The Supreme Court has ordered that Tonga Investments Ltd be restored to the company register.
The restoration was sought by Sione Moehau and Epic International Ltd so they can pursue legal action against the company.
They argued that unless TIL was restored its legal obligations could not be assessed or enforced.
The motion was opposed by the Registrar of Companies and the Crown.
In his report on the hearing, Lord Chief Justice Paulsen said TIL was a registered company and wholly owned by the Government of Tonga.
In 2007 TIL began disposing of its assets, including leases of land. It put the leases up for public tender and in June 2007 Mr. Moehau successfully bid for three leases. He nominated Epic to complete the purchase.
In October that year TIL and Epic entered into a written agreement for the transfer of the lease for TP$725,000. Epic paid a 10 percent deposit of TP$72,500. A further 30 per cent of the transfer price amounting to TP$217,500 was paid on August 24, 2007.
The balance of TP$435,000 was payable within 14 days of Epic being advised in writing that the lease transfer documentation had been completed by the Lands Department and that the transaction has been approved by Cabinet.
On November 30, 2007, TIL told Epic the documentation in respect of all three leases was complete and called for settlement in terms of the agreement. However, on December 6, December 2007 TIL wrote to Epic and Mr. Moehau, stating the Ministry of Lands and Survey was still processing the transfer of the leases.
For reasons that are not clear Cabinet did not approve the transfer of the lease until February 8, February 2013.
On February 18, 2013 TIL gave Mr. Moehau notice that the lease transfer documentation had been completed and that Cabinet approval had been obtained for the transfer of the lease. Epic was given 14 days to pay the balance of the transfer price or Epic would forfeit its deposit.
On February 25, 201,3 TIL again wrote to Mr. Moehau, reminding him that Epic had seven days to pay the balance of TP$435,000 on the transfer of the lease and again stating that failure to pay would result in Epic forfeiting its deposit.
The following month Mr. Moehau wrote to TIL explaining that after TIL’s lengthy delay a decision had been made to utilise its funds on other projects. He proposed that the parties enter into an instalment plan to pay the outstanding balance.
This was put to TIL’s board on April 11, 2013, but the board refused the request and approved the forfeiture of the deposits and decided to re-tender the lease. It is not clear whether the board’s decisions were communicated to Epic or Mr. Moehau.
TIL did not, in fact, re-tender the lease and transferred it to TAMA, another company owned by the Government of Tonga. Cabinet approved the transfer on 1 July 2013.
On June 28, 2013, the Registrar was told that TIL had ceased trading and requesting that it be removed from the register. The letter contained nothing to substantiate the assertion that TIL had ceased trading. There was no public notice of the decision to deregister TIL.
In June 2015 that the Minister of Public Enterprises, purporting to act on behalf of TIL, signed an assignment of the lease to TAMA.
Lord Chief Justice Paulsen said that if it was found that TIL had wrongfully purported to terminate (or in fact failed to do so) Mr. Moehau and Epic may seek to enforce performance of the agreement or damages.
He said the plaintiffs had paid 40 per cent of the total purchase price, amounting to TP$290,000 which TIL claimed was forfeited.
“It is arguable this was an unlawful penalty and that the plaintiffs may recover all or some portion of the amounts they have paid on that basis,” the judge said.
Lord Chief Justice Paulsen said he was satisfied the plaintiffs had an undischarged claim against TIL which was sufficient grounds to restore the company to the Registry.
The main points
- The Supreme Court has ordered that Tonga Investments Ltd be restored to the company register.
- The restoration was sought by Sione Moehau and Epic International Ltd so they can pursue legal action against the company.
- The motion was opposed by the Registrar of Companies and the Crown.
- Lord Chief Justice Paulsen said he was satisfied the plaintiffs had an undischarged claim against TIL which was sufficient grounds to restore the company to the Registry.