Bexhill Funding Group Limited v Basumel Limited (formerly MBA Limited) (In Liquidation) (2006) N3092

• Jurisdiction: Papua New Guinea
• Judge: Davani, J
• Judgment Date: 30 October 2006
• Court: National Court
• Citation: (2006) N3092
• Docket Number: OS No.744 of 2004
• Year: 2006
• Judgement Number: N3092

Full Title: OS No.744 of 2004; Bexhill Funding Group Limited v Basumel Limited (formerly MBA Limited) (In Liquidation) (2006) N3092

National Court: Davani, J

Judgment Delivered: 30 October 2006

N3092

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS NO.744 OF 2004

BETWEEN:

BEXHILL FUNDING GROUP LIMITED

Plaintiff

AND:

BASUMEL LIMITED (formerly MBA LIMITED) (In Liquidation)

Defendant

Waigani: Davani, .J

2006: 24 May

30 October

PRACTICE AND PROCEDURE – New Zealand judgment registered in PNG – application to set aside registered judgment – must prove requirements in s. 5 of Reciprocal Enforcement of Judgments Act (‘REJA’) – REJA s. 5 (1) (a) (ii) to (iv); s. 5 (2) (3).

LIQUIDATION – company in liquidation in PNG – leave to proceed obtained in New Zealand – leave of liquidator in PNG not obtained prior to application to register New Zealand judgment – highly irregular – registered judgment must be set aside – Companies Act s. 298.

Cases cited:

•Francis Kalyk and Anthony John Deegan and Bruce William Hansen v. Atlas Corporation Pty Ltd Unreported judgment N 1760;

Ferder v St Johnson Mildway [1938] AC 1;

•Stewart v Intercity Distributors Ltd [1960] NZLR 944;

•Langley Constructions (Brix Lam) Ltd v. Wells [1969] 1 WLR 503;

•Steel & Tube Co of New Zealand Ltd v JBL – Sargent Construction Ltd [1973] 2 NZLR 30;

•Felixstowe Dock and Railway Co Ltd v. United States Lines Inc [1989] QBD 360;

•Stenhurst Pty Limited v. Golding International Pty Limited (1995) N 1377;

•Ace guard Dog Security Services Limited and Yama Security Services Limited v Telikom PNG Limited (2004) SC 757;

•Benny Diau v. Gamini Kinigama & Anor, dated 12th December, 2005.

Counsel:

G.J. Shephard and K.M. Frank, for the plaintiff

I.R. Shepherd, for the liquidator

RULING

30 October, 2006

1. DAVANI .J: By an amended Notice of Motion filed on 19 May, 2006, Blake Dawson and Waldron, Lawyers for the defendant, seek the following orders;

“The Liquidator for the defendant will at 9.30am on the 24th day of May 2006 at Waigani, move the Court for orders that pursuant to Order 13, Rule 74(2) of the National Court Rules and Section 5 of the Reciprocal Enforcement of Judgments Act;

1. registration of the judgment from the High Court of New Zealand Suit No. CIV 2003-485-205 dated 26th February 2003 (the judgment) on 17th February 2006 is set aside;

2. the plaintiff to pay the Liquidator’s costs;

3. the time for entry of these orders be abridged to the date of settlement by the Registrar which shall take place forthwith.”

Background and facts

A. Appointment of Liquidator;

2. On 24 February, 2004, Mr Robert Southwell of KPMG Chartered Accountants was appointed the Liquidator of Basumel Limited (In Liquidation), the defendant in these proceedings (‘Basumel’). Basumel was placed in liquidation by a special resolution of the shareholders of the company and that this also occurred on 24 February, 2004.

3. On or about 10 March, 2004, the plaintiff’s then lawyers, Maladinas Lawyers, served the liquidator with an order of the High Court of New Zealand dated 26 February, 2004. A copy of the order is annexed to Robert Southwell’s affidavit sworn on 10 March, 2006 and is marked with the letter “A”.

4. On or about 26 March, 2004, Mr Southwell received, by facsimile, from Messrs Minter Ellison Rudd Watts, Lawyers, of Wellington, New Zealand, several documents which included;

a. Judgment of Master Gendall on jurisdiction dated 15 September 2003;

b. Judgment of Goddard .J dated 15 December, 2003;

a. Judgment of Master Gendall dated 27 February, 2004, giving the plaintiff leave to proceed against the company in liquidation.

These are attached as annexure ‘B’ to the affidavit of Mr. Southwell.

5. On or about 27 February, 2006, Mr Southwell received, from the plaintiff’s lawyers a Notice of Registration of Judgment and a copy of an order made by the National Court Waigani on 17 February, 2006, the effect of which order is that it had registered in these proceedings as a judgment of the National Court, Waigani, the New Zealand Court order of 26 February, 2004. The New Zealand order is attached and marked ‘A’ to the affidavit of Mr. Southwell.

6. The New Zealand judgment of 26 February, 2004, was obtained two days after Mr Southwell’s appointment as Liquidator of the company. But I have heard that the proceedings conducted before Master Gendall from which he delivered judgment of 26 February, 2004, was done ex parte. Paragraphs 1, 2 and 3, of Master Gendall’s oral judgment (dated 26 February, 2004), states that the lawyers representing the company, sought and were granted leave to withdraw as those lawyers had inter alia, “no instructions from the liquidator of the defendant company”, which meant that the proceedings were then conducted ex parte. According to the defendant’s lawyer’s submissions, the proceedings were conducted without the liquidator’s knowledge. He submits that it was not until 10 March, 2004, when the liquidator received the orders, was he then aware of those proceedings. However, the plaintiff’s lawyer submits otherwise. And I will deal with these submissions when I discuss the grounds for the setting aside.

7. At paragraphs 8 to 10 of his oral judgment, Master Gendall granted leave to the plaintiff to continue proceedings against the company in liquidation, such orders made pursuant to Section 248(1) (c) of the Companies Act 1993 (New Zealand), provision identical to PNG’s s.298 (1) (c) of the Companies Act.

B. New Zealand Court proceedings;

8. The notice of Proceeding and Statement of Claim were filed on 2 April, 2003, in the High Court of New Zealand at Wellington. The plaintiff also applied for summary judgment against the defendant company and instructed New Zealand lawyers, Buddie Findlay, to act for it.

9. Basumel objected to the jurisdiction of the New Zealand courts to hear the claim. After argument, its objection to jurisdiction was initially rejected in a judgment dated 15 September, 2003, given by Master D. I. Gendall.

10. Basumel then applied to a more senior judge, for that judgment to be reviewed. After further argument, on 15 December, 2003, the application for review was rejected in judgment given by Justice Goddard.

11. Thereafter, the plaintiff, Bexhill Funding Group Limited (‘Bexhill’), listed an application for summary judgment, to be heard. Before the hearing of the application for summary judgment, the defendant Basumel, made two applications for relief to the Court, both dated 2 February, 2004. These were;

(a) an application for non-party discovery against a third party, Boston Marks Groups Limited; and

(b) an application for pre-summary judgment discovery against the plaintiff.

Both those applications were supported by an affidavit sworn by Simon Wild on 4 February, 2004.

12. Additionally, Basumel filed a notice of opposition to the plaintiff’s application for summary judgment which was dated 18 February, 2004. After a hearing, Basumel’s New Zealand lawyers appeared but only to withdraw. The court granted the application for summary judgment without representation and submissions by Basumel’s lawyers. Effectively, the Master considered the company’s alleged defences without the assistance of legal representation for Basumel and rejected them.

C. New Zealand judgment/order;

13. The order taken out of the Wellington Registry on 26 February, 2004, by the New Zealand High Court, issued by Master Gendall, read as follows;

“ COURT OF ORDER

THIS PROCEEDING coming on for a hearing on the 26th day of February 2004, before Master Gendall at Wellington

AFTER HEARING Mr L J Taylor and Iain Thorpe, counsel for the plaintiff and Mr W M Wilson QC and Macayla Kilday, counsel for the defendant, who were granted leave to withdraw and the evidence then adduced IT IS ADJUDGED THAT;

1. To the extent that it may be necessary, leave is granted to the plaintiff to continue these proceedings against the defendant, a company registered in Papua New Guinea placed in liquidation by a shareholders special resolution dated 24th February, 2004.

2. There be summary judgment for the plaintiff against the defendant in the sum of US$766,634.28 (seven hundred and sixty-six thousand, six hundred and thirty-four dollars and twenty-eight cents United States currency) together with interest at the daily rate of US$222.54 (two hundred and twenty-two dollars and fifty-four cents United States currency) on outstanding principal, accruing from the date of this judgment.

3. The defendant must pay the plaintiff’s costs of this proceeding in the sum of NZ$105,728.11 (one hundred and five thousand, seven hundred and twenty-eight dollars and eleven cents New Zealand currency) together with interest pursuant to contract at the daily rate of NZ$56.48) (fifty-six dollars and forty-eight cents New Zealand currency) on costs, accruing from the date of this judgment.

DATED 26th February 2004

_______(signed)_________

(Deputy) Registrar

JULIE PEREIRA

SEALED 9 March 2004 “

This application

14. The (summary) judgment of the New Zealand High Court was registered in this court, pursuant to an order of Gavara-Nanu .J dated 17 February, 2006. His Honour found, inter alia, that there was sufficient evidence before him to register the judgment...