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[F.A.Q.]
National Court of Papua New Guinea |
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PAPUA NEW GUINEA
[IN
THE NATIONAL COURT OF JUSTICE]
WS NO: 236 of 2001
BETWEEN:
ODATA LIMITED
Plaintiff
AND:
AMBUSA COPRA OIL MILL LIMITED
First Defendant
AND:
NATIONAL PROVIDENT FUND BOARD OF TRUSTIES
Second Defendant
Waigani: Kandakasi
J
2001 : 12
June
6 July
CONTRACT LAW – Privity of Contract – subsidiary company agent of parent company if parent is in control – Corporate veil no bar to bringing an action against a parent company which is in fact the major player – Corporate veil may be lifted if fair to do so in all the circumstances of the case.
COMPANY LAW – Corporate veil - Important starting point is the separate legal personality of corporations upon incorporation – Protection of corporate veil available to legitimate or proper use – But not available for those abusing or otherwise seeking to avoid liability – Circumstances in which the corporate veil may be lifted considered – Courts should be ready to lift the veil if fairness, equity and justice so require – s.16 Companies Act 1992.
LEGISLATIONS – Investment Promotion Act 1992 – Foreign enterprises need to obtain certificates under s.25 of the Act before carrying on business in Papua New Guinea – Failure to obtain certificate does not automatically render contracts with foreign enterprises null & void – s.41A only grants a right to the other party to apply for a declaration that such a contract is unlawful and void – Applications under S.41A of the Act has to be considered on their own merits with fairness and equity in mind.
WORDS
AND PHRASES – "Carrying on business" - s. 3(1)(a) of Investment Promotion
Act 1992 – On its own suggest some physical activity must take place in
Papua New Guinea first to give rise to the need to apply for
certification under
s. 25 – But when read together with other provisions including s.41A no
physical activity in the country
is required as long as the activity is to be
performed wholly or partly in Papua New Guinea.
Facts
The
Plaintiff ("Odata") is suing on the basis of a contract between itself and the
First Defendant ("Ambusa"). Ambusa was incorporated
by the Second Defendant
("NPF") as a subsidiary. That was in association with or in a joint venture with
simple village people who
knew nothing about the venture or running any business
and did not participate in any of the decisions of Ambusa. NPF was fully in
control of the Ambusa, including a negotiation of the contract, its signing and
eventual termination.
The
Defendants by notice of motion seek to dismiss the proceedings. That is on the
basis that, Odata has not complied with the requirements
for certification as a
foreign enterprise before carrying on business in Papua New Guinea under s. 25
of the Investment Promotion
Authority Act 1992 and on the on the basis of the
doctrines of privity of contract and corporate veil for
NPF.
Failing a dismissal of the
proceedings, the Defendants asked for security for costs in the sum of K299,
779.33 being two thirds of
their estimated
costs.
Held
1. On the facts, Odata was not carrying on business in Papua New Guinea but may have been carrying on business in Papua New Guinea within the meaning of s.3 (1)(e) only by having regard to other provisions such as s. 41A of the IPA Act as a matter of law and therefore required to apply for a certificate under s. 25 of the IPA Act.
2. Odata as a foreign enterprise’s failure to obtain a certificate under s.25 of the IPA Act does not automatically render its contract with Ambusa null and void. Instead, s. 41A grants a right to the Defendants to apply for a declaration that such a contract is unlawful and void which right they have not exhausted.
3. When an application under s. 41A of the IPA Act is made it has to be considered on its own merits including the principles of fairness and equity in the interest of doing justice, having regard to the conduct of the parties.
4. The corporate veil may be lifted in a number of circumstances including when it is fair to do so in all of the circumstances and having regard to the extent of the control of the affairs of the company by whoever is behind it.
5. In the present case, NPF formed Ambusa as its subsidiary and had control of the board and the activities of Ambusa including the entering into of negotiations, finalising negotiations and signing the contract with Odata and eventually terminating it. NPF even assumed the carriage and conduct of the defence of Ambusa. These factors point to Ambusa being only a front and or agent of NPF and in the circumstances it is only fair that the corporate veil should be lifted to allow NPF to face Odata’s claim.
6. Odata does have a reasonable cause of action against the Defendants. Accordingly it is improper to strike out this action merely on technicality in an interlocutory application such as this.
7. It is within the Court’s discretion to determine what amounts should be fixed for security for costs. That discretion is to be guided by the principles of whether:
(a) the application is promptly made?
(b) the plaintiff’s claim is bona fide or is one likely to succeed?
(c) the Defendant has contributed to the plaintiff’s impecuniosity?
(d) the amount to be fixed for security for costs is reasonable an will have the effect of nullifying the proceedings?
(e) there exists a cross-claim on the merits with substance?
8. Having regard to the Defendants conduct and their effects in the present case as well as the lack of any justification for the estimate of costs and the amount asked for by them to be given for security for costs, it is declined. But, in the exercise of the Court’s discretion, a sum of K20, 000.00 is fixed as the appropriate amount to be given in security.
Cases
Cited
PNG Forest
Products Pty Ltd & Inchape Berhad v. The State and Genia [1992] PNGLR 85
Ronney Wabia v. BP Exploration & Ors
N1697
Bougainville
Copper Foundation v. Galeva Kwarara [1988-89] PNGLR
110
Graham Rundle
v. Motor Vehicles Insurance (PNG) Trust [1988] PNGLR
20
CBS Inc and CBS
Records Australia Ltd and Bali Merchants Pty Ltd v Ranu Investments Pty Ltd
(CBS) [1978] PNGLR
66
Pinpar
Development Pty Limited v. TL Timber Development Pty Limited
N1857
Jacob Luke v
John Ralda [1992] PNGLR
549
Kappo Limited
v. Hau and Ors (23/05/97) SC520
Fortunaso Limited
v. Bank of South Pacific Limited
[1992] PNGLR
275
Osprey
Industries v. Hallam [1992] PNGLR
557
Yarlett v. New
Guinea Motors Limited [1984] PNGLR
156
Reynolds v.
Walcott [1985] PNGLR
316
Driver v.
Swanson [1977] PNGLR
30
Bank of Hawaii
(PNG) Limited v. Papua New Guinea Banking Corporation &
Ors
(unreported and unnumbered judgement
delivered on 8th June
2001)
Other
Cases
Cited
Hubbuck
& Sons Ltd –v- Wilkinson Heywood & Clark
Ltd [1899] All ER
244
Dyson v.
Attorney General [1911] 1 KB
410
First City
Trust Co. vs. Woodlawn Properties Ltd (1990) (RPR (2d) 259, 272; 80 Sask R 299;
66 DLR 4th, 470
Salomon v.
Salomon & Co. Limited
(1897) AC
22
Woolfson
v.Strathclyde Regional Council 1978 SC (HL)
90,
Tunstall v.
Steigmann [1962] 2 QB
593
Chen v.
Butterfield (1996) & NZCLC
261,086.
Jones v.
Lipma [1962] 1 All ER
442
Gilford Motor
Co v. Horne [1933] Ch
935)
Trevor Ivory
Ltd v. Anderson (1992) 6 NZCLC 67, 611; [1992] 2 NZLR
517
Creasey v.
Breachwood Motor Ltd [1992] BCC
638.
Morris
v. Hanley (2000) NSWSC 957 (25 August
2000)
Counsels
Mr.
P. Mills for the Defendants/
Applicants
Mr. T.
M. Rei for the
Plaintiff/Respondent
6th July
2001
KANDAKASI,
J: By notice of motion, the Defendants
are applying to dismiss these proceedings because they argue that no reasonable
cause of action
is disclosed against them. They argue that, the Plaintiff
("Odata") did not apply for and get either a certificate or an exemption
under
section 25 or 26 of the
Investment Promotion
Authority Act (1992) ("the IPA Act"),
from the Investment Promotion Authority ("IPA"). Additionally, the Second
Defendant ("NPF") argues that, there is
no cause of action against it on the
basis of the doctrines of
privity of
contract and
corporate
veil. It argues that the contract, on the
basis of which Odata is suing is between Odata and the First Defendant
("Ambusa"). Ambusa entered
into the contract in its own capacity as a principle
and not as an agent of NPF. NPF owns 50% of the shares in Ambusa but that,
argues
NPF, does not make it a principle of Ambusa on the basis of the doctrine
of corporate veil. In the alternative, the Defendants argue
for security for
costs of K299, 779.33 being two thirds of the Defendant’s solicitor client
costs of K449, 669.00 on the basis
that, the Odata is a foreign company and
that, issues involved are complex and will require the assistance of experts.
Odata in opposing the
application, argues that, it was not carrying on because in the country because
the contract between itself
and Ambusa was terminated at the direction of NPF.
Therefore, it argues that, it was not necessary for it to apply for and get
either
a certificate or exemption under section 25 or 26 of the IPA Act. In any
event it says it applied for a certificate under s.25 but
did not pursue it
because of termination of the contract. On the issue of privity of contract and
corporate veil, it argues that,
NPF was the brain and mind of Ambusa in that, it
directed and controlled the affairs of Ambusa. Effectively therefore, Ambusa was
a sham or a front of NPF. Accordingly, Ambusa was an agent of NPF and that the
corporate veil is not available for the protection
of NPF. Finally in relation
to security for costs, it does agree this is an appropriate case for security
for costs to be given but
argues that the amount should be fixed at K10,
000.00.
Issues
A number of issues are
presented for this courts determination. The issues are as set out
below:
1. Whether there is a reasonable cause of action disclosed against the Defendants?
2. Was Odata carrying on business in Papua New Guinea within the meaning of ss.3 and 25 of the IPA Act and was therefore required to apply for and get either a certificate as a foreign corporation or an exemption under ss.25 or 26 of the IPA Act?
3. Was Ambusa an agent of NPF because of its 50% shareholding interest and it controlling the affairs of Ambusa and therefore the corporate veil protection is not available to NPF?
4. What is the appropriate amount for security for costs to be given?
The
first issue is dependent on answers to the 2nd to 4th issues, so I will view
that issue in that context. The fifth issue is dependent
on a determination of
the first four issues. But let me start by saying this. It is well-settled law
that, the test to determine
whether a reasonable cause of action is disclosed is
this. Whether it is plain and obvious from the pleadings that the Court can
say
at once that, the statement of claim as it stands is insufficient even if proved
to entitle the plaintiff to what he asks: see
per
Lindley, MR.,
Hubbuck
& Sons Ltd –v- Wilkinson Heywood & Clark
Ltd [1899] All ER 244 at
247.
This test has been adopted
and applied in a number of cases in our jurisdiction as in
PNG
Forest Products Pty Ltd & Inchape Berhad v. The State and
Genia [1992] PNGLR 85 by Sheehan J and
Sevua, J in
Ronney
Wabia v. BP Exploration &
Ors
N1697. That test was made a bit clearer
in
Dyson
v. Attorney General [1911] 1 KB 410 by
adding that no reasonable cause of action is disclosed if the purported cause of
action pleaded is obviously and
incontestably bad. With this test in mind, I
turn to the second to the fourth issues, starting with the second issue first.
But before
doing so it is necessary to set out the relevant facts or the
background from which these issues arise.
Background/Facts
The relevant background
and or facts emerge from the pleadings and the affidavits that have been filed
in relation to these proceedings.
The relevant affidavits are the affidavits of
Haro Mekere sworn on the 24th of May 2000, Rod Mitchell (x 2) sworn on the 19th
of
April 2001 and 23rd of May 2001, Peter Vincent Mills sworn on the 22nd of May
2001, Gideon Kehara sworn on the 20th of April 2001,
Shirley Marjen sworn on the
19th of April 2001, Andrew Wasina sworn on the 6th of March 2001.
Ambusa was incorporated as a
subsidiary of
NPF (affidavit of Mekere) with a 50 %
share interest in association with Ambusa Limited, which had the other 50 % of
the shares. Ambusa
Limited was a land owner company owned by a group of local
landowners in the Bialla area of the West New Britain Province ("the
landowners").
Ambusa’s board of directors was made up of Haro Mekere,
Robert Kaul, David Copland later replaced by Noel Wright for NPF and
a Stanis
Valu and Cleophas Cavulu both of Bialla for Ambusa Limited. According to the
affidavit of Shirely Marjen’s affidavit,
both Stanis Valu and Cleophas
reside in the village and that it was difficult to communicate with them. Except
for the first ever
meeting of the board immediately after incorporation, these
men did not attend any board meeting. Hence, all of the subsequent board
meetings were constituted by the NPF representatives to the board as employees
of NPF. In addition to that, Shirley Marjen was and
is the secretary of Ambusa
in her capacity as employee and secretary of
NPF.
NPF formed Ambusa as a
vehicle in association with the landowners through Ambusa Limited to go into the
manufacture of copra oil.
For that purpose a copra oil mill was required.
Through Ambusa, NPF decided to build a copra oil mill in Bialla. Obviously, the
landowners
as is the case else where in Papua New Guinea, did not know much
about running a business let alone a copra oil mill. Therefore,
NPF through Mr.
Mekere took the lead in negotiations with the Odata for the construction and
building of a copra oil mill ready for
production (see Mekere’s Affidavit
paragraph 8 and annexure "E" to his affidavit). All critical decisions in the
negotiations
and the project was made by NPF given the position of the
landowners whose representative never attended any Ambusa board meetings.
This
included the holding of board meetings in NPF’s boardroom (see annexure
"B" to Mekere’s affidavit) and use of NPF
letterhead for correspondence
between Odata and Mekere on behalf of Ambusa: see annexure "G" to Mekere’s
affidavit.
The negotiations
between Odata and Mekere on behalf of Ambusa led to the execution of a written
contract on the 4th of November 1998
("the Contract"). It was a standard
"turnkey"
agreement. This is a contract used in the construction industry especially in
Canada. It is a class of contract in which the contractor
contracts to build a
project up to 100% complete and hand it over to the other contracting party (the
project owner) ready to commence
operations: see
First
City Trust Co. vs. Woodlawn Properties
Ltd (1990) (RPR (2d)
259, 272; 80 Sask R 299; 66 DLR 4th, 470 per Noble J at 482
in the DLR report and Canadian Franchise
Guide Vol.2.
Despite legal advice
from Gadens Lawyers that there was no legal basis to terminate the contract,
Odata and NPF terminated the contract
because of a NPF board resolution dated
29th October 1999 to withdraw NPF’s commitment to the project. They said
they were
taking that action because
"critical issues
relating to the management and the sale and purchase agreement between the
contractors and Ambusa ... have not been
adequately addressed and wished to see
that these issues be properly be addressed to safeguard shareholders
interests." It was also because of
"Odata’s
refusal to deliver full accounts of its operation and
activities." The contract was for design,
execution and completion of a copra oil milling plant to be built at Bialla,
West New Britain Province.
The
termination of the contract meant that, Odata could not enter the project area
and under take a performance of its obligations
under the contract.
Consequently, it terminated steps it had taken to apply for certification as a
foreign enterprise under s.25
of the IPA Act. It then issued these proceedings
to recover damages resulting from the Defendants decision to terminate the
contract.
I now proceed to address
the issues raised, starting with the second issue concerning the need to carry
on business.
Was Odata carrying on business in Papua New Guinea within
the meaning of ss.3 and 25 of the IPA Act?
This is a question that
will have to be determined on the evidence before me, and the relevant law. So
first, what is the evidence
on
this? There
is no evidence of Odata having entered Papua New Guinea, commenced and carried
on business, either in the pursuance of the contract
or any other business.
Instead, the evidence is that, before Odata could enter the country and perform
its obligations under the
contract, the contract was terminated. I therefore,
find as a matter of fact for the purpose of the application before me that,
Odata
was not carrying on business in Papua New
Guinea.
This leads to the next
related question of whether, as a matter of law, Odata was carrying on business
in Papua New Guinea? The Defendants
argue that, because the contract was to be
performed in Papua New Guinea, it was necessary for Odata to apply for and
obtain the
required certificate or exemption under the IPA
Act.
Section 25 of the IPA Act is
the provision that requires a foreign enterprise to apply for certification
under the Act before
carrying on
business in the country. There is no
dispute here that Odata is a foreign enterprise. Hence this provision applies.
The provision reads as
follows:
"(1) The Authority may, in accordance with this Part, grant a certificate permitting a foreign enterprise to carry on business in the country.
(2) Subject to Section 26, a foreign enterprise shall not carry on business, unless a certificate has been granted under this Part.
(3) A certificate granted under this Act does not of itself relieve a foreign enterprise from compliance with any other law.
(4) A foreign enterprise which is granted a certificate under this Part shall comply with any law applying to it and such compliance is deemed to be a condition of every certificate issued under this Part."
(Underlining mine)
It
is very clear that a foreign enterprise is prohibited from carrying on business
in the country unless it has first applied for
and has obtained a certificate to
do so under the Act. That is however, subject to section 26 of the Act. That
provision reads in
these terms:
"26. Exemption.
(1) Subject to Subsections (2) and (3), where, in the opinion of the Authority, the activity in which a foreign enterprise intends to engage or is engaged is intended—
(a) primarily for religious, charitable, educational or some other socially useful purpose; or
(b) for a non-profit purpose (other than specified in Paragraph (a)) that is socially desirable and to be encouraged; or
(c) for a combination of any of the purposes specified in Paragraphs (a) and (b), the Authority may, by written notice to that foreign enterprise, exempt that enterprise from any of the provisions of this Act.
(2) Before granting an exemption under Subsection (1), the Authority shall give notice in a newspaper circulating throughout the country that at the expiration of 30 days from the date of publication of the notice it proposes to grant an exemption.
(3) A person may, within 10 working days of the publication of a notice referred to in Subsection (2), object to the proposed exemption by giving written notice to the Authority in the prescribed form.
(4) The Authority shall consider any objection received by it and shall thereafter determine whether or not to grant an exemption within 30 working days of the expiration of the period referred to in Subsection (3)."
There is no issue in this
case that, Odata did not meet the requirements to apply for and obtain an
exemption under s.26. The only
relevance for the mention of this provision is
that, Odata was not exempt from the requirements of s.25 of the IPA Act. It was
therefore
necessary for Odata to apply for and obtain a certificate as required
before carrying on business in the
country.
Section 3 (1) of the IPA
Act defines the phrase
"carrying on
business" in these terms:
" ‘carrying on business’ includes—
(a) making application for any permit, licence, lease or authority issued for commercial purposes by the State or by a State body; or
(b) administering, renting, managing or otherwise dealing with property as an owner, agent, legal personal representative or trustee whether by a servant or agent or otherwise; or
(c) maintaining an agent, employee or officer for the purpose of soliciting or procuring or entering into orders, arrangements, agreements or contracts (whether conditional or not) whether or not the agent, employee or officer is continuously resident in the country; or
(d) maintaining an office, agency or branch (however described) whether or not the office, agency or branch is also used for one of those purposes by another enterprise; or
(e) undertaking a building, construction or assembly project or an activity numbered 8324 and 8329 in the ISIC that will not be completed within 6 months; or
(f) a combination of Paragraphs (a) to (e),
but an enterprise shall not be regarded as carrying on business by reason only that it—
(g) is or becomes a party to an action or suit or any administrative or arbitration proceeding; or
(h) effects settlement of an action, suit or proceeding or of a claim or dispute; or
(i) holds meetings of its directors or shareholders or carries on other activities concerning its internal affairs; or
(j) maintains
a bank account; or
(k) effects a sale
through an independent contractor; or
(l) by an advertisement, solicits or procures an order that becomes a binding contract only if the order is accepted outside the country; or
(m) creates evidence of a debt or creates a charge on property; or
(n) secures or collects any of its debts or enforces its rights in regard to any securities relating to any such debts; or
(o) conducts an isolated transaction that is complete within a period of days, not being one of a number of similar transactions repeated from time to time; or
(p) invests
any of its funds or holds any real or personal
property;"
(Underlining
mine)
Since the contract between
Odata and Ambusa was for the building of a copra oil mill in Bialla, paragraph
(e), is relevant. The Defendants
argue that, when this provision and the other
paragraphs are read together with the next subsection, (2) Odata is deemed to
have
carried on business in Papua New Guinea. It was therefore required to apply
for and obtain the certificate required. This attracts
the application of s.41A
of the IPA Act.
Subsection (2) of
s.3 of the Act reads:
"For the purposes of this Act, an enterprise shall be deemed to carry on business in the country notwithstanding that the business is carried on partly within and partly outside the country."
This
provision makes it clear that, it does not really matter whether the business is
carried on partly in Papua New Guinea and partly
outside the country. What does
matter is the fact that, some activity is taking place in Papua New Guinea. If
that happens, then
the need to obtain a certificate under s.25, unless exempt
under s.26, arises. Section 41 is then available to penalise a foreign
enterprise together with their Papua New Guinean associates who fail to meet the
requirements of s.25 but are carrying on business
in Papua New Guinea. However,
of direct relevance for us is s.41A. That provision provides:
"41A. Contract, etc., to be unlawful and void in certain circumstances.
Where a contract, agreement or understanding is entered into between a foreign enterprise and another enterprise and—
(a) that foreign enterprise had not been issued a certificate at the time at which the contract, agreement or understanding was entered into; or
(b) the subject matter of the contract relates to business activities outside of the nature of the activities for which the foreign enterprise is certified to carry on business,
the court may, on the application of that other enterprise or of the Authority, declare the contract unlawful and void."
(Underlining mine)
These consequences are
dependent upon whether or not a foreign enterprise is carrying on business in
Papua New Guinea. A careful look
at the wording in section 3(1)(a)-(d) appears
clear to me that something must physically happen in Papua New Guinea. This can
either
be in part or whole as long as some activity is taking place in Paua New
Guinea (see s.3 (2)). In so far as is possible, the operative
wording in
s.3(1)(e) is
"undertaking a
building, construction or assembly project or an activity numbered 8324 and 8329
in the ISIC that will not be completed
within 6
months."
If this provision was read on its own, it gives the impression that in order for
a person like Odata, to be deemed to be
carrying on
business in Paua New Guinea under s. 3(2)
it must have been
"undertaking the
building". That could either be wholly or
partly in Papua New Guinea which is going to take more than 6 months to
complete. However, when I read
s. 3(1)(e) together with paragraphs (a) and s.41A
a different meaning appears to emerge from the use of these words in section
41A:
"Where a contract, agreement or understanding is entered into between a foreign enterprise and another enterprise and—
(a) that foreign enterprise had not been issued a certificate at the time at which the contract, agreement or understanding was entered into; or"
Added
to this is the fact that the exclusion list in paragraphs (g)-(p) of s.3(1) does
not list entering into contracts for the purpose
of carrying on the kind of
business enumerated under s.3(1)(a)-(f). This in my view means that, it is
included in the list under
paragraphs (a)-(f). It is a well-settled principle of
statutory interpretation that, the express mention of one thing is the exclusion
of another. This is often referred to as the
expressio unius rei
est exclusio alterius rule of statutory
interpretation: see
Bougainville
Copper Foundation v. Galeva
Kwarara [1988-89]
PNGLR 110 at page 117, for a reference to
the rule. It follows therefore, that a foreign enterprise is required to apply
for and obtain a certificate
under s. 25 of the IPA Act before undertaking any
business activity in Papua New Guinea. That includes the signing and or entering
into a contract for the purposes of carrying on or undertaking any of the
activities listed under s. 3(1) (a)-(f). As a matter of
law, Odata could be
deemed to have carried on business in Papua New Guinea by virtue of entering
into the contract with the First
Defendant which was without proper
certification under the IPA Act.
What then should be the
consequence? Or what should follow on from that? A failure to meet the
requirement for certification opens
the contract to the risk of being declared
unlawful and void under s. 41A of the IPA Act, in addition to any of the other
penalties
under that Act, such as those under s.41.
I note however, that s.41A only
grants a party who has entered into a contract with a foreign enterprise which
has not obtained a
certificate under the IPA Act a right to apply to the Court
for a declaration that the contract is unlawful and void. At the same
time, the
Court is vested with a judicial discretion to grant such an application. It is
settled law that, all discretions vested
in a Court has to be exercised on
proper principles and after taking into account all of the relevant factors and
or facts including
the principles of equity: see
Graham
Rundle v. Motor Vehicles Insurance (PNG)
Trust [1988] PNGLR
20 at 24 per Bredmeyer J for a statement
of that principle.
In the present
case, no application has yet been made to the Court under s.41A. Until such an
application is made and is granted,
the contract is still valid. If and when an
application under s.41A is made, the Court will of course, have regard to the
conduct
of the parties and the equities of declaring the contract between the
parties unlawful and void. Just because the requirements for
certification under
the IPA Act have not been met, it does not automatically follow that the
contract is unlawful and void. If it
were to be the case, mandatory words like
"shall" could have been use in that section. In these circumstances, I am of the
view that,
Odata is entitled to bring these proceedings. I therefore reject the
application to dismiss or strike out these proceedings on the
basis that the
requirements for certification under the IPA Act have not been met. I find the
arguments on this misconceived ill
founded and pre-emptory of a decision under
s.41A application which is not even on foot.
Was Ambusa an agent of NPF?
NPF wanted to go into the
copra oil milling business. It identified Bialla as the right place to set up
that business. It did not
however, have the land required for the business. It
therefore entered into a joint venture business with the local landowners
through
their landowner company, Ambusa Limited. This saw the incorporation of
Ambusa which was a joint venture company with NPF having 50%
of the shares which
was fully paid (K400,000.00). The other 50 % of the shares were owned by the
landowners in exchange for their
land.
The majority of the board of
directors of Ambusa came from NPF. The two landowner representatives attended
only the first ever meeting
of the board. Since then they only existed in name.
Through Shirley Marjen, NPF says, the landowner directors were difficult to
contact
because they were in the village. No landowner was ever involved in the
negotiations that led to the contract between Odata and Ambusa.
Mr. Mekere of
the NPF was the man who conducted the negotiations and signed the contract with
Odata in his capacity has executive
director of Ambusa, which was a position he
held because of his employment with the NPF.
There is no evidence to show that
the landowners knew anything about the business they were entering into with
NPF. In the absence
of any evidence to the contrary, it is clear to me that the
landowners did not have the slightest clue about the business. They had
no
meaningful say and part in the running of the affairs of Ambusa. Everything was
run by NPF from its boardroom by NPF employees
like Mr. Mekere. Even NPF
letterheads were used in communications with Odata: see letter dated 10th
September 1998 which is annexure
"G" to Mr. Mekere’s affidavit. Finally,
the decision to terminate was forced on Ambusa because NPF decided to pull out
of the
joint venture with the landowners. The reason for that was
"critical issues
relating to the management and the sale and purchase agreement between the
contractors and Ambusa ... have not been
adequately addressed and wished to see
that these issues be properly be addressed to safeguard shareholders
interests." It was also because of
"Ambusa’s
refusal to deliver full accounts of its operation and
activities."
This
clearly ran contrary to the fact that, Ambusa was fully controlled and run by
NPF with no input whatsoever from the landowners.
This included the negotiations
with Odata and signing of the contract to its termination. NPF also over looked
the fact that the
contract between, Odata and Ambusa was for the construction of
a copra oil mill under a
"turnkey"
agreement, which was essentially to construct the mill and hand it over to
Ambusa ready for immediate operation. It had nothing
to do with any management,
sale and or purchase. The contract was not made subject to any of these
things.
As evidenced from the
legal advice from Gadens to both NPF and Ambusa dated 5th October 1999,
(annexure "I" to Mr. Mekere’s
affidavit), it was simply a bad investment
decision taken by NPF to go into the joint venture with the landowners in the
form of
Ambusa. NPF therefore decided to pull out of the
contract.
In these circumstances,
Odata argues that, Ambusa was an agent of NPF. If not, Ambusa was a front or
sham for NPF. Therefore the protection
of the corporate veil should be lifted to
enable it to sue NPF. Odata relies on the judgements in
CBS
Inc and CBS Records Australia Ltd and Bali Merchants Pty Ltd v Ranu Investments
Pty Ltd (CBS) [1978]
PNGLR 66,
Pinpar
Development Pty Limited v. TL Timber Development Pty
Limited N1857
and
Jacob
Luke v John Ralda
[1992] PNGLR 549. It has also referred to
the Supreme Court decision in
Kappo
Limited v. Hau and Ors
(23/05/97) SC520
NPF argues that, there is no
privity of contract between it and Odata and says and or that Ambusa was not its
agent because NPF did
not place without any qualification its signature on the
contract. Further, on the agency point, it argues that the contract does
not
make any reference to it in any manner or form and as such the contract can not
be relied upon to sue it as a party or an undisclosed
principle. It also argues
that Ambusa was at all material times a separate legal entity and it should be
given the protection accorded
to all companies by the principle of corporate
veil as enshrined in s.16 of the
Companies
Act 1997. NPF then relies on the
well-known case of
Salomon
v. Salomon & Co. Limited
(1897) AC
22. It then argues that, there should be
caution when the Court is asked to pierce the corporate veil and refers to the
Kappo
Limited v. Hau and Ors (supra). Further,
it argues that Odata has misunderstood the import of the cases it relies on and
in any event they do not assist
Odata. It then refers to the judgement in
Fortunaso
Limited v. Bank of South Pacific
Limited
[1992] PNGLR
275 at page 285 and argues that Odata has
no cause of action against it. At best, the Defendants agree that Odata’s
claim is really
that the Plaintiff’s commercial rights are affected by the
contract between Odata and Ambusa with no legal rights against NPF.
On the facts, there can be no
argument that, Ambusa was an extension of NPF for the specific purpose of going
into a copra oil milling
business in association with local landowners in
Bialla. NPF had virtual control of the joint venture and was instrumental in the
negotiation, execution and eventual termination of the contract despite legal
advice from Gadens Lawyers. In reality therefore, Ambusa
was a front for NPF for
all practical
purposes.
In
Pinpar
Development Pty Limited v. TL Timber Development Pty
Limited
(supra) His Honour Kapi DCJ
said:
"Having regard to all the authorities, I accept the principle that a parent company may be liable for the actions of a subsidiary company provided that the subsidiary company was acting as agent of the parent company. Alternatively, where the parent company in truth is in control of the subsidiary company and may or may not use the corporate veil for the purposes of fraud, or as a device to evade a contractual or other legal obligations, the parent company may be liable."
The
authorities the Deputy Chief Justice had regard to were the judgement of
Pritchard J in
CBS
Inc and CBS Records Australia Ltd and Bali Merchants Pty Ltd v Ranu Investments
Pty Ltd (CBS)
(supra) and
Jacob
Luke v John Ralda (supra). In the first
case Pritchard J said at page 68:
"It may well be that the defendant company, despite its paid-up share capital of K2.00, is both wealthy and profitable. However, I do not think that judges have to go around with their eyes shut and the fact is in this country, as has happened elsewhere, many companies have been incorporated which have become insolvent only to incorporate another and continue trading, leaving the creditors of their previous company (or companies) lamenting. There has been considerable reverence paid by the Courts of many countries to the concept of a company being a legal person in its own right. In this regard I am somewhat of a heretic and in a newly developing country such as ours, when under the Constitution the judges of this Court must develop the rules of the underlying law of this nation in accordance with the principles of natural justice and ensure that such law develops as a coherent system in a manner that is appropriate to the circumstances of the country from time to time. I believe that judges will be more inclined to go behind corporate structures than judges in other countries have been prepared to."
In
the second case, His Honour, Mr. Justice Woods dismissed an appeal against a
decision of the District Court, which lifted the corporate
veil and ordered the
appellant to be personally liable. The appellant sold a defective vehicle to the
respondent. At no time did
the appellant make it know to the respondent that, he
was acting for a company, which he owned and managed. His Honour found that,
in
the particular circumstances of the case, it was fair that the appellant should
be made liable and not his company because he
failed to let the respondent know
that he was acting for and on behalf of the
company.
The learned Deputy Chief
Justice also had regard to the leading tax book on company law,
Modern
Company Law 4th
Ed.
by LC
Gower at pages 128 to 129. There the
learned author points out that, in some instances, the parent of a subsidiary
company may be made
liable going by the agency principle and in other instances
the parent may not be made
liable.
The Supreme Court alluded
to the doctrine of corporate veil in
Kappo
Limited v. Hau and Ors (supra) in these
terms:
"It is sufficient for our purposes to simply state that the starting point is the doctrine laid down in Salomon v Salomon & Co Ltd (1897) AC 22. There has been a lack of judicial unanimity with regard to the general principles about the circumstances in which the corporate veil may be lifted: see Briggs v James Hardie & Co Pty Ltd & Others (1989) 7 ACLC 841. We do not have to go into these issues here."
Mr.
Mills of counsel for the Defendants ably assisted the Court on the issue of
lifting the corporate veil by providing a copy of
an extract from the CCH
publication on the
New Zealand Company
Law and Practice. From this the following
position emerges:
1. The fundamental starting point is the importance of the doctrine of corporate personality and any suggestion to depart from it should be treated with caution.
2. The doctrine is to be applied unless the result is so unsatisfactory that it warrants a departure from it.
3. It is not possible and is undesirable to categorise the kind of circumstances in which there can be a departure.
4. It is appropriated to depart from the doctrine if a company or its personality is being used as a façade, stratagem or simulacrum in an attempt to circumvent the reality of the situation (Woolfson v.Strathclyde Regional Council 1978 SC(HL) 90, Tunstall v. Steigmann [1962] 2 QB 593). There is some difficulty with this because there is some difficulty in determining the true meaning of the word "façade" and determining whether there was an intention to conceal the true facts which was a test developed by the decision in Chen v. Butterfield (1996) & NZCLC 261,086.
5. In a contractual context there is a need for some element of fraud or sharp practice in that party’s conduct, or it must otherwise be unconscionable in the sense of equitable fraud to adhere to the doctrine (see Jones v. Lipma [1962] 1 All ER 442, Gilford Motor Co v. Horne [1933] Ch 935)
6. The veil will not be lifted to allow for the application of the unanimous assent rule to hold a company liable by the actions of the shareholders acting unanimously.
7. It is not sufficient that the mere presence of the corporate veil leads to an inequitable or generally unfair result. The interests of commercial certainty dictate that a strong case is needed to lift the corporate veil (see Trevor Ivory Ltd v. Anderson (1992) 6 NZCLC 67, 611; [1992] 2 NZLR 517).
8. The corporate veil may be lifted if a doing so is justified in all the circumstances of the case. The case on point is Creasey v. Breachwood Motor Ltd [1992] BCC 638.
9. Where a statute provides either expressly or by implication for a lifting of the corporate veil, it may be lifted.
Our
Companies Act is similar to the New Zealand Companies Act. Besides, I consider
these principles relevant and appropriate for our
jurisdiction in addition to
the position already developed (whether
obiter
dictum or not). Hence I adopt them has
proper principles for consideration on the issue of whether or not the corporate
veil should be lifted.
In the
present case, before getting to any of these principles, NPF argues that, the
starting point is that, the contract was between
the Odata and Ambusa. The
contract makes reference to only Ambusa and Odata and nobody else. All
obligations from the provision of
land upon which the mill was to be
constructed, to the payment of money is referred to as an obligation of Ambusa
in its own right
and not that of any other party. Nowhere is it referred to as
the agent of any other party. Then, it argues that, unless there is
something to
suggest to the contrary, a person (s) named in the written contract is the real
and only principal to the contract.
No extrinsic evidence can be allowed to
contradict the terms of the contract:
Halsbury’s Laws
of England, 4th Ed, paragraph 137. The
argument therefore, is for me to find that, Ambusa was not acting as NPF’s
agent when it entered into and signed the contract
with Odata. Instead it was
acting in its own capacity as a real party and principle. If it were not for the
principles on which the
corporate veil can be lifted I would stop at that
argument and find for
NPF.
However, in equity and in
fairness having regard to the particular facts of this case and my findings on
them, I am reluctant to grant
the result the Defendants are arguing for. I
hence, need to find whether the facts of this case place NPF’s position in
any
of the circumstances in which the corporate veil should be lifted to make it
answer Odata’s claim.
The
relevant facts as noted are that NPF formed Ambusa as a subsidiary to go into a
copra oil milling business. That was in association
with local landowners in
Bialla to secure the land needed for the business. The landowners come through
their landowner company Ambusa
Limited with a 50% equity or share interest in
Ambusa. Other than that, there is no evidence of them coming up with and or
contributing
to the required capital, the technical know how in terms of the
whole joint venture as a workable business concept and the conduct
of the joint
venture business including, the marketing of its product. The landowners appear
to me, in the absence of any evidence
to the contrary, were simple village
people with no idea on running a business let along an highly specialised
business such as copra
oil milling and its marketing. NPF personal were by
virtue of their employment with NPF were the brain and arms of the Ambusa. They
made all of the important decisions including, the negotiations and concluding
and signing the contract and its eventual termination
despite legal
advice.
Legal advice was that, if
the contract was terminated, Odata would be entitled to damages for breach of
contract. Although that advice
was addressed to Ambusa, the person seeking the
advice at the first place and receiving it was Mr. Mekere an officer of NPF and
by
reason of his employment with NPF an officer of Ambusa. Then on the 25th of
May 2001, NPF successfully applied and was given leave
to conduct Ambusa’s
defence. This confirms with the fact that it was NPF, which ran the affairs of
Ambusa from the very beginning.
These facts attracts in my view,
a possible application of the 8th factor in the list of factors set out above,
that must be borne
in mind when consider the issue of whether or not
Ambusa’s corporate veil should be lifted. This is in addition to my
finding
in line with the local authorities to date that, Ambusa was a front for
the NPF. Further, Ambusa in my view was an extension of NPF
for the particular
business interest it set out to venture into in association with local
ill-equipped landowners. The landowners
provided nothing more than the land
required for the project in return for a 50% share with the business being
controlled exclusively
by NPF. Given these, I am not prepared to allow NPF to
hide behind the corporate veil and effectively avoid its liability if any
to
Odata. From the available material, it seems Ambusa is impecunious and may not
be in a position to satisfactorily meet Odata’s
claim. There must be some
room to prevent an abuse of the corporate veil through conducts such the ones
disclosed in this case. The
law should be ready and willing to lift the
corporate veil in such situations to ensure no unfair advantage is gained
through the
use of the corporate veil. Indeed s.155(4) of the
Constitution
empowers the Supreme and National Courts to make such orders as are necessary to
do justice. The readiness of the Courts to lift
the corporate veil in
appropriate cases would in my view, help prevent an abuse of the corporate
veil’s protection. It would
also provided some basis for people dealing
with Papua New Guinean incorporated companies to do so with confidence that the
corporate
veil will not be used to avoid obligations and or liabilities such
companies may assume by their own
conduct.
As Pritchard J said in
CBS
Inc and CBS Records Australia Ltd and Bali Merchants Pty Ltd v Ranu Investments
Pty Ltd (CBS)
(supra), judges should not approach the
issue with their eyes shut. They should ever be vigilant to detect any possible
instance of
an attempt at abusing the corporate veil’s protect and make
appropriate orders. This is important in a newly developing country
such ours,
where there is a Constitutional duty on judges of the National and Supreme
Courts to help develop the underlying law for
the nation in accordance with the
principles of natural justice. The onus is therefore, on a judge to determine in
each case whether
its is appropriate to lift the corporate veil and help develop
the rules with fairness and equity as the main guiding principles.
On my part
therefore, in full appreciation of that duty, I have already expressed the view
that, the principles emerging from a survey
of overseas authorities should be
the guiding principles in addition to the principles already emerging from the
few local cases
to date.
In a few
words, I find that Ambusa was an extension, if not an agent of NPF in fact and
in reality. NPF was responsible for the contract
between Odata and Ambusa from
start to termination. At least in one correspondence this was disclosed to Odata
when the letter dated
10th September 2001(annexure "G" to Mr. Mekere’s
affidavit) was sent to Odata. This has been carried over into these proceedings
by virtue of NPF assuming the conduct of the proceedings on behalf of the
Ambusa. Accordingly, I find that Odata does have a cause
of action against NPF.
Hence I refuse to strike out the proceedings as against NPF. Of course whether,
NPF is in fact liable as alleged
is a matter for trial and evidence, which is
not my concern at this stage.
Security for Costs
Failing an order to strike
out the proceedings, the Defendants argue for security for costs to be given in
the sum of K299, 779.33
including VAT. This represents two thirds of a an
estimated K449,669.00 on solicitor client costs. The Defendants argue that, the
claim against them would add up to about K6 million and as such the amount they
submit is appropriate.
Further,
the Defendants submit that the amount they are asking for is reasonable because
the amount claim is large and it is expected
that witnesses will be required to
view the machinery the subject of the proceedings and to prepare the reports in
relation to it.
Counsel for the Defendants argue that the trial of the matter
would take about two weeks in Port Moresby. Senior Counsel will be
engaged at
the relevant stages of the proceedings and will incur substantial cost. Counsel
also argues that this is an extremely
complicated commercial litigation.
Furthermore, Counsel for the
Defendants submit that, there has been no delay in bringing the application and
that Odata’s claim
is not bona fide within the meaning of
Osprey
Industries v. Hallam
[1992] PNGLR 557. There is no undertaking
by the Plaintiff’s directors that they will pay any costs if the
Defendants are successful in the
defence. There does not appear to be a
reasonably good prospect of success for Odata within the meaning of
Yarlett
v. New Guinea Motors Limited [1984] PNGLR
156. Finally, the Defendants accept that the amount to be awarded as security is
a discretionary matter for the Court: see
Reynolds
v. Walcott [1985]
PNGLR 316.
The Defendants have provided a
list of the cases in which security for costs were ordered with the amount so
ordered. At the lower
end of the scale is the
Driver
v. Swanson [1977]
PNGLR 30, where the National Court
ordered security for costs to be given without specifying the amount in a claim
involving K5, 000.00 to
K40, 000.00. The next in line is the
Yarlett
case (supra) where the Court ordered security to be given in the sum of K3,
000.00. There the Court held that two thirds of the total
estimate of cost up to
the stage that security is awarded should be allowed. This is where the
Defendants stand to argue for two
thirds of their estimated costs to be given in
security in this case.
In other
jurisdictions, for example in New South Wales (Australia) sums as high as
AUD$115,000 has been ordered to be given in security.
This is represented by the
case of
Morris
v. Hanley (2000) NSWSC 957 (25 August
2000), in a commercial litigation only for the first week of trial excluding
pre-trial preparation and
interlocutory proceedings on application made after
the first week.
The Defendants
have set out the possible costs in a detailed schedule of costs, which is
inclusive of further interlocutory applications
and all pre-trial preparation. A
substantial part of that is for expert witnesses and costs of senior counsel
engagements. There
is neither any evidence nor is there any suggestion that
Odata is impecunious and as such it will not meet any order for costs should
it
fail. The Defendant argues that, Odata will not succeed in its claim against
them because of the various legal issues raised in
this application, which I
have already covered. This argument can not be sustained in the light of my
findings and rulings in the
earlier part of this judgement. The only basis on
which the application can be sustained is the fact that, Odata is a foreign
company
on the basis of which Mr. Rei of counsel for Odata has correctly
conceded but not the amount asked for by the
Defendants.
As to how much
security should be given is a discretionary matter for the Court to decide. An
exercise of that discretion is guided
by a number of principles, which are set
out in the
Osprey
case (supra) at pages 560-561. These are:
1. Whether the application is promptly made?
2. Whether the plaintiff’s claim is bona fide or is one likely to succeed?
3. Whether the Defendant has contributed to the plaintiff’s impecuniosity?
4. Whether making the amount to be fixed for security for costs will have the effect of nullifying the proceedings?
5. Whether there exists a cross-claim on the merits with substance?
In
my view these factors are very important. The first is there to ensure that
there is no delay in bringing an application for security
for costs. Any delay
in bringing such an application may result in the other party proceeding on the
basis that there will be no
such application and incur costs by taking further
steps in the proceedings including a preparation for trial. The concept of
acquiescence
by conduct in failing to act promptly could operate against a party
who fails to exercise its right. Factors two and three in my
view, go together.
If the Court is satisfied on the basis of some affidavit material in addition to
the pleadings that the plaintiff’s
claim is one which is likely to
succeed, the Court should be slow to ordering security for costs to be given. If
however, it decides
to make such an order, it should not fix an amount that
might effectively prevent the plaintiff from proceeding with its claim. There
should in my view, be much more reluctance to order security for costs where on
some reasonable basis it becomes clearer to the Court
that, the party making the
application is responsible for the parties ending up in Court and is using the
application to make it
difficult for the other party to either proceed with his
claim. Given this kind of possibility, the third factor becomes meaningful.
Likewise, the fifth and final factor also has meaning because, if there is a
cross-claim on the merits and is substantial not just
on the pleadings but
supported by say affidavit material, it may make sense to order security for
cost be given.
In the present
case, there is no issue on the first factor. As for the second one, I have
already ruled that on the basis of the available
material, Odata’s claim
is bona fide and there is a reasonable chance of success. There is no issue on
the third factor. However,
let me reiterate my earlier finding that, NPF is the
party that is responsible for landing the parties in Court. Following the orders
of the 25th of May 2001, it is now in charge of the defence on its own behalf
and that of the Ambusa. It caused a termination of
the contract between Ambusa
and Odata. It then sought to escape any liability on a technical and strict
application of the principles
of
privity of
contract and
corporate
veil. The Courts are charged with the
duty to administer justice according to law but with fairness and with equity. I
have ruled against
NPF on its application to escape liability. I find there is
no substantial or any good cross-claim against Odata apart from asking
for
orders in the nature already asked for and refused in this judgement.
Further, I am not satisfied that
this is a complicated case. It is simply a case of breach of contract and
assessment of damages.
The statement of claim is short and simple. On the other
hand the Defendants have made their defence look long and complicated. However,
at a closure look at the defence and cross-claim, it only pleads failures to met
Stamp Duty requirements as well as the IPA Act,
a denial of Odata’s claim
and plead in the alternative that the contract is bad for uncertainty. I have
adequately covered
the pleadings concerning the IPA Act requirements. There is
nothing complicated about this matter. What is clear however, is a very
highly
technical approach taken by the Defendants through the NPF all aimed at escaping
liability.
As noted earlier, a
major part of the costs for the Defendants estimate of cost is engagement of
senior counsel services. I do not
see the need and justification for senior
counsel’s involvement. There seem to be a practice adopted by nearly all
the big
name law firms like the Defendant’s lawyers here to almost, as a
matter of course, refer to senior Counsel (QC)for advice and
or opinions and
even conduct of trials. As I recently said in
Bank of Hawaii (PNG)
Limited v. Papua New Guinea Banking Corporation & Ors N2095
(unreported and unnumbered judgement
delivered on 8th June 2001),
"there is neither any
evidence nor can I accept that, after more than 20 years of independence Papua
New Guinea still lacks experience
and competent lawyers of her
own".
Whilst
it is the prerogative of a party to engage a counsel of its choice, it should
not unnecessary go on in a costs running exercise
and expect the other side to
pay for those costs if it succeeds. A losing party is only liable to pay the
winning party’s
reasonable
costs. I am not satisfied that all of the
costs envisaged to be incurred by the Defendants are reasonable and will
necessarily be required
to be incurred.
For these reasons, I am
disinclined to ordering security for costs in the amounts asked for by the
Defendants. I am instead prepared,
in the exercise of my discretion to fix a sum
of K20, 000.00 as reasonable security for cost against Odata. I would order such
security
be brought into Court within 21 days from today.
In Summary
In summary I find as
follows:
1. On the facts, Odata was not carrying on business in Papua New Guinea but may have been carrying on business in Papua New Guinea within the meaning of s. 3(1)(e) only by having regard to other provisions such as s. 41A of the IPA Act as a matter of law and therefore required to apply for a certificate under s. 25 of the IPA Act.
2. Odata as a foreign enterprise’s failure to obtain a certificate under s.25 of the IPA Act does not automatically render its contract with Ambusa null and void. Instead, s. 41A grants a right to the Defendants to apply for a declaration that such a contract is unlawful and void which right they have not exhausted.
3. When an application under s. 41A of the IPA Act is made it has to be considered on its own merits including the principles of fairness and equity in the interest of doing justice, having regard to the conduct of the parties.
4. The corporate veil may be lifted in a number of circumstances including when it is fair to do so in all of the circumstances and having regard to the extent of the control of the affairs of the company by whoever is behind it.
5. In the present case, NPF formed Ambusa as its subsidiary and had control of the board and the activities of Ambusa including the entering into of negotiations, finalising negotiations and signing the contract with Odata and eventually terminating it. NPF even assumed the carriage and conduct of the defence of Ambusa. These factors point to Ambusa being only a front and or agent of NPF and in the circumstances it is only fair that the corporate veil should be lifted to allow NPF to face Odata’s claim.
6. Odata does have a reasonable cause of action against the Defendants. Accordingly it is improper to strike out this action merely on technicality in an interlocutory application such as this.
6. It is within the Court’s discretion to determine what amounts should be fixed for security for costs. That discretion is to be guided by the principles of whether:
a. the application is promptly made?
b. the plaintiff’s claim is bona fide or is one likely to succeed?
c. the Defendant has contributed to the plaintiff’s impecuniosity?
d. the amount to be fixed for security for costs is reasonable and will have the effect of nullifying the proceedings? and
e. there exists a cross-claim on the merits with substance?
7. Having regard to the Defendants conduct and their effects in the present case as well as the lack of any justification for the estimate of costs and the amount asked for by them to be given for security for costs, it is declined. But, in the exercise of the Court’s discretion, a sum of K20, 000.00 is fixed as the appropriate amount to be given in security.
On
the basis of the above findings I make the following orders:
1. The Defendant’s application to dismiss or strike out the plaintiff’s case for failure to obtain proper certification under s. 25 of the IPA Act is dismissed.
2. NPF’s application to dismiss or strike out the proceedings as against it on the principles of privity of contract and corporate veil is also dismissed.
3. Odata shall pay into court as security for costs a sum of K20, 000.00, within 21 days from today.
4. The parties shall take all steps necessary to get the case ready for trial and shall not engage in unnecessary delaying and cost running exercises.
5. Each party will bear their own costs of this application.
6. Time is abridged for a settlement of these orders.
___________________________________________________________________________
Lawyers for the Applicant/Defendants: Blake Dawson Waldron
Lawyers for the Respondent/Plaintiff: T. M Rei Lawyers
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