J's Motors Pty Ltd v Rangip [1997] PGNC 74; N1588 (20 June 1997)

Unreported National Court Decisions

N1588

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

WS 27 OF 1993
BETWEEN
J’s MOTORS PTY LTD - PLAINTIFFS
AND
TOM RANGIP - DEFENDANT

Mount Hagen

Akuram J
21 May 1997
20 June 1997

CONTEMPT PROCEEDING FOR NON-PAYMENT OF JUDGMENT DEBT - section 169(1)(b) -meaning of - INSOLVENCY Act, Ch.253 - dismissed.

Upon application for judgment debtor to be proceeded with contempt charges pursuant to section 169 (1)(6) of the Insolvency Act, Ch. 263, whilst the judgment debtor has already been declared insolvent.

Held:

1. Any proceedings against a judgment debtor pursuant to section 169(11)(6) can be taken any time after presentation of an insolvency petition against a debtor but not after a debtor has been declared an insolvent.

2. The present contempt proceedings are not proceedings that was in progress at the commencement of the insolvency petition or commenced during its continuance but relates to proceedings that has been commenced and concluded.

3. Application for contempt proceedings is therefore refused with costs.

Counsel:

D Poka for Applicant/Plaintiff

T Rei for Respondent/Defendant

20 June 1997

AKURAM J: The Plaintiff is seeking orders by way of motion of contempt of Court by the Respondent/Applicant.

The brief history of this Application is that the Plaintiff took out legal proceedings against the Defendant claiming damages in the sum of K23,168.60 for services rendered and a default judgment was entered in the sum of K21,068.28 with interest and costs on the 24th May 1994. Defendant has not settled the judgment debt which accumulated with interest and costs up to about K71,706.28. Meanwhile there were other similar court proceedings against the Respondent/Defendant and orders made but Respondent/Defendant could not meet the judgment debts. One of the Creditors - American Express International - took out insolvency proceedings against Respondent Defendant in MP. No. 482/95 and on the 27/10/95 Respondent/Defendant was adjudged insolvent pursuant to Insolvency Act, Ch. 253. A creditors meeting was called on the 22nd of November 1995 but a trustee was not elected. That process is still pending.

The Applicant/Plaintiff in this proceedings did attend the meetings of 26-2-97 and 28-2-97 and is therefore aware of those Insolvency proceedings.

However on the 21st March 1997, Applicant/Plaintiff or Judgement creditor filed a notice of Motion that Judgement/Debtor be charged for contempt for not settling his debt within reasonable time. And again on the 8th May 1997, Applicant/Plaintiff or Judgment/Creditor filed a further notice of motion seeking orders that the Electoral Commission be restrained from accepting the nomination of the Respondent on the ballot paper for the Mul/Baiyer Electorate in the 1997 for reasons that he was adjudged insolvent. The Applicant/Plaintiff or judgment creditor filed three affidavits in support of his motions and the Respondent/Defendant or judgement debtor filed one affidavit in reply.

The Counsels have resolved that the second motion of 8th May 1997 be adjourned generally and that they will argue on the first motion of 21st March 1997. I have heard oral submission from the Plaintiff/Applicants Counsel and obtained written submissions from the Respondent/Defendant’s Counsel.

SUBMISSIONS

Counsel for Applicant/Plaintiff submitted that Respondent/Defendant had been declared bankrupt. There had been meetings to appoint a trustee and sort out the method of payment of his judgment creditors (about four) including the Applicant/Plaintiff.

The issue of appointment of the trustee is still in the hands of the Assistant Registrar National Court. He submits that Respondent/Defendant has been declared bankrupt, that no trustee has been appointed and that settlement of creditors is insecure or uncertain. He concedes that when a person is declared bankrupt, a trustee is appointed to deal with his affairs but where there is none appointed, who deals with his affairs. In absence of any trustee, Court to enforce the judgment debt pursuant to section 169 (1) (b) of Insolvency Act, Ch. 253, which reads:

“169. Actions against insolvents.

(1) At any time after the presentation of a petition against a debtor, the Court may:

(a) restrain further proceedings in any action, suit, execution or other legal process against the debtor in respect of a debt provable in insolvency; or

(b) allow any such proceedings, whether in progress at the commencement of the insolvency or commenced during its continuance, to proceed on such terms as the Court thinks just.

(2) At any time after the presentation of a petition against a debtor, the Court may also:

(a) appoint a receiver or manager of the property or business, or any part of the property or business, of the debtor; and

(b) direct immediate possession to be taken of the property or business or of any part of it.

(3) An application under this section may be made ex parte.” (emphasis added).

He submits that this application is commenced under section 169(1)(b) and that the only question now for Court to decide is whether Mr Rangip (Judgment debtor) can be proceeded against in the absence of a trustee. There is also no official trustee appointed by the Minister under section 5 of Insolvency Act. There is therefore no trustee nor an official trustee appointed. This is why this action is brought under section 169(1)(b) of the Act and therefore the Court has power to deal with contempt proceedings.

On contempt, Counsel submitted that this is a case where contemnor failed to comply with a court order - being a judgment debt. This Court also has broad powers under section 155(4) of the Constitution to make such orders and also ad hoc orders. He then submitted that this Court make appropriate orders for Mr Rangip to be brought to court to explain why he should not be dealt with.

Mr Rei for the Respondent/Defendant or judgment debtor submitted that this court cannot deal with this proceedings pursuant to section 169(1)(b) as it only applies to situations where a party is not declared insolvent and thus applicant is barred. The applicant is reviving this case despite the fact that Respondent is declared insolvent.

Section 169(1)(b) in my view, says:

“at any time after presentation of a petition against a debtor”,

but not after the debtor has been declared insolvent. That is once the insolvency petition has been adjudicated and debtor has been declared insolvent, the court has no authority to go further and take any other proceedings against the debtor. The only exception is as allowed by section 168 where the insolvent may continue certain actions in his own name and for his own benefit but any proceeds from that action, if he is successful, is to go to the trustee by order of the Court. Subsection (1)(b) of Section 169 also stipulates that any such process must be proceedings that was in progress at the commencement of the insolvency petition or commenced during its continuance but does not refer to proceedings which has commenced and concluded and orders made but not complied with as in this case. That is the current initial proceedings commenced in 1993 and concluded in May 1994. This present Interlocutory proceedings are not new and to be regarded as being in progress at the commencement of the insolvency proceedings nor had commenced during the continuance of the Insolvency proceedings.

In view of the above interpretation of section 169(1)(b), I am of the view that judgment creditor or Applicant/Plaintiff cannot bring these contempt proceeding against the Respondent/Defendant or judgment debtor.

There is another matter which I like to point out that support my findings. Under Order 13, Rule 2, judgment for payment of money may be made by any of the following means:

(a) Levy of property; or

(b) Attachment of debts; or

(c) Changing order; or

(d) Appointment of a receiver; or in a case in which Rule 6 applies but subject to Rule 8,

(i) Committal; and

(ii) Sequestration.

Rule 6 requires attendance of judgment debtor or any person to give evidence or produce any document or thing, or answer or charge of contempt or for any other purpose. If the person defaults in appearance, Court may issue a Warrant for his arrest. The provisions of sub-rule (2) does not affect the provisions of Order 14 Division 6 concerning contempt proceedings.

In the present case, in fact, there was proceedings in this Court which went before His Honour justice Injia on 10/3/95 where he made the following orders:

THE COURT ORDERS that:

1. TOM RANGIP of Mount Hagen shall attend:

(a) before the Assistant Registrar;

(b) at the National Court at Mt Hagen;

(c) on Wednesday the 5th day of July 1995 at 9:30 am and until he is excused from further attending;

(d) for the purpose of being examined as to the questions:

(i) whether any and, if so, what debts are owing to him; and

(ii) whether he has any and, if so, what other property or means of satisfying the judgment or order by which he is bound; and

(iii) as to the whereabouts of the goods which he is bound, pursuant to the judgement which has been entered against him, to deliver to the Plaintiff, or as the case may be.

2. TOM RANGIP shall attend and produce all documents or things in his possession, power or custody relating to those questions.

3. He need not attend or produce any documents on any day unless his reasonable expenses have been paid or tendered to him.

And on the 5th day of July 1995, no appearance of all parties, matter was adjourned to 20/7/95. On 20th July 1995, no appearance of Mr. O’Connor for Applicant/Plaintiff and Mr. Kandakasi so matter was adjourned sine die. In essence, those proceedings are still pending and can be resurrected by the Applicant/Plaintiff anytime. Those proceedings have not been exhausted yet.

In view of above findings, I refuse the orders sought in this motion and therefore dismiss it with costs against the Applicant/Plaintiff.

Lawyer for the Plaintiff: Milner & Associates Lawyers

Lawyer for the Defendant: