Gopera Investments Ltd v Reko (PNG) Ltd [2016] PGSC 87; SC1623 (31 March 2016)

SC1623

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA No. 92 of 2015

BETWEEN:
GOPERA INVESTMENTS LTD
Appellant

AND:
REKO (PNG) LTD
Respondents

Waigani: Injia CJ
2016: March 29^th & 31^st

PRACTICE & PROCEDURE - Leave to appeal - Conflict of opinion on point of procedural law amongst Judges of the National Court of equal jurisdiction - Trial judge's preference over one view to determine interlocutory application – Whether the arguable case that the trial judge was wrong - Exercise of discretion in a procedural matter in a civil case within the trial Judge's jurisdiction - Principles - No arguable case demonstrated - Leave application dismissed with costs

PRACTICE AND PROCEDURE- National Court- Conflict of opinion on point of procedural law amongst Judges of the National Court of equal jurisdiction - Preferred approach- Trial judge should make a reservation under s 21 of the Supreme Court Act for the Supreme Court to resolve the conflict.

COMPANY LAW- Petition for winding up of company- Mode of commencement of proceedings- Whether by Petition under the Company Rules or by application under s 291 of the Companies Act commenced by Originating Summons- Conflict of opinion on point of procedural law amongst Judges of the National Court of equal jurisdiction- Open for next trial judge to adopt either view- No error committed by trial judge who does so.

Counsel:

T Tape, for the Appellant
M Mukwesipu with M Tusais, for the Respondent

31^st March, 2016

1. INJIA CJ: This is a contested application for leave to appeal from an interlocutory ruling of the National Court in which the trial judge dismissed the appellant's application to dismiss a winding- up Petition brought by the respondent.
   
2. The short facts of the case are that on 5^th September 2014, the respondent instituted proceedings by Originating Summons seeking declaratory relief, inter alia, that the appellant's termination of a Logging and Marketing Agreement dated 12 July 2014 entered into between the appellant and the respondent was unlawful and void. On 20 January 2015, the respondent issued a statutory Demand under s 337(2)(b) of the Companies Act 1997 requiring the appellant to settle a debt of K261 ,448.50. The appellant defaulted in satisfying the demand. On 18^th March 2015, the respondent brought a "Petition" in the National Court seeking orders that the appellant be wound up by the Court under provisions of the Company Act 1997 and that one James Kruse be appointed as the Liquidator in accordance with s 291 (2)(c) and s 291 (3)(a) and (d) of the Companies Act 1997 with respect to the winding- up of the company. The respondent conceded in the Court below that the form of the Petition used to bring the application was that which is provided in Part 11, ss 14-16 of the Companies Rules (Ch 146). On 23^rd April 2015 the appellant moved a motion before the National Court before Justice Ipang seeking orders to dismiss the Petition for abuse of process pursuant to 012 r 40 (1 )(c) of the National Court Rules; the ground being the wrong mode of commencement of proceedings had been adopted to bring the application. It was argued that the Company Rules (Ch 146) and the Companies Act (Ch 146) under which those rules were made under, and under which the Petition was brought, were repealed and replaced by the Companies Act 1997. It was argued that the correct mode of commencing proceedings for winding-up under s291 of the Companies Act 1997 is by way of an "Application". It was argued however that in the absence of a prescribed form of the "Application" in the Companies Act 1997, the ordinary mode for commencement of such proceedings in the National Court, by way of Originating Summons should have been employed.
   
3. By the time this motion was moved, there were already in place two conflicting decisions of the National Court on the procedural point in question. In PNG Harbours Board v Chris Textiles Limited (2005) N2855, Justice Sevua held that the Companies Rules (Ch 146) ceased to have effect, by operation of law, six months after the Companies Act 1997 came into operation; the correct procedure to apply for winding up is found in Part XVIII (ss 290-364) of the Companies Act 1997. In re International Construction PNG Ltd (20070 N3337, Justice Hartshorn disagreed and ruled that pursuant to s 440(3) and s 441(1) of the Companies Act 1997, the Companies Rules (Ch 146) continued to apply to existing companies that were incorporated before the Companies Act 1997 came into force. Section 440(3) of the Companies Act 1997 expressly stipulated that the Companies Rules were not repealed and continued to apply after the new Act came into operation. In the absence of any express prohibition in the Companies Act 1997 against the use of the Companies Rules, the latter remained in force. The winding-up Petition had been validly brought under the Companies Rule (Ch 146).
   
4. The appellant's counsel argues before me that the trial judge was wrong in law in dismissing the application. He urged me to adopt Justice Sevua's reasoning as the correct statement of the law and to find that an arguable case has been made out to warrant grant of leave to appeal. The respondent's counsel argues that the trial judge was correct in applying the correct statement of the law as expressed by Justice Hartshorn. He also argued that the only point in contention is one of form of the Petition and in the absence of any express provision for the form of an application for winding up under s 291 of the Companies Act 1997, it was open for the respondent to adopt the form of Petition provided in the Companies Rules (Ch 146). It is submitted the Petition substantially complied with s 291 of the Companies Act 1997 in that the Petition expressly relied on that provision to bring the application for winding up. The appellant is not without recourse in the Court below, that no injustice has been caused to either of the parties and that the rights of either of the parties to prosecute or defend the Petition at the trial have not been adversely impacted by the interlocutory decision. The leave application should be dismissed for these reasons.
   5. The criteria for grant of leave are settled. The applicant must demonstrate an arguable case that the judge was wrong. The Court may refuse leave where there is recourse in the court below, that the decision does not have any bearing on the final determination of the substantive issues between the parties and that the decision does not affect the primary rights of the parties or prevents a determination of those issues: Matiabe Oberia v Police & The State (2005) SC801; Rendel Rimua & ors v Simon Ekanda & ors (2011) SC1094.
   6. In Matiabe Oberia, three (3) of the criteria canvassed in that judgement are important and of particular relevance to challenges to interlocutory rulings in a civil case on a procedural point in which the trial judge has jurisdiction to issue the interlocutory judgment. Those three (3) criteria are:

"(2) Was the ruling within the discretion of the Court? Has it been shown that its exercise was manifestly unreasonable, exercised on wrong principle or mistake of fact?

(3) Does the decision have any bearing on the final determination of the issues between the parties?
(4) Will it affect the primary rights of the parties or even prevent the determination of the issue?"

7. These criteria are derived, in part, from the full Court's decision in Sir Julius Chan v Ombudsman Commission [1999] PNGLR 240 which is cited in Matiabe Oberia. In the Chan case, the Court said that an appellant must show a strong case of an error in the judgment - something more than an arguable case: there must be shown not simply an error but a patent error on the face of the record. The Court said at page 258:

"So to obtain leave to appeal an interlocutory judgment, it is not simply a matter (of asserting there is an arguable case; that there has been some error. It is not the case that every error will effect the outcome of the substantive proceedings. What must be shown is, not only that there is patent error, but that the error effects a party's substantive rights or will prevent the proper determination of issues."

8. In Lyons Putupen v Enga Provincial Government (2009) SC 1035, I expounded on this statement where I said:

"The main issue to be decided in an application for leave to appeal is whether an arguable case has been demonstrated that there was an error in the exercise of discretion. The application for leave in this case relates to exercise of discretion on a procedural matter within the Court's jurisdiction in a civil case. When the Court is determining an application for leave to appeal against such decision, it is important for the Court dealing with the application for leave to be reminded of the strong presumption of correctness which attaches to the decision involving exercise of discretion in a civil case on a procedural matter within the Court's jurisdiction. Such an applicant does have a harder roe to hoe, so to speak, compared with an applicant who seeks leave to appeal against other types of interlocutory judgments"

9. When these principles are applied to numerous leave applications from interlocutory judgements on procedural aspects in civil matters that congesting the Supreme Court nowadays, only a handful of applications that have some real merit that raise serious issues on points of law or facts that warrant a hearing on the merits should survive the scrutiny and proceed to a hearing before the full Court. That precisely is the main purpose of the leave application.
10. In the case before, there is no question that the trial Judge was dealing with a procedural matter in a civil case in which he clearly had jurisdiction. Presented before him were two clearly competing views of judges on a point of procedural law that in my view are both tenable on the law as it stood after the enactment of the Companies Act 1997. It was open to the trial judge to adopt and apply the view that appeared to him to be persuasive to him. He chose to go by the reasoning of Justice Hartshorn J. No error can be found or imputed to a judge of the National Court of equal jurisdiction who chooses to opt for and apply a point of law from two equally competing views of judges. If the appellant is dissatisfied with the trial judge's interlocutory ruling, it should await the outcome of the trial and appeal against this interlocutory ruling in the context of the main appeal against the final decision, as of right, if the decision in the main case were to go against it.
    
11. For these reasons, I am not satisfied an error, a patent error, has been demonstrated.
    
12. Besides, neither party stands to suffer any prejudice to their rights to litigate the Petition on its merits in the Court below.
    
13. I am not satisfied that an arguable case has been demonstrated to warrant grant of leave to appeal.
    
14. I note that the conflicting view amongst judges on a point of law should be put to rest by the Supreme Court to avoid confusion and may tend to encourage judge-shopping amongst applicants that pursue similar applications in the court below. The proper course to adopt is for the trial judge on request by the parties or on the trial judge's own motion to make a reservation on the point of law for determination by the Supreme Court under s 21 of the Supreme Court Act. In the case before that approach was not taken. Hopefully the next trial judge that is faced with a contention on the same point should, I suggest, make a reservation.
    

15. For these reasons, I dismiss the application with costs to the respondent.
__________________________________________________________________________
Kandwalyn Lawyers: Lawyer for the Appellant
Gadens Lawyers: Lawyer for the Respondent

4