Department of Works & the State as the Principal Creditors v In The Matter of International Construction (PNG) Ltd (In Liquidation) and In The Matter of the Companies Act 1997 (2009) SC1051

• Jurisdiction: Papua New Guinea
• Judge: Injia CJ, Lay & Yagi JJ
• Judgment Date: 27 April 2009
• Court: Supreme Court
• Citation: (2009) SC1051
• Docket Number: SCA NO 87 OF 2008
• Year: 2009
• Judgement Number: SC1051

Full Title: SCA NO 87 OF 2008; Department of Works & the State as the Principal Creditors v In The Matter of International Construction (PNG) Ltd (In Liquidation) and In The Matter of the Companies Act 1997 (2009) SC1051

Supreme Court: Injia CJ, Lay & Yagi JJ

Judgment Delivered: 27 April 2009

SC1051

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA NO 87 OF 2008

BETWEEN:

DEPARTMENT OF WORKS & THE STATE AS THE PRINCIPAL CREDITORS

Appellants

AND:

IN THE MATTER OF INTERNATIONAL CONSTRUCTION (PNG) LTD (IN LIQUIDATION)

Respondent

AND:

IN THE MATTER OF THE COMPANIES ACT 1997

Waigani: Injia CJ, Lay & Yagi JJ

2008: 27th October

2008: 24th July

2009: 27th April

PRACTICE AND PROCEDURE - Supreme Court Act s. 14 (3) (b) – objection to competency of appeal – COMPANIES ACT 1997 – application by the liquidator for an order for assistance – whether application interlocutory or final – Companies Act – s.332 (1) (a); Appropriate forms and procedure to be applied – Companies Act and Companies Rules & National Court Rules

Facts:

The Respondent obtained an order that a consignment of eight (8) containers of bridge parts removed from the Respondent’s premises by the Appellant be restored to the Respondent’s premises. The Appellant sought leave to appear to set aside this order, which was refused. The Appellant therefore appealed against the refusal.

The Respondent objected to competency of the appeal arguing that the notice of appeal failed to comply with section 14 (3) (b) of the Supreme Court Act as no leave to appeal was obtained. The issue was whether leave of this Court is required in respect to an appeal against an order of the National Court refusing to grant leave to a creditor pursuant to s.332 (1) of the Companies Act to contest an order of the Court restoring possession of property to the liquidator.

Held:

1. The National Court did not determine rights of ownership in the property.

2. The order of the National Court in refusing grant of leave in an application pursuant to s.332 (1) of the Companies Act to restore to the custody of the liquidator property removed without order of the Court is interlocutory in nature and therefore leave is required under s.14 (3)(b) of the Supreme Court Act.

3. The objection to competency is upheld.

4. The appeal is dismissed as being incompetent

5. The Appellants pay the Respondent’s costs in the appeal

Cases Cited:

Papua New Guinea cases

Rimbink Pato v Julius Chan & Ors – SC527

Paul Bari, Orim Bari and State v John Raim – SC 768

Kitogara Holdings Pty Ltd v National Capital District Interim Commission & Ors [1988-89] PNGLR 346; SC371

Overseas Cases:

The Avenue Builders Ltd (In Liquidation) v The Avenue Ltd [2005] in NZHC 481

GCA Legal Trustees (2004) Ltd Brashside Farm NO 2 Limited and Anor v Consultant Management Services Ltd & Ors [2007] NZHC 1179

Kiwi Marketing Inc v Prima Technologies Ltd [2008] NZHC 696

Hickson v Fresh Prepared Ltd [2007] NZHC 1233

Walter and Anor as Liquidators of Kiwi International Airlines [2006] NZHC 870

Trinity Foundation (Services No 1) v Downey & Anor [2006] NZHC 310

Counsel:

L. Putupen, for the Appellants

I. Shepherd, for the Respondents

27th April, 2009

DECISION

1. BY THE COURT: This is a ruling on the Respondent’s objection to competency of the appeal. The appeal concerns eight (8) shipping containers of bridge parts which were in possession of the Respondent when it was placed in liquidation. The Appellant removed the containers to its own premises without the consent of the liquidator or any order of the Court. The Respondent liquidator obtained an order for the containers and contents to be returned to the premises of the company, and they were returned. The Appellants then sought leave to appear to set aside the ex parte order on the basis of the Appellant’s alleged proprietary interest in the bridge parts. That leave was refused and it is from that refusal that the Appellant appeals.

GROUNDS OF OBJECTION TO COMPETENCY

2. The Respondent raised 13 grounds of objection to which 11 were withdrawn or abandoned at the hearing. The grounds pursued were

grounds 3 and 4. Ground 4 is in effect the same as ground 3 and therefore both were argued together. These grounds are stated as follows:

“3. The whole of the Notice of Appeal is incompetent because the appellants seek to appeal the decision of His Honour Justice Hartshorn handed down on 17 July 2008, in circumstances where His Honour was determining an interlocutory application.

Accordingly, the appellants failed to seek leave to appeal pursuant to section 14(3) (b) of the Supreme Court Act.

4. The whole of the Notice of Appeal is incompetent because the liquidation of International Construction (PNG) Limited has not been terminated or completed.

Accordingly, the appellants failed to seek leave to appeal pursuant to section 14(3)(b) of the Supreme Court Act.”

Nature of Objection

3. It is clear from the remaining grounds of objection that the Respondent is raising the issue of the Court’s jurisdiction under section 14(3) of the Supreme Court Act. this provision states:

“(3) No appeal lies to the Supreme Court without leave of the Supreme Court.

(a) from an order allowing an extension of time for appealing or applying for leave to appeal; or

(b) from an interlocutory judgment made or given by the National Court except -

(i) where the liberty of the subject or the custody of infants is concerned; or

(ii) in cases of granting or refusing an injunction or appointing a receiver; or

(iii) in such other cases prescribed by the Rules of Court as are in the nature of final decisions; or

(c) from an order of the National Court as to costs only that by law are left to the discretion of the National Court.”

Notice of Appeal

4. The notice of appeal filed by the Appellants states that the appeal lies without leave and is made pursuant to section 14(1)(a) and (b) and subsection (4) of the Supreme Court Act.

Issue

5. Clearly there is only one issue before the Court for determination. The issue is where leave of this Court is required in respect to an appeal against an order of the National Court refusing to grant leave to set aside an ex parte order or decision of the National Court restoring possession of property to the liquidator pursuant to s. 332(1) of the Companies Act.

Respondent’s Argument

6. The Respondent argues that the appeal is incompetent on the basis that it is in breach of section 14(3)(b) of the Supreme Court Act. It was submitted that the decision of the National Court was of an interlocutory nature and therefore leave of the Court should have been obtained. In this case, the Respondent submits no leave was granted by this Court to appeal the interlocutory decision of the National Court.

Facts

7. The facts of this particular case are straight forward. In or about March 2007 the State entered into contracts with the Respondent for the procurement, supply and construction of bridges in the country.

8. An advance payment in excess of K3 million was made by the State to the Respondent. It appears the payment was made in accordance with the terms of the contract to enable the Respondent to import the bridge parts from overseas based suppliers in the Netherlands. Thereafter the State made additional payments which amounted to more than K6 million in total under the contracts.

9. The bridge component parts arrived in Papua New Guinea in eight (8) shipping containers before the Respondent company was placed in liquidation. These eight (8) shipping containers were kept at the premises of the Respondent company in Lae.

10. On 19 November 2007 the National Court made an order putting the Respondent company into liquidation. The Court also appointed Mr. James Kruse as the liquidator of the company pursuant to s. 291 of the Companies Act. These orders were made following a winding-up petition in proceedings MP. No. 205 of 2006.

11. By virtue of s. 298(1)(a) of the Companies Act, on commencement of the liquidation, all the assets of the Respondent were vested in the custody and control of the Liquidator. Section 298(1)(a) stated:

“298. Effect of commencement of liquidation.

(1) With effect from the commencement of the liquidation of a company-

(a) the liquidator has custody and control of the company’s assets; and

(b) ………………………..”

12. Upon assuming his duties and responsibilities, the Liquidator undertook an audit exercise or stock-take and determined that the 8 shipping containers of bridge parts were part of the assets of the Respondent company.

13. The Liquidator then published a tender advertisement for the sale of the bridge parts.

14. When the Department of Works became aware of the pending sale, it acted quickly and without the knowledge and consent of the Liquidator, in removing the 8 shipping containers of bridge parts from the Respondent’s premises in Lae and transferred them to its premises also in Lae.

15. On learning of the actions of the Department of Works, the Liquidator made an urgent application on 29 of February 2008 to the National Court and obtained orders ex parte for the recovery of the assets. The Court made the following orders:

“1. Leave to dispense with the service of this summons is granted

2. Pursuant to section 332(1) of the companies Act, John Wakma, the Provincial Works Manager, Department of Works, Morobe...