office bearers as the First Plaintiffs resolute to defer this agenda.
   
7. First Defendants say the Plaintiffs seek to validate acts of the purported Board namely;
   
   1. Appointment of the purported Board; and
   2. Appointment of office bearers and executives, which acts have not taken place. They say the meetings of 8th February and 20th of April, 2011 were unlawful in that; (i) the initiators of the meeting are either terminated or suspended members without powers of the Board to convene these meetings. The First Defendants say the meetings were conducted as acts of insubordination, protest and rebellion and defection.
      
8. Furthermore, they argued that the meetings were not officially sponsored by AVDA or its subsidiaries and the concerned plaintiffs sourced funding from outside sources purported to conduct official business of AVDA. In so doing, they say compromised the interest of AVDA and its subsidiaries.
   
9. They also argued that PNG Power Ltd is a significant stakeholder and sponsor of AVDA in the affairs of AVDA. Its representative did not participate in these meetings. They say PNG Power Ltd has not recognized the plaintiffs as a legitimate Board. There is no evidence before this Court to substantiate this claim.
   
10. They also argued that the requirements of section 12 of the Constitution were looked or over-ridden. They said the chairman called a meeting on the 16th March, with requisite notice to the plaintiff Board members but the plaintiffs have refused and absented themselves from that meeting. They say there was no resolution made to terminate and replace the legitimate Board and that the purported Board Members have not been sworn in to office.
    
11. In the First Plaintiffs cross motion filed on 21st of December, 2011 they sought for the following orders.
    
    1. The Court dispense with service requirements of this Notice of motion (Cross-motion) pursuant to Order 1, Rule 7 of the National Court Rules.
    2. The Court directs that current signatories to the Second Plaintiffs bank account at Bank South Pacific be changed to new signatories who shall be appointed by the First Plaintiff at a properly constituted Board meeting.
    3. Upon the signatories being appointed by the first Plaintiffs, the freeze placed on the Second Plaintiff's bank account held at Bank South Pacific be uplifted forthwith.
       
12. In moving their cross-motion the First Plaintiff relied on the following affidavits;
    
    1. Affidavit of Rodney Marato filed on the 15th of June, 2011;
    2. Affidavit of Desian Minie filed on the 22nd of August, 2011;
    3. Affidavit of Kaiyona Avapao filed on the 14th of December, 2011;
    4. Affidavit of Rodney Marato filed on the 14th of December, 2011.
    5. Affidavit of Amisa Uya filed on the 14th of December, 2011;
    6. Affidavit of Mandao Ita filed on the 14th of December, 2011;
    7. Affidavit of Ore Yatna filed on the 14th of December, 2011 and
    8. Affidavit of Ore Yatna filed on the 27th of September, 2011.
       
13. As through submission of First Plaintiff Lawyers it became obvious that they relied on the inter-parte hearing of 22nd August, 2011 and the decision on that hearing on the 24th August, 2011 which His Honour Yagi J ruled in favour of the plaintiff that interim orders of 22nd July, and amended on the 22nd August, 2011 be extended until further orders of the Court. The 13 page judgment of Yagi J has been attached on file and is self –explanatory. This judgment covers much of the issues currently raised by the First Defendants in their amended motion. On page 12 of his judgment His Honour Yagi J recognized their client by quoting His Honour that, "the election of the Chairman appears to receive majority support. It therefore seems sensible and logical that the state quo should not be disturbed."
    
14. This case got started on a different note all together. Given the sensitivity of the matter and the need to get the AVDA fully functional, the matter was given special fixtures. Initially I heard the original motion filed by the First Defendants but then decided that given the sensitivity of the matter, it would be in the interest of justice that matter proceeds to substantive trial. However, on the date set for substantial trial the lawyers for the first Plaintiffs argued that Court should proceed to hear and make a ruling on First Defendants motion. The First Defendants then filed their amended Notice of Motion. Followed by cross-motion filed by the First Plaintiffs. Several and additional affidavits were also filed.
    

ISSUE WITH AFFIDAVITS

15. Ms. Irai of Counsel for the First Plaintiffs raised objections on some of the affidavits use by the First Defendants. Counsel specifically pointed out the affidavits of; Alvin Yano sworn on the 5th December and filed on the 8th December, 2011; Albert Maru sworn on the 5th December and filed on the 8th December, 2011; David Tuvisuvi sworn on the 6th of December, 2011 and filed on the 8th December, 2011; Joe Toha sworn and filed on the 20th December, 2011.
    
16. The reason(s) for objecting to the use of the above deponents affidavits being that the Court Orders of 24th August, 2011 which extended the interim orders stopped the deponents from deposing to anything in the interest of AVDA. In regards to Albert Maru's affidavit the objection was based on the reason that he is an employee of ASS Ltd and he is subject to AVDA Board. First Plaintiffs questioned the locus standi (standing) of these deponents.
    
17. The First Plaintiffs have filed 8 affidavits in support of their cross-motion. First Plaintiffs Lawyers have not taken the Court through these affidavits in their submission. However in their submission on page 13-17 they have highlighted the factual evidence, the Plaintiffs deponents have deposed. On page 18-19 of First Defendants submission highlighted principally its factual evidence based on deponent's affidavit David Tuvisuvi. I have taken note of all that have been deposed.
    
18. Generally there is substantial factual disputes on the evidence produced by the deponents of the affidavits of respective parties have filed in court. This is owing to the sequered start of hearing of this motions as I've alluded to earlier. This has put each party in to disarray in the way they presented their case. In Monalika Konia v Nickson Buka CIA No. 48 of 2007 (2010) N4186 His Honour Makail, J said,
    

"In cases where facts are substantially in dispute and evidence is purely on affidavits it has been held that it is difficult to a certain which witness is telling the truth based on the affidavits. This is because obviously, one party may not be telling the truth and the only on the monthly funding of K168, 568.01. That was not brought to the attention of the Court when interim orders were made. Instead both parties conceded to the monthly operational funds of K101, 008.20.

19. Owing to the sequered start of the case and time constraint within the special fixture it placed counsels in an awkward position to invoke s.35 (1) (2) & s.36 of the Evidence Act, chapter 48. It was also difficult for the Court to invoke its discretion to do so under s.35 (3) of the Evidence Act, Ch 48. This is in a situation where parties or counsels choose not to call deponents; the Court has that discretion to do so. See KK Paradise trading as Korean Enterprises v Jack Tepi (2010) N3979 as quoted in Konia v Buka (Supra).
    
20. Given the above scenario and what had transpired it is my view that the reasonable approach that I should take now is not to rely purely or sufficiently on these affidavits. In that while consulting these affidavits I need to also consider the ruling of Yagi, J and other materials on file. I mean to say that all relevant facts, issues and arguments that were previously dealt with will be one of the relevant considerations that I will take in to account. I will then decide whether interim orders of 21st July, 201, varied on 12th August, 2011 and maintained on the 24th August, 2012 can be varied or set aside or not.
    

RELEVANT CONSIDERATIONS TO SET ASIDE OR VARY A PREVIOUS INTERIM ORDER

21. The relevant applicable principles for varying or setting aside a previous interim order is found in Mainland Holdings Ltd & Others v Stabbs & Ors OS 418of 2003 (29.10.03) and as relied on by Cannings, J in Ekape v Gaupe N2694 (13.10.04) I find these considerations appropriate and will adopt them in this case.
    
22. (a) Has there been any changes in circumstance since the previous orders were made would render their continuation unnecessary or inappropriate?
    
23. First Defendants submitted that the entre operations of AVDA have come to a complete stand or halt as a result of interim orders. They say the AVDA's overheads, rental, its projects, employee's salaries and wages cannot be paid and this has caused friction and inconveniences. Furthermore, they say the interim orders has put AVDA in a precarious position in its legal responsibilities to its employees but most importantly it created a volatile situation for AVDA, its Board and Management.
    
24. On the converse, the First Plaintiffs said after taking out the Interim Orders the First Defendants have not given due recognition to them. They say the First Defendants are still in possession of AVDA's common seal and other properties thus making it difficult for them to function. They also said the signatories to AVDA's bank account held at Bank South Pacific had not been changed. In fact, First Defendants had come up with their cross-motion to seek changes to signatories of AVDA's Bank South Pacific account.
    
25. (b) What has been the relative conduct of the parties since the earlier orders were made?
    

Again, the First Defendants submitted that the First Plaintiffs ought to have realized that the interim orders they had obtained and as varied by the Court were incomplete. They said instead of coming to Court to correct this mischief, they sat back and did nothing. First Plaintiffs have now filed a cross-motion to correct this mischief.

26. (c) Are there previously undisclosed relevant facts which have been discovered since the interim orders were made?
    
27. There was a Memorandum of Agreement (MOA) between the PNG Power Ltd and the ASS on the monthly funding of K162, 568.01. That was not brought to the attention of the Court when interim orders were made. Instead, both parties conceded to the monthly operational funds of K101, 008.20.
    
28. Has it subsequently been discovered that the order was granted on an erroneous legal basis?
    

These previous orders were granted based on legal principles;

1. There is a serious question to be tried or there exist an arguable case;
2. The applicant has given an undertaking as to damages;
3. Damages would not be adequate remedy;
4. Balance of convenience favors' the applicant; and
5. It is in the interest of justice to grant the interim orders.
   

These principles enunciated in the case of Chief Collector of Taxes v Bougainville Copper Ltd (2007) SC 853.

29. Where the grounds relied on in support of setting aside or variation of interim orders argued before the Court when it granted the earlier orders? Or did the parties wanting to set aside or vary those orders have the opportunity to raise those grounds?
    

Yes, the main ground relied on centers around the AGM held on the 20th April, 2011 and the election of Rodney Marato as the Chairman. Secondly, the issue of funding of Arona Security Services (ASS) and the need for ASS to meet its financial obligations. Basically, all the grounds currently raised in this application.

30. Was the Court misled when issued the interim injunctions? If so, was that attributable to the conduct of the party which sought the injunction?
    

I am not satisfied that the orders of 21st July, 2011, 12th August, 2011 and 24th August, 2011 were made on an erroneous legal basis. Carefully assessing the arguments presented by the First Defendants, it becomes obvious that much of what was submitted as grounds to vary or set aside the interim orders were substantially argued by previous Counsel Mr. M. Karu of Daniels & Associates.

31. Mr. Pilisa of Counsel for the First Defendants is submitting is basically polishing on what Mr. M. Karu had submitted earlier during inter-parte hearing between Yagi J. The only exception would be the Memorandum of Agreement between ASS and the PNG Power Ltd for the monthly funding of K162,568.01 and not as ordered in the sum of K101,008.20.In the Mainland Holdings case (supra) Injia DCJ (as he then was) stated;
    

"In the exercise of its regulatory jurisdiction the Court also has wide discretion to protect itself or its process from abuse by parties aggrieved by its earlier order, to have a second opportunity to re-argue the case in order to reverse its earlier decision."

32. As Cannings J unequivocally states in Ekepe v Gaupe (Supra) "you cannot have two or more bites at the cherry."
    
33. In conclusion I have found one of the six (6) considerations relevant and in support of First Defendants application for the Court to exercise its discretion to further vary the orders of 12th & 24th August, 2011 on the issue of funding for ASS. The rest of reliefs sought by the First Defendants are refused.
    
34. Having granted the reliefs sought by the First Defendants in their amended Notice of Motion lives me to decide on the cross –motion filed by the First Plaintiffs. Since the interim Orders were granted maintaining the status quo, the First Plaintiffs cannot effectively carry their functions as an Interim Board or say duly recognized. The Common Seal of AVDA is in the position of the First Defendants; the signatories to the AVDA's account with Bank South Pacific have not changed. Due recognition of the interim Court Order wasn't forthcoming from the First Defendants.
    
35. It is only befitting to give due recognition of the interim orders of 21st July, 2011 the amended or varied interim orders issued by Yagi J on the 12th August & 22nd August, 2011 and extended on the 24th August, 2011be further varied in the following terms.
    
    1. The interim orders made on the 21st July, 2011 amended on the 12th August, 2011 and further extended on the 24th August, 2011.
       
    2. The paragraph 3 of the amended interim orders of 12th August, 2011 for the K101, 008.20 as ordered to vary to the amount of K162, 568.00. That would be an increase. Of K61, 559.81 as per Memorandum of Agreement between PNG Power Ltd and ASS.
       
    3. That this Court grant further additional Interim orders that former (old) signatories to the AVDA's bank account held at Bank South Pacific Account No. 1002515391 be changed and new signatories to be appointed by the Interim Board which comprised Interim Board Chairman Rodney Marato.
       
    4. Once new signatories to the AVDA's bank account No. 1002515391 are appointed, freeze on AVDA's bank be uplifted forthwith;
       
    5. The Third Defendant Bank South Pacific Ltd shall facilitate the transaction contained in clauses 3 & 4 of this Order.
       
    6. All AVDA's properties like common seal, the books, financial books, cheque books etc in current possession of the First Defendants shall delivered to the interim Board Chairman Rodney Marato & his Board within 7 days from the date of this order (i.e. 5th April, 2012) in the presence of Police Station Commander – Kainantu).
       
    7. The Second Defendant shall release necessary or quarterly funding to AVDA to carry out its operations.
       
    8. The Interim orders of 21st July, 2011 amended on the 12th August, 2011 and further extended on the 24th August, 2011 and further amended & varied as of today shall be enforce until substantive hearing of the matter.
       
    9. Costs be in cause.

___________________________________________________________________

Warner Shand Lawyers: Lawyer for the First & Second Plaintiff

Pilisa Lawyers: Lawyer for the First, Defendants
PPL in House Lawyers: Lawyer for the Second Defendants