Department of Works v In re International Construction (PNG) Ltd (in Liquidation) [2008] PGNC 293; N5896 (17 July 2008)

N5896

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

'In The Matter Of the Companies Act 1997'

MP 205 OF 2006

BETWEEN;

DEPARTMENT OF WORKS
Plaintiff

AND:

IN THE MATTER OF INTERNATIONAL
CONSTRUCTION (PNG) LIMITED
(In Liquidation)
Defendant

Waigani: Hartshorn, J.
2008: May 20th, July 17th

COMPANIES ACT -Application to set aside Court Order and for Directions by creditor and non party to proceedings

Cases cited:

Tarere v. ANZ Bank [1988] PNGLR 201
Bank of Papua New Guinea v. Muteng Basa [1992] PNGLR 271

Counsel:

Mr. L. Putupen, for the Dept. of Works and the State
Mr. I. R. Shepherd, for the Liquidator

17th July, 2008

1. HARTSHORN, J: The Department of Works as a creditor and the State as principle (State), apply for certain orders concerning the liquidation of International Construction (PNG) Ltd (In Liquidation) (ICL). This court appointed Mr. James Kruse as liquidator of ICL on 19 November 2007.

2. On 29 February 2008, this court made certain ex parte orders (Asset Order) which permitted the liquidator to recover 8 containers of bridge components that the liquidator contended were the property of ICL and are now vested in him.

3. Pursuant to a contractual arrangement between ICL and the State before a liquidator was appointed, ICL was to supply the bridge components to the State.

4. The orders sought by the State concern these bridge components. The first order sought by the State in its Further Amended Notice of Motion dated 30th April 2008 (motion), is that the Asset Order be set aside for want of regularity and for abuse of court process pursuant to s.332(1)(b)of the Companies Act 1997.

5. Section 332(1)(b) relevantly provides that:

"On the application of......or with leave of the Court, a creditor, the Court may confirm, reverse, or modify an act or decision of the liquidator."

6. Section 332(1)(b) does not give this court the power to set aside a court order for want of regularity or for abuse of court process. A creditor is also required to obtain the leave of the court before he is able to seek relief under that section.

7. As the State would not have been able to obtain the relief that it sought under s.332(1)(b) even if it was granted leave, leave was refused.

8. As to the order sought in paragraph 2 of the motion that the Asset Order be set aside for want of regularity and abuse of court process pursuant to Order 12 Rule 8(2)(b) or subrule (4) of the National Court Rules, Order 12 Rule 8(2)(b) provides that where judgment has been entered pursuant to a direction given in the absence of a party, whether or not the absent party had notice of trial or of any motion for the direction, the Court may, on terms, set aside or vary a judgment.

9. The written submissions on this point on behalf of the State rely upon cases where the person who was absent when the subject order was made was a party to the particular proceedings. Here, the State is not a party to the proceedings. The application for the Asset Order was made by the liquidator, as he was entitled to do, in the proceedings that had been commenced for and in which, a liquidator was appointed to ICL. The application was made by summons pursuant to the Companies Rules.

10. Counsel for the State did not cite any authority for the proposition that 'party' in Order 8 Rule (2)(b) includes someone other than a person joined to the particular proceedings.

11. Although the word 'party' is not defined in the National Court Rules, it is used to indicate a person who was a plaintiff, defendant, cross claimant or cross defendant. Examples of these are Order 5 generally and Order 10 Rules 13(2)(a) and 14(1). In those Rules statements are made such as, "Where the only parties are one plaintiff and defendant" and "Where the plaintiff is the beginning party". It is apparent that 'party' in those Rules means those joined in the proceedings. Similarly in Order 12 Rule 8(3)(a) the words "whether or not the absent party is in default of giving a notice of intention to defend or otherwise in default", appear to mean a person joined to the proceedings, otherwise how could a person be in default of giving a notice of intention to defend?

12. In the absence of any authority being cited to the contrary, I am of the view that as the State is not a party to the proceedings it cannot avail itself of relief under Order 12 Rule 8 (2)(b) or subrule (4) National Court Rules.

13. As to the order sought in paragraph 3 of the motion that the Asset Order be set aside as it is harsh, oppressive and unfair pursuant to s.41of the Constitution; in my view there is no merit in the argument contended on behalf of the State.

14. The Asset Order was granted to the liquidator of ICL. He was exercising his rights pursuant to s.298(1)(a) of the Companies Act and enforcing that right under s.332 of the Companies Act as liquidator to take custody and control of all of the assets of the company to which he has been appointed liquidator.

15. The exercise of those rights to my mind, does not impose upon the constitutional rights of the State. The cases of Tarere v. ANZ Bank [1988] PNGLR 201 and Bank of Papua New Guinea v. Muteng Basa [1992] PNGLR 271, are 2 of numerous cases that have held that s. 41 Constitution is not applicable or available where the actions about which there is complaint, do not impinge on constitutional rights.

16. Accordingly the order sought under paragraph 3 of the motion is refused.

17. In the submissions made by counsel for the State, it was stated that the orders sought in paragraphs 4, 5 and 6 of the motion follow on and are consequential from the orders sought in paragraphs 1, 2 and 3. Given that I have refused to grant any of the orders sought in paragraphs 1, 2 and 3, the orders sought in paragraphs 4, 5 and 6 are also refused.

18. The order sought in paragraph 7 of the motion is purportedly made pursuant to s. 332(1)(a) Companies Act. As mentioned previously, the State as a creditor requires leave to seek relief under that section. Leave was not granted as mentioned previously and so the order sought in paragraph 7 of the motion is refused.

19. The order sought in paragraph 8 of the motion is conditional upon the liquidator becoming unreasonable. It is not appropriate for this court to consider making an order in such circumstances, especially when there is no evidence as to when the conditional event will or is likely to occur. The order sought in paragraph 8 of the motion is refused.

20. In conclusion, all of the orders sought in the motion are refused. The costs of and incidental to the hearing of the Further Amended Notice of Motion of the Department of Works and the State are to be paid by the State to the Liquidator.
___________________________________________________________
Greg Manda Lawyers: Lawyers for the Department of Works and the State
Blake Dawson Lawyers: Lawyers for the Liquidator