N7995

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 271 of 2018 (COMM)

BETWEEN:
AUSTRALIA & NEW ZEALAND BANKING
GROUP (PNG) LIMITED
Plaintiff

AND:
PNG MICROFINANCE LIMITED
Defendant

Waigani: Hartshorn J,
2019: 18th June, 2nd August

Personal Property Security Act 2011 Security – security interests - registration

Cases Cited:
Don Polye v. Jimson Papaki (2000) SC637
PNG Waterboard v. Kama (2005) SC821
Rex Paki v. Motor Vehicles Insurance Ltd (2010) SC1015

Counsel:

Mrs. E. Noki, for the Plaintiff
Mr. R. Raka, for the Defendant

2nd August, 2019

1.   BY THE COURT: This is a decision on a contested application concerning the registered charge and security interest of the plaintiff (ANZ) over an excavator. ANZ claims that its security interest takes priority over the interest of the defendant (PML) in the excavator pursuant to the Personal Property Security Act 2011 (PPS Act).

Background

2.   In 2012 ANZ advanced money to Resama Plant High Ltd (RPHL), the director and shareholder of which is Mr. Samson Sanga Kolaip, for, amongst others, the purchase of an excavator. ANZ was given security over RPHL’s fixed and floating assets, which included the excavator, by an equitable mortgage dated 11th October 2012. ANZ also took security over the specific assets. These security interests and charges were registered under the Companies Act and the Instruments Act.

3.   On 4th May 2016, the PPS Act came into force and repealed and replaced the Instruments Act. ANZ registered its security interest on the Personal Property Security Register (PPSR) under the PPS Act on 9th May 2016.

4.   In the middle of 2017, ANZ ascertained that PML had sold the excavator for K140,000.00 to recover monies owed to it by Mr. Kolaip.

5.   ANZ commenced this proceeding seeking amongst others declaratory relief concerning its security interest and an order that PML pay ANZ the proceeds of the sale of the excavator being K140,000.00.

6.  PML submits that it was not aware of ANZ’s interest and was not aware that the PPS Act and the PPSR established under the PPS Act were in force.

Consideration

7.   The evidence on behalf of ANZ includes that it was given an equitable mortgage by RPHL over its assets and undertaking and that this was secured by registration of a charge under the Companies Act. There is also evidence of a transitional notice of a Pre-Existing Security Interest in respect of RPHL being registered on behalf of ANZ on 9th May 2016 on the PPSR. This notice is in respect of RPHL’s collateral, being various equipment and machinery including excavators, “leased, supplied, hired or financed by the secured party to the debtor.”

8.   No evidence is adduced by PML and so the evidence of ANZ is not rebutted. There is however, evidence given on behalf of ANZ, of a chattel mortgage that Mr. Kolaip gave to PML and which was registered under the Instruments Act on 15th December 2014, in respect of amongst others, the excavator.

9.   It is clear that ANZ’s security interest was registered first in time under the Companies Act and then by its transitional notice, on the PPSR under the PPS Act. There is evidence of PML’s security being registered under the now repealed Instruments Act, but no evidence of its security interest being registered under the PPS Act.

10.   By virtue of s.23 PPS Act, by registering its transitional notice, ANZ has perfected its security interest. As mentioned, there is no evidence that PML has registered its security interest under the PPS Act. Consequently, pursuant to s.33(3) PPS Act, ANZ’s perfected security interest has priority over PML’s unperfected security interest. Further, as mentioned, ANZ’s security interest which covered the excavator, was registered under the Companies Act before PML’s security was registered in respect of the same excavator under the now repealed Instruments Act.

11.   As to the proceeds of the sale of the excavator covered by ANZ’s security interest, s.30(1) PPS Act provides:
	
“30.	Perfection of security interest in proceeds.

(1)	Except as provided otherwise in this Act, where collateral is dealt with or otherwise gives rise to proceeds, the security interest —
(a)	continues in the collateral unless the secured party expressly or impliedly authorises the dealing; and
(b)	extends to the proceeds.”

12.   Here, as there is no evidence that ANZ expressly or impliedly authorised the sale of the excavator by PML, ANZ’s security interest extends to the proceeds of sale of the excavator. Consequently, by operation of s. 30, I am satisfied, given ANZ’s perfected security referred to, that ANZ is entitled to the relief that it seeks, including costs.

13.   In regard to costs, ANZ seeks its costs on an indemnity basis. There is evidence that the lawyers for PML were given notice that if it was necessary to commence court proceedings, costs would be sought on an indemnity basis.
14.   I am satisfied that the necessary requirements for an order for indemnity costs have been made out: PNG Waterboard v. Kama (2005) SC821; Don Polye v. Jimson Papaki (2000) SC637; Rex Paki v. Motor Vehicles Insurance Ltd (2010) SC1015.
Orders
15.    Judgment is entered for the plaintiff against the defendant as follows: 
1.	It is declared that:
a)	The plaintiff has a valid and registered charge (perfected under sections 23 	and 24 Personal Property Security Act 2011 (PPS Act)) over an excavator 	described as Caterpillar Excavator Road Roller, Registration No: BDP 593, Engine No: GDC15966, Chassis No: BWZ02857, Colour: Yellow (Excavator) sold by the Defendant in 2017;
b)	The plaintiff’s perfected interest over the Excavator takes priority over the Defendant’s (unperfected) interest pursuant to sections 33(3) and 119(7) PPS Act;
c)	The Plaintiffs charge over the Excavator is transferred onto the proceeds 	from sale of the Excavator, pursuant to sections 14(4)(a), 24, 30(1)(b) and 34 PPS Act.
2. The Defendant shall pay to the Plaintiff the sum of K140,000.00 being the proceeds of the sale of the Excavator.
3. The Defendant shall pay interest on the said sum of K140,000.00 from the date of the Originating Summons at 8% per annum until payment in full of the said sum and said interest thereon.
4. The Defendant shall pay the Plaintiff’s costs of and incidental to this proceeding on an indemnity basis.
5. Time is abridged.
___________________________________________________________
Bradshaw Lawyers:   Lawyers for the Plaintiff                                           
Posman Kua Aisi:  Lawyers for the Defendant