Pacific Rim Constructors—Singapore Pte Limited v Huala Hire & Construction Limited (2012) N4710

• Jurisdiction: Papua New Guinea
• Judge: Davani J
• Judgment Date: 20 June 2012
• Court: National Court
• Citation: (2012) N4710
• Docket Number: OS NO. 194 of 2012
• Year: 2012
• Judgement Number: N4710

Full Title: OS NO. 194 of 2012; Pacific Rim Constructors—Singapore Pte Limited v Huala Hire & Construction Limited (2012) N4710

National Court: Davani J

Judgment Delivered: 20 June 2012

N4710

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 194 OF 2012

BETWEEN

PACIFIC RIM CONSTRUCTORS – SINGAPORE PTE LIMITED

Plaintiff

AND

HUALA HIRE & CONSTRUCTION LIMITED

Defendant

Waigani: Davani, J

2012: 13th, 20th June,

COMPANIES – Statutory Demand – company seeking to set aside – debt disputed by company – must be a genuine dispute – Statutory Demand must be set aside – s 337& s338 of Companies Act.

COMPANY LAW – Statutory Demand – Company has a separate legal personality – Company not correctly named – Company non-existent – Statutory Demand will be set aside.

Facts

Huala Hire and Constructions Limited, the named Defendant, served a Statutory Demand upon the Plaintiff company, which demand sought payment of monies outstanding for services purportedly rendered to the named Plaintiff, Pacific Rim Constructors – Singapore Pty Limited. However, the Defendant Company disputed the debt stating that it did not authorize a lot of the work done by the Plaintiff company.

Apart from that, the Statutory Demand was issued in the name of a company that was described as “Huala Hire and Constructions (PNG) Limited”. The company search conducted by the Plaintiff company revealed the company as “Huala Hire and Constructions Limited”. However the Statutory Demand and Company extract bore the same company no. 76205.

The Court held that if the debt is disputed to a large extent, that a Statutory Demand must be set aside. Additionally, the Court also held that if a debtor company is incorrectly named on a Statutory Demand, then the Statutory Demand must be set aside because the entity named is non-existent, notwithstanding the fact that the Company no. is the same on the extract of company search and on the Statutory Demand.

Orders

1. The Creditors Statutory Demand for payment of debt dated 8th March, 2012 issued by entity described as Huala Hire and Construction (PNG) Limited, is set aside;

2. The Defendant named in the proceedings, Huala Hire and Construction Limited, will pay the costs of the application to set aside, and other related costs;

3. Such costs to be taxed if not agreed.

Cases Cited

Papua New Guinea Cases

AGC (Pacific) Ltd v. Woo International Pty Ltd [1992] PNGLR 100

Moran Development Corporation Ltd v. Akida Investments Ltd (2003) N458

PNG Balsa Co. Ltd v. New Britain Balsa Co. Ltd (2004) N2520

Overseas Cases Cited

Salamon v. Salamon & Co. Limited [1897]

texts cited

Odgers on Pleadings and Practise 13th Edition

Supreme Court Practise Vol. 2 1973

Halsburys Laws of England Third Edition Vol. 6

Counsel:

Mr R. Manrai, for the Plaintiff/Applicant

Mr A. Chillion, for the Defendant/Respondent

DECISION

20th June, 2012

1. DAVANI J: Before the Court is Originating Summons filed on 5th April, 2012 by Manrai Lawyers which seeks to set aside a Statutory Demand issued by Huala Hire Construction Limited, such application made pursuant to Section 338 of the Companies Act 1997 (‘Companies Act’).

2. This Originating Summons is supported by notice of motion also filed on 5th April, 2012 which seeks the same orders as pleaded in the Originating Summons, together with the affidavit of Jan Aili sworn on 3rd April, 2012 and filed on 5th April, 2012, and the further affidavit of Jan Aili sworn on 18th May, 2012 and filed on 31st May, 2012.

3. The application is opposed by the Defendant, through its lawyers. They rely on the affidavit of Paul Charlaff sworn on 3rd May, 2012 and filed on 4th May, 2012, the deponent being the Defendant’s General Manager.

Background

4. Huala Hire and Constructions Limited (‘Huala Hire’) issued a Statutory Demand, relying on Section 337 of the Companies Act, upon Pacific Rim Constructors – Singapore PTE Limited (‘Pacific Rim’). The Statutory Demand was issued after Huala Hire claimed that debts owing to it by Pacific Rim remained owing and outstanding.

5. According to Mr Manrai for Pacific Rim, the Statutory Demand is in respect of debts allegedly owing by Pacific Rim to Huala Hire for services allegedly rendered but not paid for. These services are summarized in Mr Manrai’s written submissions as:

i. Septic tank pumping services at LNG Portion 152 site, pumping and transportation and disposal for the month of September, 2011;

ii. Servicing two portable toilets at K350.00 per toilet for 15 days in the month of October 2011;

iii. Daily fuel delivery to all Pacrim Equipment and Wagpac Equipment at job sites (LNG job sites in Central Province) for the month of September, 2011;

iv. Septic tank pumping services at LNG Portion 152 site, pumping and transportation and disposal for the month of October 2011;

v. Septic tank pumping services at LNG Port 152 site, pumping and transportation and disposal for the month of November, 2011; and

vi. Servicing three portable toilets at K350.00 per toilet for 16 days in the month of November, 2011.

6. Huala Hire deposes in its affidavits that these services commenced on 13th April, 2011 when the both parties agreed by e-mails exchanged to commence operations, which saw Pacific Rim issuing purchase orders followed by Huala Hire issuing invoices. Huala Hire claims that it continuously provided those services and that it is Pacific Rim who either failed to comply or was dilatory in completing its obligations under the 13th April, 2011 Agreement, where payments were to have been made monthly for services rendered by Huala Hire to Pacific Rim but which were not paid.

7. Huala Hire claims that the Plaintiff has failed to settle invoices and these are listed at pars. 20 (a) to (f) of Paul Charlaff’s affidavit sworn on 3rd May, 2012 and filed on 4th May, 2012. These are:

(a) Septic Tank pumping services at LNG Portion 152 Site, pumping and transportation and disposal for the month of September, 2011 (Invoice No. PACRIM-310911-00032).

(b) Servicing two portable toilets at K350.00 per toilet for 15 days in the month of October, 2011 (Invoice No. PACRIM-311011-00036).

(c) Daily fuel delivery to all PacRim Equipment and Wagpac Equipment at job sites (LNG job sites in Central Province) for the month of September 2011 (Invoice No. PACRIM-311011-00038).

Copies of Purchase Orders, delivery dockets and invoice for services rendered in October, 2011 are attached.

(d) Septic tank pumping services at LNG Portion 152 Suite, pumping and transporting and disposal for the month of October, 2011 (Invoice No. PACRIM-311011-00039).

(e) Septic Tank pumping services at LNG Portion 152 Site, pumping and transporting and disposal for the month of November, 2011 (Invoice No. PACRIM-301111000040).

(f) Servicing three portable toilets at K350.00 per toilet for 17 days in the month of November 2011 (Invoice No. PACRIM-301111-00041).

Annexed hereto and marked with the letter “J” are true copies of the Purchase Order, delivery dockets and invoices for services rendered in November, 2011.

8. According to Jan Ailey of Pacific Rim, the Statutory Demand was sent to Ashurst Lawyers, formerly Blake Dawson Waldron Lawyers. There is no issue as to service.

9. However, there is an issue as to the correct name of the Defendant Company, which I will discuss below.

Analysis of Evidence and the Law

10. The relevant provisions on Statutory Demands and the setting aside of Statutory Demands are found in the Companies Act. Division 5 of part XVII of the Companies Act deals with the liquidation of Companies. That division starts with section 335 and ends with section 339. The right to serve a Statutory Demand is provided in section 337 of that Act. It reads:

“337. STATUTORY DEMAND

(1) A statutory demand is a demand by a creditor in respect of a debt owing by a company made in accordance with this section.

(2) A statutory demand shall–

(a) be in respect of a debt that is due and is not less than the prescribed amount; and

(b) be in the prescribed form; and

(c) be served on the company; and

(d) require the company to pay the debt, or enter into a compromise under Part XV, or otherwise compound with the creditor, or give a charge over its property to secure payment of the debt, to the reasonable satisfaction of the creditor, within one month of the date of service, or such longer period as the Court may order.”

11. This process is available to a Creditor of a Company and its purpose is as stated in subsection 2(d) above which is to get a Debtor Company to enter into a compromise or, compound with the Creditor or, give a charge over a property to secure payment of the debt and that this must be to the Creditor’s satisfaction all to be done within one month of date of service or such longer period as allowed by the Court.

12. This only applies where there is no dispute. However, where there...