Re The Companies Act Ch146 and Pacific Rim Corporation Holdings Pty Ltd

• Jurisdiction: Papua New Guinea
• Judge: Brown J
• Judgment Date: 04 November 1992
• Citation: [1992] PNGLR 491
• Court: National Court
• Year: 1992
• Judgement Number: N1127

National Court: Brown J

Judgment Delivered: 4 November 1992

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

IN THE MATTER OF THE COMPANIES ACT CH 146 AND IN THE MATTER OF PACIFIC RIM CORPORATION HOLDINGS PTY LTD (IN LIQUIDATION)

Waigani

Brown J

2 November 1992

4 November 1992

COMPANY LAW — Summons for direction by liquidator — Question of concluded contract for sale of assets of the company in liquidation — Application of principles — Use of phrase "subject to contract".

Facts

The liquidator of Pacific Rim Corporation Holdings Pty Ltd (in liquidation) sought directions pursuant to s 254 (3) of the Companies Act Ch 146 to approve or disapprove a sale of the company assets. A prospective purchaser, Pactim Resources Pty Ltd, had offered to buy the assets on terms. On 14 September 1992, the liquidator wrote saying inter alia, "I am pleased to advise that your offer is accepted subject to contract".

Subsequently, various documents came into existence, including a draft lease agreement, a draft of the contract for sale of the business and a contract for sale of equipment on expiry of lease. In addition, the liquidator proposed to take a guarantee from directors of the leasing company and a fixed and floating charge over assets of the leasing company to secure the obligation by Pactim. Negotiations were carried on, during which time various amendments and inclusions were made to the documentation.

Later on, a new purchaser was introduced and it became necessary to determine whether a concluded contract had eventuated in the circumstances, or if the liquidator was free to treat with the new purchaser.

Held

1. That whether or not a concluded contract can be found is a question of fact Masters v Cameron (1954) 91 CLR 353.

2. The phrase "subject to contract" admitted of various meanings, and it was for the Court to draw the proper conclusion on the facts.

3. This case falls within the third category referred to in Masters v Cameron i.e. the intention was not to make a concluded bargain unless and until there was a concluded contract.

Case Cited

Masters v Cameron (1954) 91 CLR 353.

Counsel

C Coady, for the liquidator.

G Lay, for Pactim Resources.

G Chandler, for the prospective purchaser.

J Shepherd, for Peter Yapa, contributor.

4 November 1992

BROWN J: Mr Birch, the liquidator, seeks directions pursuant to s 254 (3) of the Companies Act Ch 146, to approve or disapprove a proposed sale of assets of the company in liquidation. That proposed sale was to Pactim Resources Pty Ltd. Mr Coady deposed to the negotiations. The offer to buy preceded the letter of 14 September 1992, which said:

"Thank you for offer to purchase the assets of the above company. I am please to advise that your offer is accepted subject to contract. Please note in particular that the leasing...