In an action brought by a creditor who is seeking to recover $290,000 from a deregistered public enterprise, Tonga Investments Limited (TIL), Tonga’s Supreme Court ordered its restoration to the register of companies on 26 April 2017.

Sione Moehau and Epic International Ltd (Epic) sought the decision to be able to take the public enterprise to court over issues regarding the purchase of land leases and forfeiture of their deposit.

Background

In 2007, TIL (wholly owned by the Government of Tonga) and Mr Moehau entered into a written agreement for the transfer of three leases that Mr Moehau successfully tendered for TOP$725,000.

Mr Moehau, through Epic deposited 40% of the sale price TOP$290,000 in 2007 while waiting for the lease transfer documentation to be completed by the Lands Department and approved by Cabinet.

TIL then wrote two letters to Epic and Mr Moehau; the first on 30 November 2007 advising lease documentation was completed and approved, and the second on 6 December 2007 to disregard the first letter until further notice.

On 18 February 2013 TIL advised Mr Moehau of the completion of the lease transfer documentation and requested the outstanding balance of TOP$435,000 from Epic within 14 days.

However, after the deadline no payment was made and TIL made the decision that the lease and payment was forfeited despite Mr Moehau’s request for an installment plan to be able to pay out the balance.  

TIL did not re-tender the lease but decided to transfer it to TAMA (a public enterprise) on 5 June 2013 with cabinet approving the transfer on 1 July 2013.

On 12 July 2013, TIL was removed from the companies register and it ceased to trade.

On 24 June 2015, the Minister of Public Enterprises, purporting to act on behalf of TIL, signed an assignment of the lease to TAMA.

Ruling

Lord Chief Justice Paulsen said that it was not clear if TIL advised Mr Moehau and Epic of the termination of the agreement.

He said it was not straightforward whether “TIL was entitled to terminate the agreement” by calling upon Epic on 18 February 2013 to settle the agreement within 14 days and if TIL had the right to terminate when Epic did not settle according to certain clauses in their agreement.

Lord Chief Justice Paulsen said that he was “satisfied that the plaintiffs have an undischarged claim against TIL of sufficient merit“.

He ruled an order under section 338(1) of the Companies Act for the restoration of TIL to the register of companies.