Sixth Estate Ltd, In re [2020] PGNC 235; N8515 (23 September 2020)

N8515

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

MP NO. 5 OF 2020

IN THE MATTER OF THE COMPANIES ACT, 1997

AND:
IN THE MATTER OF SIXTH ESTATE LIMITED

AND:
PHILIP MARK PETERS PAGUK

AND:
JOHN POKAROP

Waigani: Anis J
2020:18^th & 23^rd September

NOTICE OF MOTION – Application to dismiss petition –Order 12 Rule 40(1)(c) – National Court Rules – s. 155(4) of the Constitution - competency challenge – want of affidavit verifying the petition – Rule 16(1)(c) and (2) – Companies Rules - whether fatal to the petition – discretion

Case cited:

In the Matter of International Construction Limited (2007) N3337

Counsel:

Mr S Nutley, for the Petitioner/Respondent
Mr T Tape, for the Respondents/Applicants

RULING

23^rd September, 2020

1. ANIS J: The respondents applied to dismiss the petition. Their notice of motion was heard on 18 September 2020. I reserved my ruling to a date to be advised.

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

BACKGROUND

3. The petitioner, Best Group (PNG) Limited (the petitioner) filed this petition on 9 March 2020. In brief, the petition is filed pursuant to s. 152(2)(g), s. 291(2)(c) and s. 291(3)(a) and (d) of the Companies Act 1997 (the Companies Act). The petitioner alleges, amongst others, as a prejudiced shareholder, that Sixth Estate Limited be put into liquidation. The main allegation in the petition is that the respondents had purportedly taken steps to redeem the shares held by the petitioner in Sixth Estate Limited without valuable considerations.

NOTICE OF MOTION

4. The respondents’ notice of motion was filed on 17 July 2020. The main relief reads, and I quote in part, “Pursuant to Order 12 Rule 40(1)(c) of the National Court Rules and/or Section 155(4) of the Constitution, the Petition dated 06^th of March 2020 be dismissed.” The sources of the application are not in issue so I will proceed to deal with its merit.

COMPETENCY ARGUMENT

5. The respondents’ argument is in 2-fold. I will deal with the first part. They argue that the petition is incompetent because it has not been verified. They submit that the petitioner has breached rules 14, 15 and 16 of the Companies Rules of the old Companies Act Chapter 146 (the Old Act) or more particularly Rule 16. Therefore, they submit that the petition ought to be struck out or dismissed as incompetent.

6. The petitioner appears to concede that that is the case, that is, of not filing an affidavit verifying the petition. But it submits that that may be cured by an order or direction from the Court to it to comply, and for the matter to proceed by way of pleadings, and with an award of cost as sufficient to recompense the respondents, rather than the option to dismiss the petition. The petitioner submits that if the petition is dismissed, it will simply refile a new one.

RULE 16 – COMPANIES RULES

7. The Companies Rules under the Old Act is applicable or presumed to apply, under the current Companies Act 1997. The parties did not raise any issues concerning its application. Under the circumstances, I simply refer to a case on point which is In the Matter of International Construction Limited (2007) N3337, where Justice Hartshorn held, and I quote, The Companies Rules have not been repealed by the Companies Act 1997 and are to be followed and applied with necessary modification on an application for the appointment of a liquidator. I will proceed on this premise.

8. Rule 16 reads, and I quote:

16. VERIFICATION OF PETITION.

(1) A petition shall –

(a) set out in the prayer the nature of the relief sought; and

(b) contain all the allegations necessary in support of it; and

(c) be verified by affidavit.

(2) The affidavit verifying the petition shall be made –

(a) by the petitioner or by one of the petitioners, if more than one; or

(b) where the petition is presented by a corporation – by a director, secretary or other principal officer of the corporation,

and shall be filed with the petition, and the affidavit is prima facie evidence of the statements in the petition.

(3) When a petition is required to be served, a copy of the verifying affidavit shall be served with the petition.

CONSIDERATION – COMPETENCY

9. I have considered the arguments of the parties. I have also considered the documents that have been filed. In this case, I note the following. Firstly, the petition was filed on 9 March 2020 without other supporting documents including an affidavit verifying the petition. It was served on the respondents. The petitioner, however, did file an affidavit recently in response to the application, which is the affidavit of Minhua Liang. It was filed on 20 August 2020. Mr Liang is a director of the petitioner. His affidavit is not titled Affidavit Verifying the Petition, but rather, and it reads, Affidavit. I note that this does not necessarily mean that the affidavit cannot or does not have the potential of verifying the petition. So, when I consider its content, I note that Mr Liang deposes facts and attaches documents, that addresses the merit of the petition. I note that nowhere in his affidavit did he expressly verify the petition as true and correct.

10. Let me begin by saying that the requirements under Rule 16 of the Companies Rules are mandatory. A petition must be filed and served together with an affidavit that verifies it. The verifying affidavit must be deposed to by a designated person. In the case of a company or a corporation, a designated person must be a director, company secretary or a principal officer within the said company or corporation. In this instance, it is obvious that the petitioner has breached the requirements under Rule 16 of the Companies Rules. First, the petitioner did not file and serve its affidavit verifying the petition together or at the same time as the petition. Second, the petitioner has to date, not filed an affidavit verifying the petition. The affidavit of Mr Liang, in my view, is not or cannot be regarded as an affidavit verifying the petition within the meaning of or as required by Rule 16(1)(c) and (2) of the Companies Rules. It rather constitutes an affidavit evidence that is filed by the petitioner in relation to the substantive claim. In my view, such evidence may be filed in support of the pleadings that are contained in a petition provided the pleadings are, or must first of all be, verified by an affidavit that is filed under Rule 16(1)(c). And the verifying affidavit is the one document that must also be filed and served together with the petition, under Rule 16 of the Companies Rules.

11. Because Rule 16 is mandatory, failure to comply with it by the petitioner, in my view, renders the petition incompetent and therefore it shall be dismissed.

SUMMARY

12. I will grant the respondents’ notice of motion.

COST

13. Cost award in this instance is discretionary. I will award cost to follow the event which shall be assessed on a party/party basis to be taxed if not agreed.

ORDERS OF THE COURT

14. I make the following orders:

(1) The petition is dismissed for being incompetent.

(2) The petitioner shall pay the respondents’ costs 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 Registrar which shall take place forthwith.

The Court orders accordingly.

__________________________________________________________________________
Fiocco & Nutley: Lawyers for the Petitioner
Kandawalyn: Lawyers for the Respondents