Home | Databases | WorldLII | Search | Feedback National Court of Papua New Guinea

Culture Shock Ltd (1-61817), In re [2016] PGNC 414; N6786 (14 July 2016)

N6786

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

MP 8 of 2015 (COMM)

IN THE MATTER OF THE COMPANIES
ACT 1997

AND

IN THE MATTER OF CULTURE
SHOCK LIMITED (1- 61817)

Waigani: Hartshorn J.
2015: 3^rd, 4^th, August
2016: 14^th July

Counsel:

Mr. S. Nutley, for the Petitioner
Ms. M. Peipul, for the Respondents

14^th July, 2016

1. HARTSHORN J: This is a decision on a contested petition of an aggrieved former shareholder.

2. The petitioner Ms. Teniko Uave Taraka, is a former shareholder of Culture Shock Ltd. Ms. Taraka alleges that the 25 shares that she held in Culture Shock Ltd were appropriated by being purportedly transferred without her consent to a third party. Ms. Taraka seeks various relief pursuant to s. 152 Companies Act including for the payment of compensation or for Culture Shock Limited to be placed into liquidation.

3. The respondents’ Ms. Charlene Samuel and Arma Holdings Ltd, two shareholders of Culture Shock Ltd, oppose the petition.

4. Most of the relevant facts of the matter are not in dispute. They are that Ms. Taraka was employed by Ms. Grace Harris and Mr. Eric Samuel as a haus meri. The daughter of Ms. Harris and Mr. Samuel is Ms. Charlene Samuel. Ms. Samuel and Ms. Harris through Arma Holdings Ltd, incorporated Culture Shock Ltd and invited Ms. Taraka to be a shareholder. Culture Shock Ltd was incorporated on 3^rd January 2008. One hundred (100) shares were issued: 33 to Charlene Samuel, 42 to Arma Holdings Ltd and 25 to Ms. Taraka. The subscription price of K 25.00 for the 25 shares held by Ms. Taraka was paid for by Ms. Charlene Samuel.

5. The respondents’ position is that the sum of K 25.00 continues to be owed by Ms. Taraka to Ms. Samuel. Ms. Taraka maintains that she worked off this debt.

6. What is not in dispute is that on 11^th February 2015, there was a purported extraordinary meeting of shareholders of Culture Shock Ltd, at which Ms. Samuel and Arma Holdings Ltd represented by Ms. Harris, passed a special resolution to “allocate” the shares of Ms. Taraka to Ms. Solance Danson. The reason given in the minutes of the meeting is that Ms. Samuel paid K25.00 for Ms. Taraka’s shares on Ms. Taraka’s promise to reimburse. This was evidenced by way of a “debt advice”. It is then stated in the minutes that Ms. Taraka had failed to pay for her shares since 2008. The next day, on 12^th February 2015 there was a board meeting of directors at which Ms. Samuel and Ms. Harris were present. At the board meeting, amongst others, the special resolution was agreed to be in the best interests of the company, the register of shares amended and Ms. Taraka was taken off the share register.

7. Given what occurred and that there is no dispute as to what occurred, I am of the view that the actions of Ms. Samuel and Ms. Harris demonstrate at the very least, a misapprehension by them of the law. The shares held by Ms. Taraka had been paid for. They belonged to her and were in her name. It was incorrect for it to be stated in the minutes of the extraordinary shareholders meeting that Ms. Taraka had failed to pay for her shares as distinct from failing to pay K25.00 to Ms. Samuel. That Ms. Samuel paid for the shares on Ms. Taraka’s behalf but that Ms. Taraka had not repaid her, did not entitle Ms. Samuel or anyone else to, in essence, appropriate or forfeit Ms. Taraka’s shares and transfer them to someone else without Ms. Taraka’s consent.

8. I am satisfied that this action in transferring Ms. Taraka’s shares without her consent and without any consideration constitutes amongst others, an act that has been, or is, or is likely to be oppressive, unfairly discriminatory or prejudicial to Ms. Taraka in her capacity as a shareholder.

9. Notwithstanding that the evidence is that Culture Shock Ltd is insolvent and that Mr. Eric Samuels is owed more than K 400,000 by Culture Shock Ltd, I note that Mr. Samuels and the respondents’ do not wish the company to be placed into liquidation as it is believed that it will eventually be able to repay the debt that is owed to Mr. Samuels. Whilst not agreeing with the petitioner that the evidence as to insolvency is a contrivance, I am of the view that the company and the two shareholders are in a position to make a compensation payment to Ms. Taraka in the amount sought by Ms. Taraka in her submissions. Given what has transpired, I am satisfied that it is a compensation payment of an appropriate amount to which Ms. Taraka is entitled.

Orders

10. The Orders of the Court are:

a) Pursuant to section 152 Companies Act 1997, the company, Culture Shock Limited and the shareholders Ms. Charlene Samuel and Arma Holdings Limited are jointly and severally liable to the petitioner in the sum of K25,000 for the petitioner’s shares that she held in Culture Shock Ltd;

b) Pursuant to section 152 (2) (b) Companies Act 1997, Culture Shock Limited, Ms. Charlene Samuel and Arma Holdings Limited shall pay the sum of K 25,000 in compensation to the petitioner;

c) The interim relief presently in force shall be discharged upon payment of the said sum of K25,000 to the petitioner;

d) The costs of and incidental to this petition shall be paid to the petitioner by Culture Shock Limited, Ms. Charlene Samuel and Arma Holdings Limited jointly and severally, such costs to be taxed if not otherwise agreed.
____________________________________________________________
Fiocco Nutley Lawyers: Lawyers for the Petitioner
Ketan Lawyers: Lawyers for the Respondents