Koitaki Plantations Ltd, In re [2017] PGNC 51; N6670 (23 March 2017)

N6670

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

MP 1 of 2017

IN THE MATTER OF THE
COMPANIES ACT 1997

AND:

IN THE MATTER OF
KOITAKI
PLANTATIONS LIMITED

Waigani: Hartshorn J
2017: 17^th, 23^rd March

Application to set aside a statutory demand and to dismiss the proceeding – s. 431(1)(c), s.432(a) Companies Act and Order 13 Rule 2(3) National Court Rules considered

Cases:

Bank of South Pacific Ltd v. South Pacific Timber Exports Ltd (2004) N2712
Boochani v. Independent State of Papua New Guinea (2017) SC1566
Cal Exports Ltd v. Camp Administration Ltd (2009) SC1050
Piunde Ltd, In re (2015) N5971

Counsel:
Mr. T. Noki, for the Petitioner
Mr. P.H. Pato, for the Company

23^rd March, 2017

1. HARTSHORN J: Koitaki Plantations Ltd (KPL) applies to set aside a statutory demand issued against it and to dismiss this proceeding. Charlton Ltd trading as Kookaburra Meats, the petitioner, (KB Meats) opposes the application.

Application to set aside the statutory demand

2. KPL applies pursuant to s. 338(1) Companies Act which provides for the court, on the application of a company, to set aside a statutory demand. The statutory demand sought to be set aside was purportedly served upon KPL on 8^th November 2016 and the notice of motion and amended notice of motion containing this application were not filed until 8^th and 9^th February 2017.

3. Section 338 (2) Companies Act provides that an application to set aside a

Statutory demand shall be made and served on the creditor, within one month

of the date of service of the demand.

4. To determine, “whether the application to set aside has been made within time requires amongst others, a consideration of whether, and if so, when the statutory demand was served in accordance with the requisite service

requirements.

5. The first ground upon which KPL relies is that it contends that the statutory demand was not properly served as required by s. 431 Companies Act.

6. The evidence given on behalf of KB Meats is amongst others that the statutory demand was served at the offices of Sinton Spence Chartered Accountants and upon a Mr. Jack Yange at the offices of NKA Chartered Accountants both on 8^th November 2016. The Registrar of Companies company extract for KPL as at 8^th February 2017 indicates that the registered office is Sinton Spence Chartered Accountants, 2^nd floor, Brian Bell Plaza, Turumu Street, Boroko. The address for service and postal address is Suite 8, 2^nd floor, Ori Lavi Haus, Turumu Street, Boroko. Further, the evidence is that at the time of the purported service at Sinton Spence Chartered Accountants a woman informed that they no longer acted for KPL, that they would not accept service, and that the office was located at Ori Lavi Haus, 2nd Floor.

7. KPL submits that service of the statutory demand was not properly effected as:

1. Jack Yange was not asked if he was an employee of NKA or KPL or his position and whether he was authorized to accept service;
2. Yange’s name was printed on the last page of the statutory demand. He did not sign it and “anybody could just write any name” it is submitted;

100. Yange is not an employee of KPL and NKA’s office is not KPL’s head office or principal place of business;

4. the statutory demand was served on a person, instead of being left at NKA’s office which was KPL’s registered office and address for service.

8. KPL submits further that if the statutory demand was served at NKA, why was the petition to liquidate KPL served at the offices of Sinton Spence, the affidavit of Mr. Stuart Fancy and affidavit of service of Augustine Ivarature were sworn and filed after KPL’s lawyers raised the issue of service by letter, the petition bears a note on the last page that it is intended to serve the petition at KPL’s registered office at Sinton Spence Chartered Accountants and that KPL was not aware that the statutory demand had been served until the Post Courier advertisement on 26^th January 2017.

Consideration

9. Section 337 (2) (c) Companies Act provides that a statutory demand shall be served on the company. Section 431 Companies Act concerns service of documents on companies in legal proceedings. A statutory demand is not a document in legal proceedings when it is issued and so s. 432 Companies

Act, which concerns the service of other documents on companies, applies.

10. Section 432 (a) Companies Act provides that:
    

“Notwithstanding the provisions of any other Act, a document, other

than a document in any legal proceedings, may be served on a company as

follows:-

(a) by any of the methods set out in Section 431 (1)(a), (b), (c), (d) or (f);”

11. Section 431 (1) (c) provides that:
    

“Notwithstanding the provisions of any other Act, a document, including a

Writ, summons, notice, or order in any legal proceedings may be served

on a company as follows:-

..............

(c) by leaving it at the company’s registered office or address for service;”
12. The unrebutted evidence as to service of the statutory demand on the office of NKA is that it was received by a person who called himself Jack Yange. This was at the offices of NKA Chartered Accountants on 2^nd floor, Ori Lavi Haus. The person Jack Yange, printed his name, the date and time and significantly, affixed the stamp of NKA Chartered Accountants on the receipt

copy of the statutory demand.

13. If the office of NKA Chartered Accountants is the registered office, or

address for service of KPL, then I am satisfied that the statutory demand was

served in accordance with s. 431 (1) (c) Companies Act as it was left at KPL’s

registered office or address for service with the person who called himself Jack

Yange, on 8 November 2016 at 10:08 am. Whether Jack Yange was asked if he

was an employee of NKA or KPL, and whether he was authorised to accept

service is not to the point. I note in this regard that there is no evidence to the

effect that Jack Yange is not an employee of NKA Chartered Accountants.

14. As to whether the office of NKA Chartered Accountants is the registered office or address for service of KPL:

1. the Registrar of Companies company extract as at 8^th February 2017

indicates that the address for service and postal address for KPL is Suite 8, 2^nd floor, Ori Lavi Haus, Turrumu Street, Boroko which is the offices of NKA Chartered Accountants. The registered office address however, is given as Sinton Spence Chartered Accountants, 2^nd floor, Brian Bell Plaza, Turumu Street, Boroko;

2. in a letter dated 31^st January 2017 from the lawyers for KPL, they inform

the lawyers for KB Meats that KPL appointed NKA Chartered Accountants to provide accounting services, “which means taking over from Sinton Spence Chartered Accountants on 12^th August 2016”;

100. the copies of the notice of change of registered office and address for

service in evidence show the new registered office and address for service of KPL from 19^th September 2016 as being Suite 8, 2^nd floor, Ori Lavi Haus, Turumu Street, Boroko.

15. From the above, I am satisfied that the address for service for KPL is Suite 8, 2^nd floor, Ori Lavi Haus, Turumu Street - the offices of NKA Chartered Accountants. As referred to, I am satisfied that the statutory demand was served in accordance with s. 431 (1) (c) Companies Act. That the statutory demand was also served at another address does not detract from it being properly served as mentioned. That the petition was purportedly served at another address also does not detract from the statutory demand being properly served. Consequently, the application to set aside the statutory demand on the ground that it was not properly served is refused.

16. I have found that the statutory demand was properly served and that service occurred on 8^th November 2016. As mentioned, s.338(2) Companies Act provides that an application to set aside a statutory demand shall be made and served on the creditor, within one month of the date of service of the demand. As the amended notice of motion and motion of KPL to set aside the statutory demand were not made within one month of the date of the service of the statutory demand, they are out of time.

17. Section 338(3) Companies Act is explicit in providing that no extension of time may be given for making or serving an application to have a statutory demand set aside.

18. Consequently, as the application to set aside the statutory demand is out of time, and no extension of time may be given pursuant to s. 338(3) Companies Act, the application to set aside the statutory demand is refused.

Application to dismiss the proceeding

19. The application by KPL to dismiss this proceeding is made pursuant to Order 12 Rule 40(1) (b) and (c) National Court Rules, the inherent jurisdiction of this court and s. 155(4) Constitution.

20. As to the reliance upon s. 155(4) Constitution, I need to do no more than reproduce the following passage from the joint decision of Salika DCJ and Hartshorn J in Boochani v. Independent State of Papua New Guinea (2017) SC1566 at [39]:

“As was stated in Louis Medaing v. Ramu Nico Management (MCC) Limited (2011) SC1156 at [10] – [12]:

“10. Section 155 (4) Constitution has been considered on numerous occasions by this Court. It has been interpreted as conferring jurisdiction on the court to issue facilitative orders, such as prerogative writs or an injunction, in aid of the enforcement of a primary right conferred by a law: SCR No 2 of 1981 [1981] PNGLR 150 at 150 and Ume More v. UPNG [1985] PNGLR 401 at 402.

11. Section 155 (4) is not however the source of any substantive rights, as stated by Kidu CJ in SCR No 2 of 1981 (supra):

“The provision under reference.... does not.... vest in the National Court or the Supreme Court the power to make orders which confer rights or interests on people. Such rights or interests are determined by other constitutional laws, statutes and the underlying law. Section 155 (4) exists to ensure that these rights or interests are enforced or protected if existing laws are deficient to render protection or enforcement.”

12. We also make reference to Powi v. Southern Highlands Provincial Government (2006) SC844 in which the Court, after giving detailed consideration to s. 155 (4) said that in its view, there are about five important features or attributes of that section. They are:

“1. The provision vests the Supreme and National Court with two kinds of jurisdictional powers, namely orders in the nature of prerogative writs and the power to make “such other orders as are necessary to do justice in the particular circumstances of each case” before the Court;

2. Although the power is inherent, it is not a grant of jurisdiction to cover all and every other situation and for the creation and grant of new rights. Instead it is a general grant of power to the Court to develop and grant such remedies as are appropriate for the protection of rights already existing and granted by other law, including the Constitution;

3. Where remedies are already provided for under other law, the provision does not apply;

4. The provision does not grant the Supreme Court power to set aside or review the decision of another Supreme Court regardless of number (sic) it is constituted, except as may be provided for by any law; and

5. A person seeking to benefit from that provision has an obligation to demonstrate a case of his rights or interest being affected or that he stands to suffer much damage or prejudice and he has no remedy available under any other law.”

We respectfully agree with the views expressed in Powi (supra).” ”

21. In this instance, Order 12 Rule 40 (1) (b) and (c) National Court Rules apply. As a remedy is already provided for under other law, s. 155(4) Constitution does not apply.

22. As to the applicability of Order 12 Rule 40 National Court Rules in the present circumstances, as I did in Piunde Ltd, In re (2015) N5971, I reproduce the following passage from Cal Exports Ltd v. Camp Administration Ltd (2009) SC1050 at [19]:

“19. Our conclusion is that the power to stay a petition to wind up a company presented pursuant to s291 of the Companies Act, before the liquidator is appointed, is founded in the inherent jurisdiction of the court to prevent abuses of the process of the court. In terms of rules of court, an application could be based on National Court Rules O8 r 27 (a pleading which is an abuse of the process of the court) or similarly O12 r40, because the Companies Rules Rule 2 provides:

"Subject to the Companies Act and these Rules, the Rules of Court of the National Court and the general practice of that Court, including the course of procedure and practice in Chambers, apply in relation to proceedings to which these Rules relate as far as is practicable".”

23. Given the above I consider the application pursuant to Order 12 Rule 40(1) (b) and (c) National Court Rules which provides for amongst others a proceeding to be stayed or dismissed where the proceeding is frivolous or vexatious or an abuse of the process of the court.

24. KPL submits that the petition in this proceeding is premature and an abuse of process. This is because KB Meats has not taken steps to enforce its judgment debt pursuant to Order 13 National Court Rules. This is required, it is submitted, before issuing a statutory demand and petition when both are based on an unpaid judgment debt. Reliance is placed upon the National Court decision of Sakora J. in Bank of South Pacific Ltd v. South Pacific Timber Exports Ltd (2004) N2712.

25. In BSP v. South Pacific Timber (supra) at 4 Sakora J. said:

“On the issue of the defendant’s Statutory Demand, it has to be noted (once again) that the demand is in respect of two judgments entered on the certified costs of K2,172.50 and K5,266.25 respectively, pursuant to O22 r 62 NCR. Thus, it would appear that the defendant’s Statutory Demand for the amount of K7,438.75 was to enforce those two judgments ordered on 14 October 2002 (entered 17 October 2002).

Rules for the enforcement of judgments in the National Court are to be found under O13 NCR, and not under the Companies Act. Order 13 r 2 is in the following terms:

2. Payment of money

(1) A judgment for the payment of money (not for the payment of money into Court) may be enforced by one or more of the following means –

(a) levy of property;

(b) attachment of debts;

(c) charging order;

(d) appointment of a receiver; and

(e) . . .

(2) . . . (re payment of money into court)

(3) Sub-rules (1) and (2) of this Rule do not affect any other means of enforcement of a judgment for the payment of money. (underlining mine).

In my respectful opinion, sub-rule (3) would be envisaging any other means provided for under the NCR. Furthermore, it would apply to enforcement of judgments only.

................

It is my respectful opinion that the availing by the defendant of the Statutory Demand under 337 of the Act is an abuse of process. It is tantamount to enforcing a judgment that the NCR provide specific rules and procedures to be undertaken. Section 337 of the Act does not envisage, in my opinion, what have to be undertaken under O 13 NCR. In fact, s 335 (b) of the Act envisages the availing and exhausting of the provision of the rules under O 13 NCR to demonstrate an “Inability to Pay Debts” preparatory to putting a company in liquidation.”

26. No authority is referred to or stated in BSP v. South Pacific Timber Exports (supra) as being relied upon by Sakora J. for his opinions.

27. Order 13 Rule 2 National Court Rules to which Sakora J. refers and the New South Wales of Australia equivalent, O42.2 Supreme Court Rules 1970 are derived from the English Rules of Court. The equivalent 1965 Supreme Court Rule O.45, r.1, our Order 13 Rule 2, is as follows:

“(1) Subject to the provisions of these rules, a judgment or order for the payment of money, not being a judgment or order for the payment of money into Court, may be enforced by one or more of the following means, that is to say-

(a) the writ of fieri facias;

(b) garnishee proceedings;

(c) a charging order;

(d) the appointment of a receiver;

(e) in the case in which rule 5 applies, an order of committal;

(f) in such a case, writ of sequestration.

(2) Subject to the provisions of these rules, a judgment or order for the payment of money into Court may be enforced by one or more of the following means, that is to say-

(a) the appointment of a receiver;

(b) in the case in which rule 5 applies, an order of committal;

(c) in such a case, writ of sequestration.

(3) Paragraphs (1) and (2) are without prejudice to any other remedy available to enforce such a judgment or order as is therein mentioned or to the power of a Court under the Debtors Acts 1869 and 1878, to commit to prison a person who makes default in paying money judged or ordered to be paid by him, or to the right of a person prosecuting a judgment or order for the payment of money to a person to apply under section 105(1) of the County Courts Act 1984, to have the judgment or order enforced in a county Court, or to the enactments relating to bankruptcy or the winding up of companies.”

28. It is clear from a reading of O 45, r1(3) that the means provided for enforcement in paragraphs (1) and (2) of O 45, r 1 are without prejudice to, amongst others, any other remedy available to enforce a judgment or order or to the enactments relating to bankruptcy or the winding up of companies. Further, when an equivalent rule was adopted to the circumstances of New South Wales, instead of including all of the various enactments that provide for means of enforcement as in O 45, r1(3), it was decided to collectively refer to them all by use of the words, “any other”. Hence, O 42.2(3) Supreme Court Rules 1970 is:

“(3) Subrules (1) and (2) of this Rule do not affect any other means of enforcement of a judgment for the payment of money.”

29. O 42.2 Supreme Court Rules 1970 is the same as Order 13 Rule 2 National Court Rules. Specifically, (and at the risk of belabouring the point) O42.2(3) Supreme Court Rules 1970 is exactly the same as our Order 13 Rule 2(3) National Court Rules.

30. Given this, in my view, where Order 13 Rule 2(3) National Court Rules states, “do not affect any other means of enforcement of a judgment for the payment of money.”, it is not confining itself to other means provided for under the National Court Rules, but is referring to any other means available at law.

31. I also mention that if the opinion of Sakora J. were to be preferred, a creditor that has a debt owing by a company but has not obtained a judgment in respect of that debt is able to issue a statutory demand under the Companies Act but a creditor that has obtained a judgment in respect of his debt cannot issue a statutory demand until he has at least attempted to enforce the judgment debt first. To my mind this leads to an anomalous situation not intended by the relevant provisions of the Companies Act. Further, a right that is conferred by a statute should not be fettered by a rule.

32. Consequently, for the above reasons I respectfully disagree with the opinions of Sakora J. expressed in BSP v. South Pacific Timber (supra). I find that KPL has not made out its case that this petition should be dismissed as an abuse of process as Order 13 Rule 2(3) National Court Rules does not fetter the ability of KB Meats to issue a statutory demand and petition as was contended by KPL.

33. Given the above the amended notice of motion and motion of KPL should be dismissed.

Orders

34.

a) the amended notice of motion filed 9^th February 2017 and the notice of motion filed 8^th February 2017 of Koitaki Plantations Ltd are dismissed;

b) Koitaki Plantations Ltd shall pay the costs of the petitioning creditor of and incidental to the said amended notice of motion and motion;

c) time is abridged.

___________________________________________________________
Jema Lawyers : Lawyers for the Petitioner
Parker Legal : Lawyers for the Company