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Corporate Authority to commence legal proceedings - what entities need to know
- Category: Company Law/Commercial Law
- Date: 06/07/2026
- Author: Rachael Morea, Lawyer
Case: JV PNG Investment Construction Ltd v Samson [2026] PGSC 63; SC2906 (18 June 2026)
Summary:
In the above Supreme Court decision handed down on 18 June 2026, the Court ruled that where proceedings are brought on behalf of a corporate entity and when corporate authority is challenged, to satisfy the court, proof of corporate authority must be shown.
The case arose from a dispute over competing State Leases and the cancellation of the Appellant’s title. At the substantive hearing, an objection was raised that there was no evidence showing the company’s board had authorised the proceedings.
It had been settled in the case Botike & Anor v Setao Investment Ltd SC2862 (23 March 2026) that the National Court Rules and Supreme Court Rules do not require evidence of a board resolution as a precondition to commence or maintain legal proceedings. The absence of the board resolution does not automatically render proceedings incompetent.
In the current case, the appellant’s corporate authority to commence legal proceedings was challenged. The court built upon the principle established in Botike & Anor v Setao Investment Ltd, and developed it further to place evidentiary burdens on corporate litigants when their corporate authority is questioned.
Now, even though corporate authority is not a precondition to commencing legal proceeding, when it is challenged in court, evidence needs to be provided that proper corporate authority was obtained to commence legal proceedings.
In JV PNG Investment Construction, because the Appellant failed to provide evidence of the authority or seek an adjournment to address the issue, the trial judge dismissed the proceedings, a decision which was upheld on appeal.
Key Takeaways:
- Early Action: Prior to commencing legal proceedings corporate entities should pass a resolution approving the proceedings.
- No Automatic Precondition: A board resolution is not automatically required to commence or maintain court proceedings.
- Authority Can Be Challenged: Corporate standing and authority to litigate can become a critical live issue if specifically contested by the opposing party.
- Constitutional Clarity: Corporate entities can include in their constituent documents who holds corporate authority to commence proceedings and the process.
- Judicial Discretion: Courts retain broad powers to control their processes and will dismiss incompetent actions if authority cannot be substantiated.
Keywords: Corporate Authority, Board resolutions, Constituent Documents.
Publications
News
PNG Sets the Foundation for a Modern Rail Era with the Launch of the Railway Legal Framework Consultancy
The Department held its Prestart Meeting for the Railway Legal Framework Consultancy Contract today. International law firm Leahy Lewin Lowing Sullivan (LLLS) has been awarded the contract to draft the legal framework for a railway system for Papua New Guinea.
The Secretary for Works and Highways, in his opening remarks, stated that the Railway Project reaffirms the Government’s commitment to diversifying the country’s transport system. Initially, the introduction of a modern railway network will traverse the Markham stretch of the Highlands Highway, starting from the main port in Lae and terminating at Watarais. This will significantly reduce traffic volume and the associated stress imposed on the road pavement. Once fully functional, this mode of transport will support both the mining and agricultural industries. Secretary Holemba emphasized the importance of establishing a clear policy framework and enabling legislation to guide the development of the railway system. In a broader perspective, it is about setting the stage for collaboration between government, technical advisors, and legal partners.
Michael Sullivan, a Managing Partner at LLLS, speaking at the occasion, provided positive insights on the need to extend the land transport system. He drew attention to pre-independence days, noting that railway is not new to Papua New Guinea. However, he highlighted that today’s challenges are compounded by two major factors: land compensation and security.
The Railway Development Program Office within the Department of Works & Highways is leading this initiative and has been tasked with delivering the program through a phased implementation plan with distinct milestones and deliverables. This is key not only to ensuring tangible outcomes but also to establishing the legal and institutional foundations for Papua New Guinea’s first railway transport network.
