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Sogeram Development Corporation Ltd v Som [2014] PGNC 213; N5874 (10 December 2014)

N5874

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 20 of 2012

BETWEEN:

SOGERAM DEVELOPMENT CORPORATION LIMITED
Plaintiff

AND:

ROBIN SOM
First Defendant,

ANTON LAMBERTH
Second Defendant,

BENSON TOKAU
Third Defendant,

MOSES KAPO
Fourth Defendant,

NAMONG KEPSAK
Fifth Defendant,

RODNEY TAPO
Sixth Defendant,

SEBRONL DUAI,
Seventh Defendant,

TAMI ULANGU,
Eighth Defendant,

TULUM ENKOL,
Ninth Defendant,

JOHN LAS
Tenth Defendant

Waigani: Hartshorn, J
2013: December 3rd, 4th, 6th, 18th
2014: December 10th

Trial

Cases cited:

Papua New Guinea Banking Corporation v. Jeff Tole (2002) SC694
Jacob Simbuaken v. Neville Egari (2009) N3824

Counsel:

Mr. A. MacDonald, for the Plaintiff
Mr. T. Sirae, for the First Defendant

10th December, 2014

1. HARTSHORN J: The plaintiff company Sogeram Development Corporation Ltd (SDC) holds a Timber Permit for an area of 56,480 hectares north-west of Madang.

2. SDC seeks declaratory relief in this proceeding to confirm the identity of its present directors and to restrain the defendants from holding themselves out as being entitled to represent SDC. SDC claims that none of the defendants are its directors. The only opposition to the relief sought by SDC is by the first defendant Mr. Robin Som.

Background

3. On 29th May 2009, SDC entered into a logging and marketing agreement with Timbers PNG Ltd. In or about late October, early November 2011, shareholders of SDC learned that the then directors, the defendants, had issued a notice to show cause and intended to terminate the logging and marketing agreement with Timbers PNG Ltd and to substitute it with a logging and marketing agreement with Madang Timbers Limited.

4. This action resulted in complaints from shareholders and caused an extraordinary general shareholders meeting to be called on 14th November 2011. At that meeting, the eight shareholders present unanimously resolved to remove all nine directors of SDC.

5. On 16th February 2012, this court granted an injunction restraining those directors, all of whom are defendants, from representing SDC.

6. On 16th July 2012, this court directed SDC to call a special shareholders meeting. This meeting was held on 27th July 2013. At that meeting 13 directors were appointed, including four of the defendants, but those defendants did not accept their appointments.

7. In January 2013, the then directors of SDC decided that it was necessary to hold an annual general meeting of the Resource Clan Representatives and an annual general meeting of the shareholders of SDC as there had not been an annual general meeting since February 2010. An annual general meeting was called for and held on 15th February 2013 at which the current directors were elected, namely: Saikawaa Kima, Johnathan Magibet, Robin Sibai, Kutag Mui, Isaacs Caps Selong, Hans Moziba, Sokrim Loin, Francis Aka, Francis Puletum, Willie Mate, Kawa Agai and Frank Daniel. SDC seeks a declaration in this proceeding that these are the current directors of SDC (current directors).

SDC's case

8. SDC claims that at the annual general meeting on 15th February 2013, the shareholders of SDC resolved to appoint 12 directors. The meeting was held in accordance with SDC's constitution and the Companies Act and 12 persons, the current directors, were elected. SDC submits that the current directors are the current directors irrespective of any issues concerning the previous meetings.

9. SDC submits that any irregularities in the 14th November 2011 meeting are now irrelevant to the issue of who are the current directors. Mr. Som has not raised any specific plea in his defence concerning the meetings of 27th July 2012 and 15th February 2013. Pursuant to case authority, SDC submits, Mr. Som has no valid basis upon which he can contend that the meetings or the business shown to be transacted at the meetings was in any way irregular or invalid.

Mr. Robin Som's case

10. Mr. Som contends that:

a) the purported extraordinary meeting of shareholders on 14th November 2011 was illegally conducted and he and the other defendants were illegally removed as directors of SDC,

b) the shareholders meeting conducted on 27th July 2012 was conducted without proper notice to the defendants, thus denying them the opportunity to prepare and attend the meeting. Further, the meeting was arranged in a manner that served the interests of Timbers PNG Ltd.

11. As to the submissions of Mr. Som concerning the shareholders meeting of 14th November 2011, it is not in dispute, as I understand it, that the next meeting, that of 27th July 2012, was as a result of an order of this court made by Justice Sawong, dated 16th July 2012 that:

"Plaintiffs call a Special Shareholders Meeting within 14 days. Notice of the Meeting to be served on the Defendants via their Lawyers, Sirae & Co. Lawyers and Gubon Lawyers."

12. Mr. Som in his defence has not raised any specific plea in relation to the meeting of the 27th July 2012, or indeed the meeting of 15th February 2013. In particular he has not pleaded that the organisation and resolution of this meeting was in any way irregular or illegal and no issues concerning late notice were pleaded. Further, apart from Mr. Som's affidavit evidence, the specific evidence sought to be relied upon by Mr. Som concerning the meetings of 27th July 2012, and 15th February 2013 was struck out upon a successful objection made by SDC, pursuant to Order 8 Rule 14 and Order 11 Rule 28 National Court Rules. Mr. Som's complaint, from his evidence, was that he was denied an opportunity to adjourn the meeting until he recovered his health. However, this issue was not pleaded by him.

13. As to the requirement to plead, counsel for SDC referred to the decision of Davani J. in Jacob Simbuaken v. Neville Egari (2009) N3824 and Papua New Guinea Banking Corporation v. Jeff Tole (2002) SC694, a decision of Kandakasi J.

14. In Tole's case (supra), Kandakasi J stated, "The law on pleadings in our jurisdiction is well settled..... unless there is foundation in the pleadings of a party, no evidence... of matters not pleaded can be allowed."

15. In Simbuaken's case (supra), after setting out Order 8 Rule 14, Davani J. stated that the reason that certain matters should be pleaded is to avoid surprises and to ensure that all issues that need to be raised are raised long before the matter progresses to trial. Further, each party must plead all the material facts on which he means to rely at the trial otherwise he is not entitled to give any evidence of them at the trial. I respectfully agree with the above statements.

16. Order 8 Rule 14 National Court Rules requires that in a defence the defendant shall plead any matter which he alleges makes any claim not maintainable, or if not pleaded would take the plaintiff by surprise. If he does not so plead all material facts on which he intends to rely at trial, a defendant is not entitled to give any evidence of those facts at the trial.

17. Here, there are no specific pleadings by Mr. Som as to why the meeting of 27th July 2012 was not valid or why the business conducted was in some way illegal. There is also no evidence in that regard apart from Mr. Som's. I am satisfied that as the meeting was ordered by this court and resulted in the election by the shareholders of the directors of SDC, it renders the result of the meeting of 14th November 2011 irrelevant as well as any alleged irregularities surrounding or emanating from that meeting. It is not necessary therefore to consider the arguments of the parties concerning amongst others, the validity or otherwise of the meeting of 14th November 2011.

18. As to Mr. Som's contentions concerning the shareholders meeting on 27th July 2012, as referred to above there are no specific allegations pleaded against that meeting and no evidence in that regard. Consequently the submissions made by counsel for Mr. Som on that meeting are merely that, submissions with no basis.

19. Similarly, there is no adverse pleading by Mr. Som or evidence concerning the meeting of 15th February 2013.

20. From a perusal and consideration of the evidence relied upon by SDC, I am satisfied that:

a) on 16 February 2012, this court granted orders restraining the first nine defendants from representing themselves as directors or as otherwise being entitled to represent SDC;

b) this court directed a special meeting of shareholders to determine by fresh elections who were the directors and who controlled SDC. This was the meeting held on the 27th July 2012;

c) the meeting on 27th July 2012 was organised without prejudice to the defendants' rights as candidates and the meeting was conducted in a manner which allowed shareholders to make a free and fair election of the directors of their choice;

d) a notice in accordance with SDC's constitution and the Companies Act were issued and a shareholder's annual general meeting was held on 15th February 2013. That annual general meeting elected the current directors;

e) that despite the injunctive orders of 16th February 2012, some defendants continue to represent themselves as directors and have interfered and frustrated the prosecution and defence of collateral proceedings;

f) arising from the injunctive orders of 16th February 2012 the defendants were not entitled to represent themselves as directors and thereafter service for any meetings pursuant to the SDC constitution or the Companies Act was not required.

21. Consequently I am satisfied that SDC is entitled to the relief it seeks.

Orders

22. The court orders that:

a) it is declared that each of the defendants is not a director of the plaintiff or entitled to hold any position of authority in the plaintiff,

b) it is declared that the current directors of the plaintiff are Saikawaa Kima, Johnathan Magibet, Robin Sibai, Kutag Mui, Isaacs Caps Selong, Hans Moziba, Sokrim Loin, Francis Aka, Francis Puletum, Willie Mate, Kawa Agai and Frank Daniel.

c) the defendants are permanently restrained from holding themselves out as being entitled to represent the plaintiff.

23. I will hear counsel on the question of costs.

_____________________________________________________________
Young & Williams Lawyers: Lawyers for the Plaintiff
Sirae & Co. Lawyers: Lawyers for the First Defendant