THE COURT REPORT

Curtain Bros Litigation Deals Blow To Gummi Fridriksson and Paga Hill Estate

Commentators and academic experts have repeatedly sounded warning sirens over the proposed ‘K3 billion’ Port Moresby luxury property development dubbed “Paga Hill Estate”. It is spearheaded by flamboyant Icelandic-Australian businessman Gummi Fridriksson and the Paga Hill Development Company (PNG) Limited.

They have good reason to be skeptical.

Since the 1990s the founder and CEO of Paga Hill Development Company, ‘Gummi’ Fridriksson has been chased from court to court by angry contractors.

In Hong Kong a luxury hotel, and serviced apartment block, both litigated in an attempt to secure payment from Fridriksson for substantial bills he is alleged to have skipped out on.

Image: The South China Morning Post reports on multiple litigation again Fridriksson in Hong Kong

When Fridriksson arrived in Papua New Guinea it did not take long for further trouble to erupt.

Fridriksson’s company Destination PNG was awarded a premium contract by the government to produce a book marking 20 years of independence in PNG. Sean Dorney claims the contract was four times the market price. Despite the premium bounty it received, Destination PNG was chased by numerous subcontractors who claimed they were not paid for their work.

Image: Destination PNG received wide-spread criticism in the Australian and PNG media

Then in 2006 the property development firm founded and led by Fridriksson, Paga Hill Development Company (PNG) Limited, was accused of being in substantial rental arrears by the Public Accounts Committee. Despite an illegal rent reduction made by a Lands Department official, the Public Accounts Committee claimed the company had failed to keep up its rental payments over prime state land it had leased at Paga Hill.

The Public Accounts Committee  also alleged Рwhich documentary evidence presented on PNGi supports Рthe land was originally secured through an unlawful state lease.

However, unlike the private sector, the government has proven much more forgiving. Paga Hill Development Company (PNG) Limited has been allowed to retain their lease over Paga Hill, at a discounted rate of rent.

This generous posture allowed the company to forcefully evict NHC residents at Paga Hill, along with communities along the harbour foreshore. Many of the demolished homes notably lay outside the state lease perimeter.

While it was claimed that the K3 billion Paga Hill Estate would be the centre-point of APEC 2018, it wasnt to be. The project lies largely moribund, another promise so far unfulfilled, echoing the ill fated Ela Beach fun park, which Fridriksson also led on.

It appears investors are more hesitant to get into bed with the team behind Paga Hill Estate than the government.

Their caution will only be heightened further now it is public record that Paga Hill Development Company (PNG) Limited is being sued by the construction heavyweight Curtain Bros.

Image: The litigation is now archived on the PACLII website

Curtain Bros statement of claim reports that the Paga Hill Development Company contracted them to engage in reclamation, excavation and road construction works at Paga Hill in December 2014.

The value of the proposed work was K10 million.

Curtain Bros alleges that the job was completed, but Paga Hill Development Company only paid them K100,000, a mere 1% of the contract price.

This characterisation chafes against the outward image projected by the Paga Hill Development Company of an affluent property developer, capable of pulling together the capital needed to build a 5 star hotel, a major marina, and luxury residential and commercial accommodation.

Screenshot: A pipe-dream? A graphic projection of the Paga Hill Estate, appearing on https://www.pagahill.com/

The Public Accounts Committee has offered a more sober appraisal of the company’s credentials: ‘The Land Board could not have been reasonably satisfied that the applicant could raise K.300 million in five years. Indeed, the Committee finds that the Lessee cannot pay the Land Rental and has sought relief from that obligation, much less fund a development of the magnitude required’.

It appears from Judge Hartshorn’s decision that Paga Hill Development Company wishes to keep the dispute with Curtain Bros out of the courts, claiming it is a minor matter more suitable for arbitration.

Curtain Bros disagrees K9.9 million is a minor matter. The court has sided with Curtain Bros.

While eyes will be on the final outcome of this litigation, it will almost certainly add ice to the already cold feet of investors.

With a founder and CEO who has an unenviable record of courting litigation and condemnation from the Public Accounts Committee, Auditor General’s Office and the COI into the Department of Finance, the current litigation will make investors ask if leopards can change their spots.

Curtain Bros Papua New Guinea Ltd v Paga Hill Development Co (PNG) Ltd [2019] PGNC 251