Emeck v Pima [2022] PGNC 474; N10003 (7 November 2022)

N10003

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 09 OF 2021 (COMM)

BETWEEN:
CASPARIA EMECK
Plaintiff

V

JAMES PIMA – CHIEF EXECUTIVE OFFICER OF HELI SOLUTIONS LTD
First Defendant

AND
HELI SOLUTIONS LTD
Second Defendant

Waigani: Anis J
2022: 4^th & 7^th November

SETTING ASIDE EX PARTE ORDER – notice of motion – Order 12 Rule 8 (3)(a) and (b) – National Court Rules – jurisdiction – whether relevant source cited – Order 13 Rule 2(1)(d) – National Court Rules – whether judgment sought to be enforced by appointment of receiver was a ‘judgment for payment of money’ – whether judgment entered was irregular - s 152(2)(e) – Companies Act 1997 – whether applicant may use this provision for enforcement – whether Court has jurisdiction to invoke s 152(2)(e) for enforcement proceedings brought in this fashion – whether judgment entered was irregular – consideration – exercise of discretion

PRACTICE AND PROCEDURES – General – applications of Order 12 and Order 13 – National Court Rules

Cases Cited:

Makop v. Billy Parako (2004) N2593
Arman Larmer Surveys Ltd v. Chan Consolidated Ltd (2013) SC1253
Arman Larmer Surveys Ltd v. Chan Consolidated Ltd (2014) SC1609
Kina Bank Ltd v. Mark Baiai and Or (2021) N8894

Counsel:

G Akia, for the Plaintiff
G Sheppard with counsel assisting G Purvey, for the Defendants

DECISION

7^th November, 2022

1. ANIS J: The defendants applied to set-aside an ex parte order I made on 7 October 2022. I heard the application, which was contested, on 4 November 2022 and reserved my ruling to today at 9:30am.

2. This is my ruling.

BACKGROUND

3. On 9 September 2021, Kandakasi DCJ entered judgment against the defendants for failure to comply with court issued directions.

4. The plaintiff commenced the action in her personal capacity as well as in her capacity as the Administrator of the Estate of her late husband Phil Emeck. The plaintiff was granted the Letters of Administration on 20 March 2020. Her late husband died in a helicopter crash on 13 September 2019. Before his death, her late husband held 50% shares in the second defendant. The plaintiff, in her capacity as the Administrator, claimed in the pleadings that she had requested the defendants to account for and pay her the dividends (including outstanding dividends) of her late husband. The plaintiff claimed that the defendants had not responded to her requests. She also claimed in the proceeding that the defendants had made an undertaking to her at the funeral service of her late Husband in September of 2019, that they would settle the mortgage of plaintiff and her late husband, that is, in regard to a property described as Section 4 Allotment 3 Korobosea National Capital District (the Property). The Property was mortgaged by her late husband to Bank South Pacific Ltd (the bank) as security for a loan that was obtained by the second defendant. She claimed in the proceeding that the defendants had breached the said undertaking.

5. At [12] and [14] of the Statement of Claim (SoC/pleadings), the plaintiff pleaded:

“12. The Plaintiff sues the First and Second Defendants in her own personal capacity firstly to enforce the Undertaking made by letter of 23^rd September 2019 and secondly, to enforce her rights under Division 4 of the Companies Act 1997. The proceeding is issued directly than by derivative actions.

......

14. The plaintiff therefore, claims;
    

(a) Specific Performance as against the First and Second Defendants to perform the undertaking of 23^rd September 2019;

(b) An Order pursuant to s. 152(1) & (4)(c) of the Companies Act 1997 that the First and Second Defendants shall account for all outstanding dividends payable to the Plaintiff and pay same forthwith.

(c) Alternatively, an Order pursuant to s. 152(1) & (4)(c) of the Companies Act 1997, that the First and Second Defendants shall pay the Plaintiff just compensation in lieu of all unpaid dividends.

(d) An interim Mandatory injunction pursuant to s. 142(1)(b) of the Companies Act 1997, that the First and Second Defendants be compelled to furnished the Company’s Books and records to the Plaintiff for inspection on five (5) days’ notice by the Plaintiff.

(e) The First and Second Defendant shall pay the Plaintiff’s Costs of and incidental to this proceeding.

(f) Such other orders the Court deems apt.”

6. Then on 9 September 2021, as stated above, the Court entered judgment in favour of the plaintiff. The main terms of the orders were as follows:

“1. Pursuant to Order 10 Rule 9A(15)(2) of the Listings Rules in the National Court Rules and term 15 of the orders of 21^st June 2021 and the relevant case law on point as represented by Kalang Advertising Limited v. Visvanathan Kuppusamy (2008) SC924 and John Wasis & Ors v. Margaret Elias & Ors [2016] SC1485, the Defence filed by the Defendant is dismissed and judgment is entered for the Plaintiff on account of the Defendants failure to comply with Court order, and his failure to appear in Court ready to prosecute the matter further today.

2. Relief in terms of paragraph 14(a), (b), (d) and € of the writ of summons & Statement of Claim filed on 8^th March 2021 are granted as follows:
   

(a) Specific Performance as against the First and Second Defendants to perform the undertaking of 23^rd September 2019.

(b) An Order pursuant to s. 152(1) & (4)(c) of the Companies Act 1997, that the First and Second Defendants shall account for all outstanding dividends payable to the Plaintiff and pay the same forthwith.

(d) An interim Mandatory injunction pursuant to s. 142 (1)(b) of the Companies Act 1997, that the First and Second Defendants be compelled to furnish the Company’s Books and records to the Plaintiff for inspection on five (5) days’ notice by the Plaintiff.

(e) The First and Second Defendants shall pay the Plaintiff’s Cost of and incidental to this proceeding.

......”

7. Recently on 7 October 2022, based on a notice of motion filed (on 1 July 2022) by the plaintiff, I granted ex parte orders (ex parte order) in her favour. The main terms of the orders read:

“1. Pursuant to Order 13 Rule 2(1)(d) of the National Court Rules (NCR), and Section 152(2)(e) of the Companies Act 1997, and based on the inherent power of this Honourable Court, Mr. Andrew Pini appointed (sic) as the Receiver of the Second Defendant.

2. The Receiver shall within 7 days of his appointment or the date of this Order, comply with the requirements under section 259 of the Companies Act 1997.
3. The receiver shall perform his duties to satisfy the National Court judgment of 9 September 2021 made in this proceeding.

......”

NOTICE OF MOTION

8. The defendants, by their notice of motion (filed on 24 October 2022) (NoM), seek to set-aside the ex parte order. The main relief sought reads, Pursuant to Order 12 Rule 8(3)(a) and (3)(b) of the National Court Rules that the ex parte orders made on 7^th October 2022 be set aside.

9. Both parties filed affidavits in regard to the NoM.

ISSUES

10. The main issues, in my view, are (i), whether the ex parte order was irregularly entered, and (ii), subject to the first issue, explanation on why the ex parte order was entered in the absence of the defendants, (iii), whether there was a delay in making the application and (iv) whether there is a defence on merit.

IRREGULARITY

11. The law is settled that if an irregularity is established in regard to an ex parte order, that pursuant to Order 12 Rule 8(3)(a) and (b) or Rule 4, the Court shall have the order set aside. If there is no irregularity, the Court will then consider (i), the explanation of the applicant on why the orders were entered in his or her absence, (ii), whether there was a delay in making the application and (iii), whether there is a defence on merit. See cases: Makop v. Billy Parako (2004) N2593, Arman Larmer Surveys Ltd v. Chan Consolidated Ltd (2013) SC1253 and Arman Larmer Surveys Ltd v. Chan Consolidated Ltd (2014) SC1609.

12. Order 12 Rule 8(3)(a) and (b) states:

“12. Setting aside or varying judgement or order. (40/9)

......

(3) The Court may, on terms, set aside or vary an order —

(a) where the order has been made in the absence of a party, whether or not the absent party is in default of giving a notice of intention to defend or otherwise in default, and whether or not the absent party had notice of motion for the order; or

(b) where notice of motion for the setting aside or variation is filed before entry of the order.”

(Underlining mine)

13. I note at the outset or firstly that the NoM was filed on 24 October 2022, and the ex parte order was entered on 11 October 2022. As such, the NoM herein was filed outside the requirement of Order 8 Rule(3)(b) of the NCR.

14. The second point I note is this. Order 12’s heading reads, JUDGEMENTS AND ORDERS. In my view, the Order relates to or covers relief that may be sought in a proceeding from the date of its commencement to the date of judgment whether it be summary or otherwise. In this case, I note that the final judgment was entered on 9 September 2021. What I have before me is not an application to set aside the said order or judgment.

15. The NoM herein seeks to set aside an ex parte order which is, in my view, sought under the next stage of the proceeding, that is, enforcement. And the process for this is provided for under Order 13 of the NCR. I note that the notice of motion that had been made based upon which the ex parte order was granted, was made under Order 13 Rule 2(1)(d) of the NCR, that is, apart from s 152(2)(e) of the Companies Act 1997. Therefore, and in my view, it is erroneous or misconceived to invoke the provisions under Order 12 of the NCR [i.e., Rule 8(3)(a) and (b)] to seek relief or redress when the matter is at the enforcement stage and where the defendants are seeking to set aside an enforcement order that was granted under Order 13 of the NCR. See case: Kina Bank Ltd v. Mark Baiai and Or (2021) N8894.

16. Order 12 Rule 8(4) of the NCR may be looked at as an example or for clarity. It is consistent or clarifies my view in regard to the issue (on the second point). It reads:

“(4) In addition to its powers under Sub-rules (1), (2) and (3), the Court may, on terms, set aside or vary any order (whether or not part of a judgement) except so far as the order determines any claim for relief or determines any question (whether of fact or law or both) arising on any claim for relief and excepting an order for dismissal of proceedings or for dismissal of proceedings so far as concerns the whole or any part of any claim for relief.” [Underlining mine]

17. As a result of my findings, the NoM is therefore incompetent.

SUMMARY

18. In summary, I will dismiss the defendants’ NoM for the stated reasons.

COST

19. I will order cost to follow the event, that is, on a party/party basis to be taxed if not agreed.

ORDERS OF THE COURT

20. I make the following orders:

1. The defendants’ notice of motion filed on 24 October 2022 is dismissed.
   
2. The defendants shall pay the plaintiff’s cost of the application on a party/party basis to be taxed if not agreed.
   
3. Time for entry of these orders is abridged to the date and time of settlement by the Registrar of the National Court which shall take place forthwith.
   

The Court orders accordingly

________________________________________________________________
Akia & Associates Lawyers: Lawyers for the Plaintiff
Young & Williams Lawyers: Lawyers for the First & Second Defendants