Moran Development Corporation Limited v Akida Investments Limited (2003) N2458

• Jurisdiction: Papua New Guinea
• Judge: Kandakasi J
• Judgment Date: 03 September 2003
• Court: National Court
• Citation: (2003) N2458
• Year: 2003
• Judgement Number: N2458

Full Title: Moran Development Corporation Limited v Akida Investments Limited (2003) N2458

National Court: Kandakasi J

Judgment Delivered: 3 September 2003

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS. NO. 367 OF 2003

MORAN DEVELOPMENT CORPORATION LIMITED

Plaintiff

AND:

AKIDA INVESTMENTS LIMITED

Defendant

WAIGANI: KANDAKASI, J.

2003: 22nd August

3rd September

PRACTICE & PROCEDURE - Application seeking to set aside statutory demand – Application filed within prescribed time limit – Whether it should be heard within the time limit – As long as application is filed and served within the time limit, the hearing of the application need not be within the time limit but at the earliest available opportunity – s. 338(1) Companies Act 1997.

COMPANIES – Statutory demand served on a company – Company seeking to set aside –No contest as to there being serious dispute on alleged debt – Only issue whether application served and made within time – Application found to have been filed, served and heard within the ambit of s.338(2) of the Companies Act – s. 335 to 338 of the Companies Act 1997.

STATUTORY INTERPRETATION – s. 338(2) Companies Act 1997 – Meaning of - Intent of legislation is to allow a company served with a statutory demand to apply to set aside if it seriously disputes the debt – Not just and proper that a party claiming a debt against a company should succeed merely by default of the company - Application must be filed and served within one month from the date of service of debtors summons – Actual hearing of the application can be made at the earliest available date – ss 335 to 338 of the Companies Act 1997.

WORDS & PHRASES – “application must be made and served” – means filed and served and not the actual hearing of the application – The hearing can be at the earliest available opportunity after the application has been filed and served – s. 338 (2) Companies Act 1997.

WORDS & PHRASES - “month” – means one calendar month – In considering what is the length of a month, it is sufficient when the months are broken, whatever the length of, either to go from one day in a month to the corresponding day in the other – s. 338(2) Companies Act 1997.

Papua New Guinean Cases Cited:

The State v. Independent Tribunal; Ex parte Sasakila [1976] PNGLR 49.

Constitutional Reference No 1 of 1977 [1977] PNGLR 362.

Canisius Karingu v. Papua New Guinea Law Society (9/11/10) SC674.

Overseas Cases Cited:

Camden London Borough Council v. ADC Estates (1990) 3 P.L.R. 121.

Brady v. Licensing Authority for North West Traffic Area [1981] Crim.L.R. 407.

Freeman v. Read L.J.M.C. at Law Journal New Series, Magistrates Cases 1831 – 1896.

Radcliffe v. Batholomew [1982] 1 Q.B. 161.

Counsel:

Mr. B. Frizzell for the Plaintiff.

Mr. D.S. Awaita for the Defendant.

3rd September 2003

KANDAKASI, J: The plaintiff is applying to set aside a statutory demand served on it by the defendant. The defendant opposes the application on the basis that, the application does not meet the requirements of s. 338(2) of the Companies Act 1997, in that it has not been served and heard within the one month stipulated in that provision. In response, the plaintiff argues that its application is within the ambit of s. 338 (2), because it has filed and served the application within the time period stipulated in that section. As for the hearing of its application, it argues that the hearing need not be made within that period.

From these arguments, clearly the issue is whether the plaintiff’s application is made within the ambit of s. 338 (2) of the Companies Act 1997? That issue is dependent on the interpretation to be given to the provision in question, which raises the question of, what is the meaning to be subscribed to the words employed in that provision?

The facts giving rise to this application and consequently, the arguments and the issues are straightforward. A De Kewanu, who is the secretary of the plaintiff company, says that on the 12th of June 2001, the defendant served on the plaintiff a statutory demand for a sum of K270,000.00, allegedly for a debt arising out of a subcontract agreement between the parties. A Mr. David Andiki, a director of the defendant company, signed the contract on behalf of the defendant. He is the person with whom the plaintiff had dealt with at all relevant times in respect of carrying out the terms of the contract. As far as the plaintiff was aware, Mr Andiki was the person who had the relevant and appropriate authority to represent the defendant.

The witness states further that, the plaintiff paid a total sum of K264,544.00 to the defendant through Mr. David Andiki, who gave receipts for the payments. After allowing for the payments, the plaintiff admits to owing to the defendant about K46, 656.00. It then made a payment into Court in the sum of K40,000.00 in total satisfaction of statutory demand. Subsequently, De Kewanu deposes to in another affidavit, that he made a mistake in saying the defendant was owed K46,656.00. This was due to an inadvertent error resulting in a failure to take into account further payments to the defendant reducing the amounts owing to K31, 600.00. On this basis, application was made and granted without much objection for a withdrawal from the monies brought into Court a sum of K8,400.00.

The evidence in rebuttal of what the plaintiff is saying is from a Agibe Pai. He claims to be the managing director of the defendant company. He claims the payments to Mr. David Andiki by the plaintiff were to Mr. David Andiki personally and not to the defendant company. He also speaks of having sent an invoice for an amount of K46, 656.00 to the plaintiff. He then says, the plaintiff has not paid for services rendered under the subcontract. He also claims that the plaintiff wrongly made cheques payable in cash to Mr. Andiki. He therefore, claims that the defendant correctly served on the plaintiff the statutory demand on the 12th of June 2003.

The plaintiff filed these proceedings on the 11th of July 2003. De Kewanu, in an affidavit he deposed to on the 20th of August 2003, states that he effected service of these proceedings on Mr. Agibe Pai, who is a director of the defendant company on the same day of filing. Consequential on that happening, he says Mr. Pai has been attending his office to negotiate the defendant’s position on this matter.

Given these facts, counsel for the defendant does not take issue with the plaintiff that there is a serious dispute as to the amounts the plaintiff allegedly owes the defendant. The only issue is in relation to the timing of this application. This argument is based on s. 388 (2) of the Companies Act 1997.

That provision reads:

“(2) The application shall be made, and served on the creditor, within one month of the date of service of the demand”.

As already noted, the defendant’s argument is that, an application for a set aside must be filed, served and heard within one month from the date of service of a statutory demand. No authority is cited for that proposition. This argument however, relies on The Shorter Oxford English Dictionary’s definition of the word “make” in terms of “doing; action” and “causation uses – “to cause (something to happen): to bring about” or “ to cause a person to do something: to have something done to a person or thing.”

The plaintiff on the other hand relies on a definition of the phrase “Application … is made” from Strouds Judicial Dictionary, 6th edition, p. 1518. The dictionary makes reference to two cases, Camden London Borough Council v. ADC Estates (1990) 3 P.L.R. 121 and Brady v. Licensing Authority for North West Traffic Area [1981] Crim.L.R. 407. These authorities speak in terms of an “application … is made” when the application is communicated or served and not before then. Based on these, the plaintiff argues that s.338 (2) should be interpreted to mean that an application for a set aside of a statutory demand must be filed and served within one month from the date of the service of the demand. But it need not be heard within that period.

As for the meaning of the phrase “one month” counsel for the plaintiff refers to two cases. These are the cases of Freeman v. Read L.J.M.C. at Law Journal New Series, Magistrates Cases 1831 – 1896 and Radcliffe v. Batholomew [1982] 1 Q.B. 161. Reference is also made to s. 3 of the Interpretation Act in the absence of any definition of the word “month” in the Companies Act. Based on these authorities, it is argued for the plaintiff that it means a calendar month, which can commence on a particular day in a month and end on the corresponding day of the following month.

It is settled law that when a Court is faced with the task of interpreting and applying the provisions of any legislation, regard must always be had to the intent of the legislation in question. This necessarily requires an inquiry into what was the purpose of the...