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Lighthouse Trading Ltd v Pouru [2024] PGNC 254; N10917 (22 July 2024)

N10917


PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]


WS NO. 849 OF 2009


BETWEEN:
LIGHTHOUSE TRADING LTD
-Plaintiff-


AND:
KANAWI POURU
Managing Director of Papua New Guinea Forest Authority
-First Defendant-


AND
PAPUA NEW GUINEA FOREST AUTHORITY
-Second Defendant-


AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
-Third Defendant-


Lae: Dowa J
2021: 20th November
2024: 22nd July


CIVIL PRACTICE AND PROCEDURE- application for dismissal of proceedings for lack of capacity to sue-plaintiff company removed from register of companies-no longer legal entity- sections 15, 16 & 17 of the Companies Act-abuse of process - Order 12 Rules 1 & 40 of the National Court Rules- clear case for summary dismissal for incompetence- proceedings dismissed.


Cases cited:
Ace Guard Dog Security Services Ltd v Lailai (2004) SC757
Mt Hagen Urban LLG v Sek No.15(2009) SC1007
Philip Takori v Simon Vagari (2008) SC905
Telikom PNG v ICCC & Digicel (PNG) Ltd (2008) SC906
Kerry Lerro v Philip Stagg (2006) N3050


Counsel:
T M. Ambokai, in person-for the Plaintiff
S. Mitige, for the First & Second Defendants


JUDGMENT

22nd July 2024


1. DOWA J: This is a decision on both issues of liability and damages.


Facts


2. At all material times, the Plaintiff was carrying on business, amongst others, as a sustainable logging Company within the Morobe Province in Papua New Guinea. The Plaintiff entered contract to export sawn timbers to J Scott Limited of New Zealand, an overseas company. To fulfil its obligations under the said contract, the Plaintiff lodged an application to the second Defendant on 4th September 2006, to be issued a (FIPC) Forest Industry Participant Certificate and for an Export License pursuant to Sections107 and 92 of the Forestry Act 1991 respectively, to facilitate the export of the timber. The Plaintiff claims that it lodged the required applications and paid the required fee for the Board of the second Defendant to consider the applications.


3. The Plaintiff alleges that one Fabian Niulai who was at that relevant time, the Acting Managing Director of the second Defendant who received the said applications failed, refused and or neglected to submit the applications to the Board of second Defendant to consider and process within a reasonable time. As a result, the Plaintiff’s contract with the overseas company could not be fulfilled.


4. The Plaintiff has instituted these proceedings seeking damages for the Defendants’ failure to consider its application for the Forest Industry Participant Certificate and Export License. As a result of neglect of statutory duty by the First Defendant, the Plaintiff alleges, it suffered loss and damage.


Defence

5. The Defendants filed a Defence, denying the claim. The Defendants have also raised a preliminary issue during the trial that the Plaintiff is not a legal entity as it was removed from the Register of Companies and that the proceedings are therefore incompetent.


Trial

6. The trial was conducted by tender of respective affidavits without cross-examination. The parties also agreed to rely on written submissions. After all written submissions were filed and received the decision was reserved which I now deliver.


Evidence


7. The Plaintiff tendered the following Affidavits:


(i) Exhibit “P1” – Affidavit of Tony Moses Ambokai sworn on 26/11/2018 and files 30/11/2018
(ii) Exhibit “P2” – Affidavit of Tony Moses Ambokai sworn on 26/11/2018 and files 30/11/2018
(iii) Exhibit “P3” – Affidavit of Moses Murray sworn and filed on 19/06/19
(iv) Exhibit “P4” – Affidavit of Moses Murray sworn and filed on 19/06/19
(v) Exhibit “P5” – Affidavit of Tony Moses Ambokai sworn and filed on 30/08/21
  1. The Defendant tendered the following Affidavits:

Issues


9. The issues for consideration are:


(a) Whether the proceedings are incompetent due to lack of legal capacity.
(b) Whether the Plaintiff is entitled to the reliefs sought in the proceedings.

Whether the proceedings are incompetent due to lack of capacity.


10. Mr. Mitige, counsel for the Defendants, submits that the Plaintiff company is not a legal entity duly registered with IPA pursuant to Sections 15 & 16 of the Companies Act. Therefore, it does not have the legal capacity to sue or be sued. Counsel relies on the decision of the Supreme Court in Bluewater International Ltd -v- Mumu [2019] PGCS 41; SC 1798 as authority for his submissions.


11. Mr Tony Ambokai, the Managing Director of the Plaintiff company, submits that the Plaintiff is a duly registered company and has legal capacity to sue. He submits that the Plaintiff was registered on 21st April 1992. It was removed from the Register on 9th January 1997. It is now restored to the Register of Companies on 9th December 2021.


Reasons for Decision


12. I have considered the evidence and submissions of the parties carefully. The Defendants’ submissions are based on facts deposed to in the Affidavits of Magdalene Maihua (Exhibit D2) and Seri Mitige (Exhibit D3).The facts deposed to are from company searches conducted on the Plaintiff with the office of Investment Promotion Authority (IPA). The following are facts from their respective company searches and results extracted from the IPA website:


Company: Lighthouse Bookshop & Fashionwear Pty Ltd

Date Incorporated: 21st April 1992

Entity Status: Removed


13. The Plaintiff does not dispute the above facts. Mr Ambokai concedes that the Plaintiff company as an entity was removed from the Company Register on 9th January 1997 but is now restored on 9th December 2021.


14. It is important to note that the current proceedings were instituted on 20th July 2009 while the Plaintiff was removed from the Register of Companies.


15. Sections 15, 16 and 17 of the Companies Act are relevant and they read:


“

  1. CERTIFICATE OF INCORPORATION.

A certificate of incorporation of a company issued under Section 14 is conclusive evidence that–

(a) all the requirements of this Act as to registration have been complied with; and

(b) on and from the date of incorporation stated in the certificate, the company is incorporated under this Act.


Division 3. Separate Legal Personality.


  1. SEPARATE LEGAL PERSONALITY.

A company is a legal entity in its own right separate from its shareholders and continues in existence until it is removed from the register.

(underlining mine)


  1. CAPACITY AND POWERS.

(1) Subject to this Act and to any other law, a company has, both within and outside the country–

(a) full capacity to carry on or undertake any business or activity, do any act, or enter into any transaction; and

(b) for the purposes of Paragraph (a), full rights, powers, and privileges.

(2) The constitution of a company may contain a provision relating to the capacity, rights, powers, or privileges of the company only where the provision restricts the capacity of the company or those rights, powers, and privileges.”
16. The law on legal entity is settled in that no proceedings can be brought by and enforced against a party that lacks legal capacity to sue or be sued. The case on point is Ace Guard Dog Security Services Ltd v Lailai (2004) SC757. The Supreme Court said at page 7 of the judgment, and I quote:

“For these reasons, the Appellant is not an incorporated company and therefore without any legal personality. The law in this regard is clear. Counsel for the Respondent submits that consequence of the non-existence of the Appellant is fatal to the appeal. He relied on passage from Halsbury, 4th Edition, Vol 37, para 241:

"A corporation, whether incorporated by charter, statute or registration, or a company, whether incorporated by special statute or registered under the Companies Act, must sue or be sued in its corporate title or registered name, as the case may be. A corporation which has ceased to have any juristic existence cannot sue or be sued"

Counsel for the Respondents further rely upon the proposition that under its inherent jurisdiction a superior court of record has power to order the stay of proceedings in circumstances where the proceedings are instituted or continued without lawful authority by the plaintiff and in particular where the action was brought in the name of a non-existent company (Larzard Bros & Co v Midland Bank Limited [1933] AC 289)

We find that the Appellant is not incorporated as a company and therefore has no legal standing. It is therefore incompetent to institute the appeal.”


17. In the present case, the Plaintiff was registered on 22nd April 1992. It continued in existence until it was removed from the Register of Companies on 9th January 1997. The Plaintiff was no longer a registered legal entity at the time when the current proceedings were filed on 20th July 2009. The proceedings were concluded in November 2021.The Plaintiff company was restored on 9th December 2021, after the conclusion of the hearing of the matter. This was about 10 days after the issue of lack of legal capacity was raised in Court.


  1. By reading Sections 15,16 and 17 of the Companies Act together, a company, when registered, remains incorporated and is a legal entity until it is removed. Once it is removed from the Register of Companies, it no longer has legal personality until it is restored. During the period of its removal from the Register, it remains an unincorporated body and has no legal personality or capacity to carry on business or do any act or enter a transaction that is to have legal effect. Any transactions entered or act done or undertaken by that company after its removal from the Register is null and void ab initio.
  2. In the circumstances, I find the Plaintiff was no longer a legal personality when the current proceedings were filed and has no standing to institute the proceedings. The subsequent restoration of the Plaintiff as a legal entity is of no consequence to the incompetency of the proceedings as the restoration took place after the filing and hearing of the matter.
  3. The proceedings are therefore frivolous. Under Order 10 Rule 9A (15) (2) (d), Order 12 Rules 1 and 40 of the National Court Rules, the Court has a discretion to summarily dismiss the proceedings on competency grounds at any stage of the proceedings.

21. The law on applications under Order 12 Rule (40) of the National Court Rules is settled in this jurisdiction in cases such as Mt Hagen Urban LLG v Sek No.15(2009) SC1007, Philip Takori v Simon Vagari (2008) SC905, Telikom PNG v ICCC & Digicel (PNG) Ltd (2008) SC906 and Kerry Lerro v Philip Stagg (2006) N3050.


22. Order 12, Rule 40 of the NCRs is constructed and defined by the Supreme Court (per Takori v Vagari) in following terms:


  1. A claim may be disclosing no reasonable cause of action if the facts pleaded does not clearly show all necessary facts and legal elements to establish a claim known to law.
  2. A claim maybe frivolous if it can be shown that it is obviously untenable that it cannot possibly succeed or is bound to fail it if proceeds to trial.
  1. Proceedings are vexatious where the case is a sham, amounting to harassment of the opposing party, or where the opposing party is put to unnecessary trouble and expense of defending the case.

23. In the present case, the Plaintiff’s claim is untenable for lack of legal personality. For the foregoing reasons, I uphold the Defendants’ submissions and find the proceedings are incompetent for lack of standing and shall dismiss same.


24. In the light of the findings on the competency of the proceedings, it is not necessary to consider the merits of the matter.


Cost


25. Cost is a matter of discretion. The proceedings are dismissed on the ground of competency of proceedings. In my view the Defendants failed to raise this threshold issue earlier and allowed for the prolonged and winding litigation. In the circumstances, I will order that each party bear their own costs of the proceedings.


Orders


  1. The Plaintiff’s proceeding is dismissed.
  2. The parties shall bear their own costs.
  3. Time be abridged.

M Ambokai, Managing Director: Appearing in person for Plaintiff
S Mitige Inhouse Lawyer : Lawyer for the First & Second Defendants

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