Autahe v Korerua [2008] PGSC 39; SC956 (1 December 2008)

SC956

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SC REV 30 OF 2008

REVIEW PURSUANT TO SECTION 155 (2) (b) OF THE CONSTITUTION

APPLICATION BY MESACH AUTAHE

BETWEEN:

MESACH AUTAHE
Applicant

AND:

PAUL KORERUA
First Respondent

AND:

BERNARD KEPA
Second Respondent

AND:

JOHNNY PHILLIP
Third Respondent

Waigani: Sevua, Mogish & Gabi, JJ
2008:3 October
& 1st December

PRACTICE AND PROCEDURE – Review - Application for – Constitution s. 155 (2) (b) – Applicant lost right of appeal under Supreme Court Act – Application filed after 11 months from decision of National Court - Applicant not yet discharged from insolvency and remains insolvent – Whether he has standing to seek review as an un-discharged insolvent.

INSOLVENCY – Discharge – Application for discharge – Applicant failed to exercise right to be discharged – No certificate of discharge – Applicant still insolvent –Whether applicant has lost right to be discharged from insolvency – Whether he can come under s. 155 (2) (b) to apply for review as an insolvent.

REVIEW – Application under s.155 (2) (b) – Application by person who has lost right of appeal under Supreme Court Act -– No application for discharge made under Insolvency Act –– Whether he can use s.155 (2) (b) to apply for a review as an insolvent – Whether application same as Avia Aihi v. The State.

Held.

1. The review jurisdiction of the Supreme Court pursuant to s.155 (2) (b) Constitution is available to persons who have lost their right of appeal under the Supreme Court Act. Avia Aihi v The State [1988] PNGLR 81 followed.

2. The applicant is under an existing legal disability as he remains an insolvent. Therefore he has no locus standi in this Court at this time.

3. Unless and until the applicant’s insolvency is discharged by operation of law, he has no locus standi to seek a review as a normal person with legal standing can.

4. The application is dismissed with costs.

5. The applicant is to pay to the third respondent the sum of K5, 000.00 for November rent.

Cases cited:

Avia Aihi v. The State [1988] PNGLR 81
Application by Jeffery Balakau [1988-89] PNGLR 210
Application by Jeffery Balakau (1996), unreported, SC529, 25th October, 1996

Legislations Cited:

Constitution, s.155 (2) (b) and (4)
Insolvency Act, ss. 131, 132, 133, 134

1 December, 2008

1. BY THE COURT: The applicant, Mesach Autahe, has come to the Supreme Court by way of an application for review pursuant to s.155 (2) (b) of the Constitution.

2. The applicant seeks to review a decision of the National Court given on 18th July 2007 whereby the National Court dismissed his suit in proceedings WS 1159 of 2003 for want of prosecution.

3. The application for review was filed on 27th June 2008, a little over eleven months after the decision of the National Court.

4. This application raises difficult and important questions as it involves the right of appeal by a person who has lost his right of appeal under the Supreme Court Act and who had been declared insolvent and not yet discharged from such insolvency. Our task is not made any easier because at the time of the hearing, the applicant has not yet been discharged from his insolvency.

5. The merits of the application for review under s.155 (2) (b) were not heard. Instead the Court unanimously agreed to hear counsels on some preliminary issues. Those issues were:-

1. Whether the applicant has locus standi or standing to invoke the inherent powers of the Court pursuant to s.155 (2) (b) of the Constitution when he is still insolvent.

2. Whether he has the right to seek review when he is yet to be discharged as an insolvent.

3. Whether he has lost the right to apply for a certificate of discharge under the Insolvency Act so as to parallel or analogise his application to the application in Avia Aihi v. The State [1988] PNGLR 81.

6. Therefore the central issue we will first consider in this matter is one of standing to appear and invoke the inherent and discretionary powers of the Court under s.155 (2) (b) in circumstances where the applicant is still insolvent.

7. Mr. Kubak, counsel for the applicant has asked the Court to analogise or parallel this case to that of Avia Aihi v. The State [1988] PNGLR 81. This submission is premised upon the fact that the applicant in this case has lost his right of appeal as in Avia Aihi’s case.

8. Whilst it is correct in one sense that the applicant before us has lost his right of appeal, he has not lost his right to apply for a certificate of discharge under the provisions of the Insolvency Act Chapter 253 (consolidated to No. 4 of 1988). Incidentally, we note that there is another Insolvency Act 1951 (consolidated to 1988) as well. We assume it is the same Act.

9. But prior to answering the questions posed and eventually determining the issues raised at the outset, certain facts need to be stated in order to appreciate this application, the conclusion and the reasons.

10. The applicant, Mesach Autahe, was one of the officials of the company called U-Vistract Finance Corporation Limited which was involved in collecting monies from the public for investment purposes. Due to its many failed promises to pay its investors, certain authorities initiated proceedings against the company and its officers. This applicant was one of the officers of that company who were declared insolvent by the National Court.

11. In National Court proceeding, MP 62 of 2000 instituted by Sandra Sawaraba and other petitioners under the Companies Act 1997 against U-Vistract Finance Corporation Limited, Noah Ariku, Nelson Maila, Noah Musingku and the applicant, Mesach Autahe, the National Court made the following orders on 29th March, 2000.

1. Mesach Autahe (the ‘Debtor’) is adjudicated insolvent.
   
2. Mr. Christopher Burt of Pricewaterhouse Coopers is appointed Interim Trustee in Insolvency until election of a Trustee in Insolvency by the creditors of the Debtor.
   
3. For the purposes of Section 49(a) of the Insolvency Act the date shall be fixed by the Interim Trustee in Insolvency and shall be not earlier than 6 days and not later than 30 days from 18 April 2000 and the place shall be the office of the Registrar of this Court.
   
4. For the purposes of Section 49(b) of the Insolvency Act the time shall be 9.00 am on 25 April 2000 and the place shall be at the offices of Pricewaterhouse Coopers, Credit House, Cuthbertson St, Port Moresby, and the Debtor is ordered to comply with Section 49(b) of the Insolvency Act on or before that time by delivering a true, full and accurate statement of all his debts and liabilities of every kind and of all his assets and entitlements of every kind and of the names and addresses of his creditors and debtors.
   
5. This order to be published once in the National Gazette and twice in the Post Courier newspaper at least 7 days before the first meeting of creditors.
   
6. The time for entry of these orders is 19 April 2000.
   

12. On 14th June 2000, the National Court made further orders as follows:-

1. Mesach Autahe is until 19 April 2005 restrained from either directly or indirectly soliciting, canvassing, inviting or requesting any funds, deposits, investments or money from the public or a section of the public.
   
2. Mesach Autahe is until 19 April 2005 restrained from either directly or indirectly promoting, forming, managing or controlling any corporation or scheme which may directly or indirectly solicit, canvas, invite or request any funds deposits, investments or money from the public or a section of the public.
   
3. Mesach Autahe is until 19 April 2005 restrained from acting as a director or officer of any company or corporation or acting as a trustee of any funds.
   
4. Mesach Autahe is until 19 April 2005 restrained from holding any funds or deposits on trust (whether an express, implied or constructive trust) for any person or corporation.
   
5. Mesach Autahe is to forthwith direct, instruct and authorise all persons or corporations (wherever situated) which to his knowledge hold funds or deposits received on deposit or on trust (whether an express, implied or constructive trust) from U-Vistract Finance Corporation Limited (in liquidation) Mesach Autahe to pay all funds and deposits so held to the trust account of the Registrar of the National Court of Justice of Papua New Guinea.
   
6. In the event that any monies are received by the Registrar of National Court pursuant to Order 5, the parties and any person claiming to be a creditor of Mesach Autahe or U-Vistract Finance Corporation Limited may apply to the Court on 7 days notice for orders or directions as to the disbursements of the monies received.
   
7. Any contravention of Orders 1 and 2 by Mesach Autahe in respect of a company shall be deemed to be a contravention of an order made pursuant to Section 425 of the Companies Act.
   
8. That the orders made on 29 May 2000 restraining Mesach Autahe from making public statements to continue until further notice.
   
9. Time for entry of these orders be abridged to the date of settlement by the Registrar which shall take place forthwith.
   

13. Despite the existence of those insolvency orders, the applicant, through Kemaken Lawyers filed a writ of summons in WS 1159 of 2003 on 19th August 2003 against Paul Korerua; Bernard Kepa, Michael Nali, Minister for Lands & Physical Planning, Pepi Kimas, Secretary for Lands & Physical Planning, and The Independent State of Papua New Guinea.

14. That proceeding was dismissed on 18th July 2007 for want of prosecution. The application for review was filed on 26th June 2008, some 11 months and 1 week after the dismissal of the writ of summons in the Court below.

15. Section 17 of the Supreme Court Act stipulates a time limit of 40 days after the date of the judgment for a person who desires to appeal or obtain leave to appeal to file an appeal or application for leave to appeal. That 40 days period lapsed on 29th August 2007.

16. The applicant did not exercise his right of appeal within that time limit therefore he had lost his right of appeal. He now comes to this Court under s.155 (2) (b) of the Constitution to seek a review.

17. On the basis of the authoritative pronouncement of the law in Avia Aihi (supra) we are of the view that the applicant has indeed lost his right of appeal under s.17 of the Supreme Court Act. We are also of the view that he can come by way of an application for review under s.155 (2) (b) Constitution.

18. However, we consider that it is not that simple. We say that the appellant has a legal obstacle preventing him from making this application. That obstacle arises under the Insolvency Act therefore it is our opinion that the applicant has to satisfy the Court that as an insolvent, he can come by way of an application under s.155 (2) (b) like Avia Aihi did.

19. In Avia Aihi (supra) the applicant had lost her right of appeal under s.27 of the Supreme Court Act (now s.29) which provides for a 40 days time period within which to appeal. The Supreme Court held inter alia that, the right to appeal or to apply for leave to appeal is lost on failure to comply with s.27 of the Supreme Court Act.

20. The question before the Court then was whether the Court had power to allow the applicant to appeal out of time, more than twelve months after her conviction and sentence.

21. However, instead of determining that question, the Court, by a majority of 3 - 2 decided to grant leave to the applicant to adduce evidence to support her application for leave to appeal.

22. A summary of the decision of the Court is as follows:-

1. All Justices agreed that the applicant had lost her right of appeal under s.27of the Supreme Court Act.
   
2. By a majority of 4 – 1, the Court has an inherent power to review all acts of the National Court.
   
3. By a majority of 3 – 2, the Court has a discretionary power under s.155 (2) (b) to review the applicant’s sentence.
   
4. By a majority of 3 – 2 the Court granted leave to the applicant to adduce evidence to support her application for leave to appeal.
   

23. For our purpose in the present case, it is sufficient to say that the majority decision in that case on the issue of s.155 (2) (b) was that the Court has an inherent jurisdiction and a discretion to review, which jurisdiction is unfettered and that such power is not subject to, or restricted by the Supreme Court Act 1975.

24. In applying those principles in the present case, we concur with the Supreme Court in Avia Aihi (supra) that the applicant in the present case has lost his right of appeal under s.17 of the Supreme Court Act. That is, he failed to appeal or obtain leave to appeal within the 40 days period after the National Court decision on 18th July 2007. He is therefore out of time.

25. However, on the basis of Avia Aihi, we consider that the applicant can invoke the discretionary power of the Supreme Court in applying for a review under s.155 (2) (b) of the Constitution. Such application is subject to the requirements of leave.

26. But this is not a case where the applicant has only lost his right of appeal. His position as a person aggrieved by a decision of the National Court and therefore having the right to appeal against such decision is complicated by the fact that he is an un-discharged insolvent.

27. We consider that the applicant is not a free legal person to come to Court to apply for a review under s.155 (2) (b) of the Constitution as a normal person with legal standing would. He is yet to be discharged from his insolvency and because he has not yet been discharged, he has a legal disability to apply for a judicial review as a normal legal person would.

28. The provisions of the Insolvency Act accords the applicant a right to apply for a discharge. Division 2 of Part VII of the Insolvency Act deals with Discharge of Insolvent. Under s.131, the Court may issue a certificate of discharge in accordance with s.132 or s.133.

29. Section 133. Discharge after one year with consent of creditor, or after two years in any case; provides:-

1) Subject to Subsection (2), on the application of an insolvent who has not obtained a certificate of discharge (whether or not an application has been made under Section 132), and after the prescribed notice has been given, the Court may grant a certificate of discharge –

(a) With the consent, testified in writing, of a majority in number of the creditors who have proved in the estate and whose debts amount to K20.00 or more each – at the expiration of the period of 12 months after the date of the adjudication; or

(b) Without the consent of any creditor – at the expiration of two years after that date, and may, for that purpose vary any previous decision.

2) On an application under Subsection (1), the insolvent shall make oath that –

(a) He has made a full and fair discovery of his estate; and

(b) He has not granted or promised any payment or security for the purpose of obtaining the consent of his creditors; and

(c) He has not entered into any collusive agreement for the purpose of obtaining that consent.

3) On an application under Subsection (1), the Court may withhold or suspend the certificate for such period as it thinks just.

30. Section 134. Right to discharge after three years; states -

(1). At the expiration of three years from the date of the order of adjudication, an insolvent who has not obtained a certificate of discharge may –

(a) After giving the prescribed notice; and

(b) With the written consent of a majority of the creditors who have proved in the estate and whose debts amount to K20.00 or more each, apply to the Court for a certificate of discharge.

(2) On an application under Subsection (1), the insolvent shall make oath that –

(a) He has made a full and fair discovery of his estate; and

(b) He has not granted or promised any payment or security for the purpose of obtaining the consent of his creditors; and

(c) He has not entered into any collusive agreement for the purpose of obtaining that consent

(3) On proof to the satisfaction of the Court that the consent has been obtained without fraud or collusion, the Court shall grant the certificate of discharge.

31. In considering these provisions, we are of the view that the applicant has a right to apply for a discharge from his insolvency. His right to apply still subsists and he is yet to utilize it. He has not lost that right. The discharge from insolvency, in our view, would make him a normal legal person again who will repossess his standing as a person with legal standing who can sue or be sued.

32. The applicant has a right to apply for a discharge and may obtain a certificate of discharge. First, he can apply to the National Court for a certificate of discharge under s.132. Secondly, he has the right to apply for a certificate of discharge under s.133 after one year with the consent of his creditors, or after two years. Thirdly, he has the right to apply for a certificate of discharge under s.134 after three years.

33. We note from the concession made by Mr. Kubak, counsel for the applicant, that the applicant has not yet exercised that right and he remains insolvent at this point in time.

34. Mr. Kubak has urged the Court to make new laws in this case, as we understand, by pronouncing that despite the applicant’s standing as an insolvent, the Court should rule that has standing to seek a review.

35. With respect, we do not accept that proposition. We consider that the applicant is under a legal disability to come to Court and because of that legal disability, he has no standing to seek a judicial review until he is officially discharged from his insolvency.

36. We analogise the applicant’s locus standi to a person who cannot stand for public elected office because he is disqualified to be, or to remain a Member of Parliament under s.163 (3) of the Constitution. That is a legal disability preventing a person from becoming or remaining an elected Member of Parliament.

37. Mr. Kubak also submitted that this Court should not be bound by another Supreme Court decision, namely Avia Aihi, if and when the justice of a particular case warrants.

38. It is correct that this Court is not bound by a decision of another Supreme Court, however, with respect, Avia Aihi is still very good law and there is no persuasive reason to depart from the constitutional precedents established in that case. We reject that submission.

39. Furthermore, we assume that the second part of that submission refers to s.155 (4) of the Constitution. With respect to counsel, the utility or application of s.155 (4) has been firmly determined in Avia Aihi. It is settled law now that s.155 (4) does not confer a primary right, nor does it recreate a primary right when it has been extinguished. As the Court said in that case, the applicant’s primary right to appeal under s.27 of the Supreme Court Act had been extinguished by operation of law.

40. The applicant in the present case cannot argue that this Court should apply s.155 (4) of the Constitution because s.155 (4) cannot recreate his primary right to appeal under s.27 which had expired by operation of law. It is therefore our respectful opinion that s.155 (4) has no utility or application in the present case.

41. Counsel for the first and second respondents, Mr. Nanei submitted that the applicant has no locus standi to come to this Court. He cited The Application by Jeffery Balakau [1988-89] PNGLR 210.

42. That case deals with an application for a certificate of discharge under s.134 (6) of the Insolvency Act. We find that that case is of no assistance to the Court in the present application.

43. But in another case by the same applicant, Application by Jeffery Balakau (1996) unreported, SC 529, 25th October 1996, the Court applied the principles in Avia Aihi and at pages 7 and 8 discussed the issue of locus standi or interest of the applicant. The Court affirmed the principle in Avia Aihi in this way:-

"a person affected or aggrieved by the final decision of the National Court and lacking now any statutory right to have that decision reviewed, may nevertheless make application to the Supreme Court to exercise its inherent and discretionary power to review that judicial decision under s.155 (2) (b) of the Constitution. This inherent or right in such an aggrieved applicant is the same right which enabled Avia Aihi to make application for leave to apply for review by the Supreme Court."

44. Whilst we agree with the principles determined in both cases, it is our respectful opinion that these two cases are distinguishable from the present case. As we alluded to earlier, this is not a straight forward case of the applicant having lost his right of appeal. It is more than that. He is insolvent thus we consider that his application is not the same as the applications by Avia Aihi and Jeffery Balakau.

45. The distinction here is that in all three cases, the applicants had lost their right to appeal under the Supreme Court Act. However in the present case, the applicant, apart from having lost his right of appeal, remains an insolvent therefore his position as an applicant is not exactly the same as that of Avia Aihi and Jeffery Balakau.

46. It is our view that in order for the applicant to come to Court under s.155 (2) (b) he must first apply to the National Court for a certificate of discharge so that he can be discharged as an insolvent. Once he is issued with a certificate of discharge, he can then apply under s.155 (2) (b) to invoke the inherent and discretionary powers of the Supreme Court, but must first obtain leave to make that application. His primary right to be discharged from insolvency still subsists therefore that creates a legal disability for him to have standing to come to Court to make a s.155 (2) (b) application.

47. We consider that if he makes an application under the provisions of the Insolvency Act, and is successful, he can then have the locus standi to come to Court to pursue an application for leave under s.155 (2) (b).

48. We reiterate that the applicant has the right to seek a review under s. 155 (2) (b) of the Constitution as a person affected or aggrieved by the decision of the National Court on 18th July 2007. That right is the same right that was granted to Avia Aihi and Jeffery Balakau (supra). Because he has the right, he has the standing to come to Court.

49. However, the applicant is under an existing legal disability. He remains an insolvent. In our view, unless and until that insolvency is discharged by operation of law, he has no locus standi to seek a review as a normal person with legal standing can.

50. In the circumstances, we are of the opinion that as the applicant remains insolvent therefore under that legal disability, he has no locus standi before this Court at this time.

51. For these reasons, we uphold the submissions by Mr. Nanei and Mr. Cooper for the respondents and order that the application for review be dismissed with costs.

52. Consequent to that order, we note that the applicant remains in occupation of the property the subject of WS 1159 of 2003 and this review. Due to the present review application and the Court, an understanding reached between the applicant and the third respondent, the Court ordered the applicant to remain in occupancy upon payment of K5, 000.00 for October rent, until this matter is determined.

53. In the light of the order for dismissal of this review, the third respondent is at liberty to evict the applicant if he so desires. However, we order that the applicant pays the sum of K5, 000.00 to the first respondent for the November rent of the property.

Orders accordingly.

____________________________________

Nobert Kubak & Co Lawyers: Lawyers for Applicant
J.B. Nanei & Co: Lawyers for First and Second Respondent
Rageau, Manua & Kikira Lawyers: Lawyer for Third Respondent