Platinum PNG Ltd, In re [2019] PGNC 339; N8114 (25 November 2019)

N8114

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

MP NO. 52 of 2018

IN THE MATTER OF THE COMPANIES ACT 1997

AND
IN THE MATTER OF PLATINUM PNG LIMITED

Waigani: Anis J
2019: 18^th and 25^th November

NOTICE OF MOTION – setting aside statutory demand – section 155(4) –Constitution - Order 12 Rule (1) - National Court Rules – section 338(1) and (2) – Companies Act 1997 – whether notice of motion made and served was within the required period – whether notice of motion void or incompetent – section 338(4) - Companies Act – whether debt substantially disputed – section 338(5) – Companies Act - whether statutory demand irregular - whether debtor likely to suffer substantial injustice if statutory demand is not set aside - section 339(1)– Companies Act – whether court should order debtor to pay undisputed debt within a fixed period.

PRACTICE AND PROCEDURES – service of statutory demand by post on company – due service - sections 431(1)(d) and 432 – Companies Act 1997

Cases Cited:

Nivani Ltd, In the matter of the Companies Act 1997 (2016) N6389
Piunde Ltd, In the matter of the Companies Act 1997 (2015) N5971

Counsel:

Mr D J Siminji, for Petitioner
Mr M Phillip, for the Respondent

RULING

25^thNovember, 2019

1. ANIS J: Platinum PNG Limited (the respondent) applied to set aside a Creditor’s Statutory Demand for Payment of Debt (statutory demand) which had been served on it by Delta Corporation Limited (the petitioner), under the provisions of the Companies Act of 1997 (the Companies Act). Its notice of motion (application) was heard on 18 November 2019. The application was contested. I reserved my ruling on 18 November 2019 to a date to be advised.

2. Parties have been notified so I will rule on it now.

FACTS

3. The petitioner filed its petition on 20 December 2018. It claims that the respondent owes it a debt of K104, 000 (the debt). Before filing the petition and on 24 September 2018, the petitioner prepared and signed the statutory demand under section 337(2)(b) of the Companies Act. The petitioner says that it served the statutory demand on the respondent on 31 October 2018. It says the respondent had one month under section 338(2) of the Companies Act to pay the debt or to file its application to set aside the statutory demand. It says the 1 month lapsed on 29 November 2018, hence it filed this petition. The petitioner says it intends to request the Court to liquidate the respondent.

4. The respondent responded by filing this application on 15 October 2019.

APPLICATION

5. The respondent cites various jurisdictional basis for making the application, that is, to set aside the statutory demand. The correct source for this purpose, which was also cited by the respondent, is section 338 of the Companies Act. The section states, and I quote in part:

338. Court may set aside statutory demand.

(1) The Court may, on the application of the company, set aside a statutory demand.

(2) The application shall be made, and served on the creditor, within one month of the date of service of the demand.

(3) No extension of time may be given for making or serving an application to have a statutory demand set aside, but, at the hearing of the application, the Court may extend the time for compliance with the statutory demand.

(4) The Court may grant an application to set aside a statutory demand where it is satisfied that—

(a) there is a substantial dispute whether or not the debt is owing or is due; or

(b) the company appears to have a counterclaim, set-off, or cross-demand and the amount specified in the demand less the amount of the counterclaim, set-off, or cross-demand is less than the prescribed amount; or

(c) the demand ought to be set aside on other grounds.

(5) A demand shall not be set aside by reason only of a defect or irregularity unless the Court considers that substantial injustice would be caused if it were not set aside.

6. The respondent also seeks as an alternative relief an order that it pays K20,000 to the petitioner. It claims that the said sum is undisputed. The jurisdictional basis for the said relief as pleaded in the application is section 339(1) of the Companies Act. The section reads:

339. Additional powers of Court on application to set aside statutory demand.

(1) Where, on the hearing of an application under Section 338, the Court is satisfied that there is a debt due by the company to the creditor that is not the subject of a substantial dispute, or is not subject to a counterclaim, set-off, or cross-demand, the Court may—

(a) order the company to pay the debt within a specified period and that, in default of payment, the creditor may make an application to put the company into liquidation; or

(b) dismiss the application and forthwith make an order under Section 291(3) putting the company into liquidation, on the grounds that the company is unable to pay its debts as they become due in the ordinary course of business.

EVIDENCE

7. The respondent filed 1 affidavit on 15 October 2019 which is the affidavit of Benny Koroka. Mr Koroka is the Managing Director of the respondent. The petitioner in response to the application relies on the affidavit of Jackson P Kola filed on 2 September 2019. It also refers to and relies on the affidavit of Jeffery Kennedy which was filed on 2 September 2019.

THE ARGUMENTS

8. The respondent argues that it was never served with the statutory demand. It says that it only learnt of it in July of this year, which was when it took steps including engaging lawyers to file this application. Therefore, it says that the statutory demand should be set aside. Alternatively, it says that the Court should order it to only pay the petitioner K20, 000 which it claims is a sum that was not disputed by the parties. The respondent submits that the disputed sum is substantially disputed therefore should be properly pleaded by the petitioner in a separate proceeding for the parties to argue.

9. The petitioner, in its defence, says that it had duly served the statutory demand on the respondent by post on 31 October 2018. It says service had been effected in compliance with the provisions of the Companies Act. The petitioner also argues that the statutory demand had not been adhered to by the respondent in terms of paying the debt in full within the required 1 month period. It says the time for making the payment or to apply to set aside the statutory demand, lapsed on 29 November 2018. Therefore, it claims, amongst others, that the application was filed outside the required period under the Companies Act and submits that it must be refused.

ISSUES

10. The main issues are, (i), whether the statutory demand was duly served on the respondent and on the dates alleged, and if so, (ii), whether the application was filed within 1 month as required by section 338(2) of the Companies Act, and if so, (iii), where there is substantial dispute to the debt and therefore whether the Court should set aside the statutory demand pursuant to section 338(4)(a) and (5) of the Companies Act, and (iv) whether the Court should also exercise its additional powers under section 339(1) of the Companies Act and order the respondent to pay a sum of K20,000 to the petitioner within a specified period.

SERVICE

11. Section 432 and section 431(1)(d) of the Companies Act are relevant for this purpose. I set them out in part herein:

432. Service of other documents on companies.

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);

(b) by sending it by any means, including a facsimile machine, telex, computer or other electronic device, that provides that document, or a copy of that document, to that person in a permanent form or image, including an electronic or magnetic form or image.

(Underlining mine)

431. Service of documents on companies in legal proceedings.

(1) 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:—

......

(d) by posting it to the company's registered office, or address for service, or postal address;

12. Let me look at the evidence. I firstly refer to the affidavit of service of Jackson P. Kola filed on 2 September 2019. He states that service was effected by registered post to the postal address of the respondent, on 30 October 2018. The postal address shown on the covering letter is PO Box 6235, Boroko, NCD. The petitioner attaches a company extract of the respondent at annexure 2 to Mr Kennedy’s affidavit filed on 2 September 2019. The extract was printed out as at 28 August 2019. The address of the respondent is confirmed therein, that is, PO Box 6265, Boroko, NCD. If the statutory demand was regarded as served on 31 October 2018, then 1 month after that would be 31 November 2018. The expiry date would be 1 December 2018. The respondent’s application was filed on 15 October 2019. The respondent’s application appears to be filed well outside the 1 month period. I use the term “appears to be” because I have not yet considered the evidence of the respondent.

13. At the hearing, I noted what appeared to be an anomaly in annexure 2 to Mr Kola’s affidavit. The anomaly is this. The stamped date on the front of the envelop states 30 October 2018. But on the receipt of payment of the registered postage, it is dated 18 December 2018. The petitioner did not explain this anomaly in its evidence. Counsel however submits that the original receipt was lost which was why they had to obtain a reprint of the receipt from the post office on 18 December 2018.

14. “Was the anomaly fatal in that did it affect the service of the statutory demand in any significant way?”My answer to that is, “no, it was not fatal to the service of the statutory demand.” The reason I give is this. Even if I assume that service of the statutory demand was effected on 18 December 2018, it may still not improve the position of the respondent as its application was filed about 10 months or so after 18 December 2018. See cases: Piunde Ltd, In the matter of the Companies Act 1997 (2015) N5971 and Nivani Ltd, In the matter of the Companies Act 1997 (2016) N6389.

15. I now refer to the evidence of the respondent on the issue of service. In so doing, I refer to the affidavit of its Managing Director Benny Koroka filed on 10 October 2019. Mr Koroka’s response is contained at paragraphs 14 to 17. He does not deny that the statutory demand was posted to the postal address of the respondent. The reason he gives is of his lack of access to the said Post Office box number. He said he no longer uses the said box number and that he had failed to make the necessary changes to the respondent’s record that is kept at the Company Register.

16. In my view, I do not find the respondent’s reason as a valid reason to deny receipt of service of the statutory demand. Evidence adduced by Mr Kennedy as stated above, affirms the registered postal address of the respondent. And it is clear from my considerations above, that the statutory demand was posted to the registered address of the respondent on or about 31 October 2018 and that the required period had lapsed on or about 1 December 2018. Even if I am wrong and if time should have been computed as of 18 December 2018, the required period would have also lapsed on 19 January 2019. In this case, the respondent’s application filed on 15 October 2019 was filed well outside the required period as required by section 338(2) of the Companies Act.

17. I therefore find that the respondent’s application was filed outside the 1 month period as required by section 338(2) of the Companies Act. The application is therefore void or incompetent.

SUBSTANTIAL DISPUTE

18. I note that the respondent also requests the Court to exercise its powers under section 338 subsections 4 and 5, of the Companies Act. The respondent argues that there is substantial dispute on the debt that is sought in the statutory demand. As such, it submits that the statutory demand should be set aside. The petitioner, amongst others, maintains that the application is void or incompetent and that it must be dismissed.

19. In my view, section 338(4) and (5) are subject to the competency of the application under section 338(2). Because I have determined that the application was filed outside the required 1 month period, the application is incompetent or void and as such, I cannot proceed to consider its merit.

SUMMARY

20. I will dismiss the respondent’s application. I find that the application was filed well outside the required 1 month period as required under section 338(2) of the Companies Act.

COST

21. I will order the respondent to pay the petitioner’s cost for opposing the application on a party/party basis which may be taxed if not agreed.

THE ORDERS OF THE COURT

22. I will make the following orders:

1. The respondent’s notice of motion filed on 15 October 2015 is dismissed.
   
2. The respondent shall pay the petitioner’s cost on a party/party basis which may be taxed if not agreed.
   
3. Time for entry of these orders is abridged to the date of settlement by the Deputy Registrar of the National Court which shall take place forthwith.
   

The Court orders accordingly.
_______________________________________________________________
Jacksons Lawyers: Lawyers for the Petitioner
Korerua & Associates Lawyers: Lawyers for the Respondent