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Green Investment Ltd v Wamomo Seafood Exporters Ltd [2019] PGNC 413; N8120 (23 October 2019)

N8120

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 705 OF 2018

GREEN INVESTMENT LIMITED
Plaintiff

-V-

WAMOMO SEAFOOD EXPORTERS LIMITED
Defendant

Waigani: Kariko, J
2019: 5^th September & 23^rd October

PRACTICE & PROCEDURE – CIVIL JURISDICTION – application to dismiss proceeding – standing – resolution by board to commence proceeding – no proper notice of meeting

Cases Cited:
Papua New Guinea Cases

Thomas Taiya Ambi v Exxon Mobil Ltd (2012) N4844

Overseas case

Gibson v Moorhouse (1988) 4 NZCLC 64

Legislation:

Companies Act 1997
National Court Rules

Counsel:

Ms J Nandape, for the Plaintiff
Mr J Poya, for the Defendant

RULING

23^rd October, 2019

1. KARIKO, J: The defendant has applied to have the proceeding dismissed pursuant to Order 12 Rule 40 (1) National Court Rulesfor disclosing no reasonable cause of action, for being frivolous and vexatious and for being an abuse of process. As an alternative, it asks that the statement of claim is struck out pursuant to Order 8 Rule 27 (1) for disclosing no reasonable cause of action and for being an abuse of process.
   

Background

2. The dispute in this proceeding relates to premises (the Premises) located on Portion 2965 (previously Portion 2437), Jacksons, National Capital District (the Property). The Property is owned by the National Airports Corporation (NAC) while the Premises were built by Ailan Seafood Limited as the lessee of the Property at the relevant time.
   
3. The plaintiff company Green Investment Limited (Green Investment) was incorporated in 2009 with two brothers, Leong King Ngu(Leong) and Sing King Ngu (Sing), holding 55% and 45% shares respectively. In August 2012, 30% of the shares were transferred by Sing to another brother, Wong King Ngu(Wong). This changed the shareholding to Leong 55%, Wong 30% and Sing 10%.
   
4. Leong has substantial interest as an investor in the defendant company, Wamomo Seafood Exporters Limited (WSEL), which is involved in the business of buying, processing and exporting seafood.
   
5. On 23^rd January 2013, Ailan Seafood Limited sold the Premises to the plaintiff for K1.5 million. The new lease by NAC to the plaintiff following the sale of the Premises was not formalized until 1^st October 2015. A year earlier on 15^th November 2014, the plaintiff entered into an agreement with the defendant for the sub-lease of the Premises.
   
6. The defendant was incorporated on 21^st May 1993. ASL Limited (previously known as Wamomo Seafoods Limited) was incorporated on 13^th July 2009 and is also involved in similar business as that of the defendant. Wong holds 49% of the shares in ASL Limited and is one of its two directors. His brothers Leong and Sing are not involved as either shareholders or directors with this company.
   
7. The situation now is that both the defendant and ASL Limited operate their respective businesses from the Premises. This has caused an obvious conflict that led to a purported Board Circular Resolution of Green Investment dated 28^th September 2018 (the Resolution) which authorizes the plaintiff to sue the defendant and have it removed from the Premises. The present proceeding was commenced pursuant to the Resolution.
   

Standing

8. The defendant’s main argument is that the Resolution is invalid because it is not a proper resolution of the directors of Green Investment for the reason that Leong, as a director, was not given proper notice of the board meeting as required by the Companies Act 1997.
   
9. The evidence by the other directors, Sing and Wong is that they asked Leong a number of times for a meeting but he refused so they decided to meet without him and passed the Resolution.
   
10. Section 138 of the Act states that subject to a company’s constitution, proceedings of the board are governed by Schedule 4 to the Act. Advice offered by counsel during submissions suggested that Green Investment does not have a constitution. At least, one was not produced in evidence. That being the case, Schedule 4 applies and according to cl. 2(2) of the Schedule, a director must be given notice of meeting not less than two days prior to the meeting, and the notice shall state the date, time and venue of the meeting and the matters to be discussed. Such notice was not given to Leong. Counsel for the plaintiff ultimately conceded to this fact. A meeting called without notice is invalid and the meeting cannot pass any valid resolution; Gibson v Moorhouse (1988) 4NZCLC 64 at 114.
    
11. If all directors agree or attend the meeting, the irregularity of want of proper notice may be waived; cl. 2(3) of Schedule 4. Leong has not waived the irregularity in this case and has not agreed to the Resolution.
    

Conclusion

12. In the circumstances, I find the Resolution is invalid.
    
13. Consequently, I find the plaintiff has no standing to bring this proceeding, and it should therefore be dismissed as being frivolous or vexatious, an abuse of the process of the court, and for not disclosing a reasonable cause of action; Thomas Taiya Ambi v Exxon Mobil Ltd (2012) N4844.
    
14. I do not consider it necessary to discuss and decide the other arguments raised, and I dismiss this proceeding with costs.
    

Order

15. The orders of the Court are:
    
    • (1) The defendant’s application is upheld and accordingly this proceeding is dismissed.
    • (2) The plaintiff shall pay the defendant’s costs of and incidental to this proceeding.

_______________________________________________________________
Nandape& Associates: Lawyer for the Plaintiff
Poya Legal Services: Lawyer for the Defendant