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
8. The Defendant tendered the following Affidavits:
(i) Exhibit “D1” – Affidavit of Kanawi Pouru sworn on
16/06/14 and files on 17/06/2014
(ii) Exhit “D2” – Affidavit of Magdalene Maihua sworn on
14/11/2016 and files on 07/11/16
(iii) Exhibit “D3”- Affdiavit of Seri Mitige sworn on 26/11/2019
and filed 27/11/2019
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:
“
15.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.
16. 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)
17.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.
18. 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.
19.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.
20. 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:
a) 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.
b) 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.
c) 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
