Bromley v Finance Pacific Ltd [2001] PGNC 46; N2156 (4 June 2001)

N2156

PAPUA NEW GUINEA

[IN THE NATIONAL OF JUSTICE]

OS 285 of 2001

BETWEEN:

KENNETH WINSTON BROMLEY
Plaintiff

AND:

FINANCE PACIFIC LIMITED
First Defendant

AND:

THE PRIVATISATION COMMISSION

Second Defendant

AND:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

Third Defendant

Waigani : SHEEHAN, J.
2001 : 9, 16, 31 May & 4 June

INTERLOCUTORY RELIEF – application for continuation of orders restraining disposition of assets.

Counsel:

Mr G. Sheppard & Mr B. Andrew for the Plaintiff

Mr I. Molloy & Mr D. Hartson for 2nd Defendant
Mr J. Kawi for the 3rd Defendant

RULING

Before the Court is an application for extension of the interlocutory orders of 7 May 2001 which effectively restrain the Defendants from liquidating and or disposing of former assets of the 1st Defendant.

The Plaintiff by proceedings commenced in 2000 has obtained judgement in this Court against the 1st Defendant in the sum of 1.5 million Kina but with the privatization of that Defendant by a declaration on 20 March 2001 under the Privatization Act 1999, all assets of 1st Defendant were vested in the 2nd Defendant. This leaves the 1st Defendant without the means to meet that judgement and the Plaintiff without the means to enforce it.

The Plaintiff has now commenced these proceedings seeking inter alia declarations that he may enforce the judgement against the holder of those assets, the 2nd Defendant. The application for interim orders restraining further disposal of the assets pending trial, is opposed by the 2nd and 3rd Defendant. There has been no appearance for Finance Pacific the judgement debtor and 1st Defendant, nor has any appearance been filed for that Defendant.

For the Court to be satisfied that the Plaintiff should have the interim relief sought, he must show an arguable case, that is, a serious question to be tried. He must also show that the balance of convenience lies in favour of such a course.

Serious question to be tried.

The Plaintiff acknowledges that by the declaration under s. 14 of the Privatization Act 1999 the ownership of the assets of Finance Pacific is now vested in the 2nd Defendant, the Privatization Commission. He argues therefore that the Commission stands in place of Finance Pacific and is liable for the judgement debt. He argues that not withstanding there is no specific provision for transfer of assets and liabilities under that Act, it must be implied, otherwise the Act would be authorising by such legislation a seemingly fraudulent disposition of property - a conclusion not to be arrived at without clear and specific language in the statute. Such language does not appear in the Act.

Alternatively it is argued, if the Privatization Act does so authorise a disposition of assets as has been made but without liabilities as well, then such legislation must be seen as unconstitutional under s. 53 of the Constitution (relating to rights to property) and/or proscribed by s. 41 of the Constitution which provides for laws found to be harsh or oppressive.

In response Counsel for the 2nd and 3rd Defendant argue that the interlocutory relief sought falls within the ambit of Mareva injunctions, where the objective is to preserve assets from disposition beyond the jurisdiction of the Court and thereby defeat any successful claim. Since the privatization of Finance Pacific involves disposition of assets within jurisdiction – assets acknowledged to be around 70 to 100 million kina or so, there can be no arguable case and the balance of convenience lies in refusal as well.

Counsel for the 2nd Defendant maintained that the Privatization Act was constitutional, clear and brooked no other interpretation than that liabilities did not pass on privatization. Thus the Plaintiff could not seek recompense from 2nd Defendant. Further, the Plaintiff had offered no evidence or serious argument for fraud on the part of the 2nd Defendant. Counsel for 3rd Defendant the State agreed and pointed to the public interest in the speedy disposition by privatization of the assets that has been transferred.

In this application there is no determination of the factual or legal issues, merely an assessment of whether the case put forward for the relief, raises a serious question to be tried. I am satisfied that they do.

The bald facts say that a judgement creditor is unable to enforce his judgement because the judgement debtor’s assets – well able to meet such a judgement – have been transferred to another. While that transfer has been made pursuant to an Act of Parliament there is at least an arguable case in the Plaintiffs contention that Parliament did not intend by that Act to incidentally totally override centuries of commercial certainty, that debtors can not dispose of their assets to defeat creditors.

That argument is not decisive, no such finding is here made. The arguments by the Defendants are equally cogent, but not sufficient at this preliminary stage, in this interlocutory application to obliterate the whole of the case proposed by the Plaintiff.

Balance of convenience

As to the balance of convenience the Defendants say that since there is no disposal of assets beyond jurisdiction, no order of restraint is necessary. But, it is clear that the purpose of the 2nd Defendant, and indeed the State is for the disposal of those assets, and disposal upon terms and conditions over which the Plaintiff and the Court may exert no control. Disposal of the assets to another or others can only further complicate the present situation. I am satisfied the balance lies in granting an extension of the orders.

Lawyer for the Plaintiff - Maladina Lawyers
Lawyer for the 1st & 2nd Defendant - Blakes Dawson Waldron
Lawyer for the 3rd Defendant - Solicitor General