Loha Customs & Forwarding Ltd, In re [2016] PGNC 47; N6242 (1 March 2016)

N6242

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

MP 16 of 2013

IN THE MATTER OF THE
COMPANIES ACT 1997

AND

IN THE MATTER OF LOHA
CUSTOMS & FORWARDING
LIMITED

Waigani: Hartshorn J.
2016: February 17th & March 1st

PETITION to appoint a liquidator – Sections 335, 336 (1) and (2) Companies Act considered

Counsel:

Mrs. M. Saroa, for the Petitioner
Mr. R. Obura, for the Company

1st March 2016

1. HARTSHORN J: The petitioner Vitis Industries Ltd (Vitis) petitions that Loha Customs & Forwarding Ltd (Loha Customs) be placed into liquidation by the appointment of a liquidator on the ground that Loha Customs is unable to pay its debts as they become due in the ordinary course of business. The petition is opposed by Loha Customs on various grounds.

2. It is not in dispute that this Court dismissed the amended notice of motion of Loha Customs filed 4th May 2015 on 15th May 2015. That amended notice of motion sought amongst others that Vitis' statutory demand issued to Loha Customs be set aside pursuant to s. 338 (4) Companies Act. That relief sought was refused as the application to set aside was made significantly out of the time prescribed by s. 338 (2) Companies Act for the making of such an application.

3. There is no evidence before the court that the order dismissing the amended notice of motion has been either successfully set aside or appealed.

4. Pursuant to s.335 Companies Act, unless the contrary is proved, the company is presumed to be unable to pay its debts in the ordinary course of business if it fails for a period of 30 days or more to comply with a statutory demand for payment of debt.

5. Here, the statutory demand for payment of debt was served on 8th April 2013. Section 336 (1) Companies Act provides that on an application to the Court for an order that a company be put into liquidation, evidence of failure to comply with a statutory demand is not admissible as evidence that the company is unable to pay its debts as they become due in the ordinary course of business unless the application is made within one month after the last date for compliance with the demand.

6. The last date for compliance with the statutory demand was 8th May 2013. The petition of Vitis for Loha Customs to be placed into liquidation was not filed until 2nd September 2013. It should have been filed before 8th June 2013 if Vitis wished to rely upon evidence of failure to comply with a statutory demand as evidence that Loha Customs is unable to pay its debts as they become due in the ordinary course of business.

7. Section 336 (2) provides that s. 335 does not prevent proof by other means that a company is unable to pay its debts as they become due in the ordinary course of business.

8. In this instance, Vitis relies upon various affidavit evidence. None of that evidence is to the effect that Loha Customs is unable to pay its debts as they become due in the ordinary course of business. Mr. Sergey Mosin deposes that amongst others that Loha Customs has not satisfactorily shown that its assets are greater in value than its liabilities and that it can pay its debts.

9. It is for Vitis to prove on the balance of probabilities that Loha Customs is unable to pay its debts as they become due in the ordinary course of business. It is not for Loha Customs to prove otherwise particularly as there is no admissible evidence that the failure by Loha Customs to comply with a statutory demand is evidence that it is unable to pay its debts as they become due in the ordinary course of business.

10. As the ground upon which Vitis seeks to have Loha Customs placed into liquidation is that it is unable to pay its debts as they become due in the ordinary course of business, but evidence of failure to comply with the demand as evidence of an inability to pay debts as they become due in the ordinary course of business is inadmissible, and Vitis has not given any other evidence of Loha Customs' inability to pay its debts as they become due in the ordinary course of business, Vitis has failed to prove its case.
Consequently the petition should be dismissed.

Orders

11.

a) The petition is dismissed.

b) The costs of and incidental to the petition shall be paid by the petitioner to Loha Customs & Forwarding Ltd, to be taxed if not agreed.

________________________________________
Nelson Lawyers: Lawyers for the Petitioner
Obura Lawyers: Lawyers for the Company