Aure v Sai Business Group Incorporated [2008] PGNC 55; N3349 (22 April 2008)

N3349

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS. NO. 134 OF 2004

BETWEEN

PHILIP AURE & SIMON KAMA
Plaintiffs

AND

SAI BUSINESS GROUP INCORPORATED
Defendant

AND

MAINLAND HOLDINGS LIMITED
Garnishee

Lae: Kirriwom, J
2008: 8 February & 22 April

JUDGMENT – Recovery – Enforcement of Judgment – Attachment – Garnishee Notice – Leave to issue – Application opposed by Garnishee – Whether Garnishee’s resistance proper – Whether dividend payable is attachable by way of garnishee action – National Court Rules, Order 13, rules 53, 55, 56 & rule 62.

Cases cited:
No cases cited in the judgment.

Counsel:
K. Gamoga, for the Plaintiff/Judgment Creditor
No Lawyers, for the Defendant/Judgment Debtor
E. Mambei, for the Garnishee

RULING

22 April, 2008

1. Kirriwom, J: This is an application by the Plaintiffs, Judgment Creditors, for leave under Order 13 rule 56 of the National Court Rules to issue a garnishee notice on the garnishee, Mainland Holdings Limited, for the attachment of debts due to them from the Defendant/Judgment Debtor, Sai Business Group Inc.

2. The Defendant Judgment Debtor was not represented in this application but the garnishee was represented by its lawyer who strongly opposed this application. It is not certain and it was not clearly expressed as to whose interests was the garnishee protecting by mounting this strong resistance to the application given that the garnishee itself has no direct interest in this proceeding.

3. This action was commenced against the Defendant in February 18, 2004 for goods ordered, paid for in advance and not delivered in full. The Defendant failed to defend the action and summary judgment was entered against it in the sum of K32, 763.00 with interest at 8%.

4. Since the entry of summary judgment, the Defendant ran into financial and other difficulties and in the end could not meet its financial obligations and debts were incurred. Every attempt to secure this payment from the Defendant seemed futile especially when the Defendant was embroiled in court battles over leadership struggle between different groups of people holding shares in the group and in reality the group had become defunct. The Defendant is the single largest shareholder in Mainland Holdings Ltd a prosperous company and an icon of Morobe from whom it receives substantial payments in dividends when the company announces its profits from its various operations including coffee mill, poultry and flour mill, electrical, crocodile farm, retail outlets and service stations.

5. For some time pursuant to Court orders, payments of these dividends were withheld due to the on-going leadership tussle between the different factions. At one point in time the Defendant had some monies held in the Registrar’s Trust Account. Records in the Court file show that the Plaintiff tried to attach this money by way of garnishee proceeding but there is no evidence of what became of this application. This is another of a similar application that the Plaintiff is pursuing upon becoming aware by chance that the Defendant has suddenly received payments of dividends from the garnishee after a long time.

6. Under O. 13 rule 56 application for leave to issue garnishee notice is ordinarily pursued ex parte as sub rule (2) states that a judgment creditor may move for leave under sub-rule (1) without filing or serving notice of motion. However, in this case motion was filed and served and the garnishee caused an appearance through its lawyer who strongly opposed the leave sought by the Judgment Creditor contending that there were no debts owed by the Garnishee to the Judgment Debtor for the Judgment Creditor to attach. He argued that dividends payable to a shareholder are not attachable, only bank accounts and wages or salaries can be garnisheed by the Judgment Creditor. Mr Mambei strongly argued that rule 53 clearly defined what Garnishee means in law. It means a person from whom a Judgment Creditor claims that a debt is due or accruing to the Judgment Debtor. He argued that dividend is not a debt that can be attached.

7. In respect of this application, there are three things that the Court must satisfy itself of for the requirements of leave sought:

1. there is a Debt owing to the Plaintiff by the Defendant,

2. the Debt has not been settled,

3. the Defendant is owed money by the Garnishee.

8. In this case I am satisfied that the Plaintiff is owed money by way of Judgment Debt in the sum of K32, 763.00 by the Defendant. I am also satisfied that this Debt remains unsettled and every day that passes it is escalating in interests charges at K7.18 per day which has to date accumulated over K10,000.00 in interests over the last four years.

9. The only question that remains for me to answer is whether the garnishee owes any money to the Defendant that the Plaintiff can attach by way of a garnishee order. The Defendant/Judgment Debtor had prospered in its business ventures from dividends paid to it annually by the garnishee over the years and it was once a profitable and wealthy local entity. During that era the Defendant made a financial commitment with the Plaintiffs for supply of roofing sheets and incurred debts when it short-supplied after payments had been received in full.

10. The Judgment Debtor cannot run-away from its liability forever and the Garnishee cannot protect the Judgment Debtor and prevent the Judgment Creditor from claiming any monies due from itself to the Defendant/Judgment Debtor in whatever description those monies are disbursed in ultimately. The argument raised by Mr. Mambei may have some merits which for now in my view is premature. It can only be raised after leave had been given and the garnishee notice is issued and served and the Garnishee can now take steps to dispute liability under rule 62 order 13 of the National Court Rules. The process in the recovery of debts has not reached that stage. The nature of this application clearly gives the court a very narrow scope in which it must exercise its powers which is described above.

11. In my view, whatever the description is given to the money that is paid to the Defendant/Judgment Debtor by the Garnishee annually or from time to time when such conveyance is made, it is an income which is like salary or wages due and paid to someone to have and to spend at will that is attachable once received. Leave sought is therefore granted to the Judgment Creditor/Plaintiff to issue and serve garnishee notice upon the Garnishee Mainland Holdings Limited.

12. I order costs of the application against the Garnishee.

__________________________________________

Gamoga & Co Lawyers: Lawyers for the Plaintiff/Judgment Creditor
No Representation for the Defendant/Judgment Debtor
Rageau Manua & Kikira Lawyers: Lawyers for the Garnishee