Salvatore Algeri v Patrick Leslie (2001) N2119

• Jurisdiction: Papua New Guinea
• Judge: Sakora J
• Judgment Date: 29 June 2001
• Citation: (2001) N2119
• Court: National Court
• Year: 2001
• Judgement Number: N2119

Full Title: Salvatore Algeri v Patrick Leslie (2001) N2119

National Court: Sakora J

Judgment Delivered: 29 June 2001

N2119

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 258 of 2000

BETWEEN:

SALVATORE ALGERI

Plaintiff

AND:

PATRICK LESLIE

Defendant

WAIGANI: Sakora J

2000: 18 August

2001: 29 June

Companies — Winding up — Liquidator — Powers, duties & responsibilities of — Transaction — Preferential payment — Voidable transaction — Setting aside of — Companies Act 1997, ss. 290 — 300; 303 — 327; 335 — 339; 340 — 342; National Court Rules, O. 4 rr. 37 & 38; O. 6, r.12.

Mr Young for the Plaintiff.

Mr Rihatta for the Defendant.

29 June 2001

SAKORA J: Two applications between these parties in respect of the same matter came before me and heard together. The other application was by the defendant (OS No. 328 of 2000). These applications were made as a direct result or consequence of the following three orders of this Court:

· Winding Up Order of 12 November 1999 in respect of Millenium Corporation Limited (MP No. 576 of 1999).

· Payment into Court of the sum of K40,513.19, and accrued interest to date, being the proceeds of monies lodged with Kina Finance Limited in an Interest Bearing Deposit (Orders made on 7 March 2000 in OS No. 27 of 2000).

· The plaintiff and the defendant herein to initiate proceedings against each other in respect to claims on the ownership of the monies the subject of the preceding order (Orders made on 7 March 2000 in OS No. 27 of 2000).

The plaintiff's claim is by Notice of Motion filed 9 May 2000 pursuant to an Originating Summons filed of even date. It is said to be supported by the affidavit of the plaintiff himself, sworn 30 April and filed 9 May 2000. The application seeks the principal relief:

That any monies held in or paid into the National Court Registry Trust Account pursuant to the Orders made 7 March 2000 in relation to the proceedings of OS No. 27 of 2000 be delivered and paid to the Plaintiff.

The Plaintiff's entitlement to sue and claim arises from or is based upon his appointment as a Liquidator of the company the subject of the Winding Up Order (supra, paragraph (2)), and his powers and duties consonant with that appointment under the Companies Act 1997 (the Act).

The defendant's claim is by Originating Summons which, the Court cannot help but note, is unaccompanied by a Notice of Motion as required by O. 4, rr. 37 and 38 of the National Court Rules (NCR), the former of which reads:

37. Interlocutory or other application in proceedings.

An interlocutory or other application, in or for the purpose of or in relation to proceedings commenced by writ of summons or by originating summons, shall be by motion. (my underlining).

And the latter rule is in the following terms:

38. Notice unnecessary.

(1) Subject to sub-rule (2), a persona shall not move the Court for any orders unless before moving he has filed notice of the motion and served the notice on each interested party who has an address for service in the proceedings. (my underlining).

(2) A person may move the Court without previously filing or serving notice of the motion —

(a) where the preparation of the notice, or the filing or service (as the case may be) of the notice would cause undue delay or other mischief to the applicant;

(b) where each party interested, other than the applicant, consents to the order;

(c) where under these Rules or the practice of the Court for the time being the motion may properly be made without the prior filing or service (as the case may be) of notice of the motion; or

(d) where the Court dispenses with the requirements of sub-rule (1) of this Rule.

(3) Except with the leave of the Court, and subject to these Rules, a motion shall be moved only on a date fixed by the Court for the hearing of motions.

None of the circumstances envisaged by Sub-rule (2) exist here for there to be no Notice of Motion.

Thus, it is the Court's view that the defendant's application (for lack of a better term under the circumstances) registered as OS No. 328 of 2000 has not been properly brought or initiated. It does not comply with the specific requirements of the NCR (supra).

Be that as it may, the Court notes that no objection by or on behalf of the plaintiff Liquidator has been taken to this obvious and fundamental error. Under the circumstances, therefore, all the evidentiary material that the defendant purports to rely on in support of the proceedings OS No. 328 of 2000 can, in my view, be accepted and considered as if these had been duly filed pursuant to his Notice of Intention to Defend dated and filed 15 June 2000 upon substituted service on him of the plaintiff's documents (in respect of OS No. 258 of 2000), pursuant to Orders of this Court made 9 June 2000 (entered 14 June 2000) under O. 6, r. 12 NCR. And I do so accept and consider them in respect of the disputed claims to the money in question.

The plaintiff Liquidator's entitlement to claim and the particulars of the claim itself are detailed in the supporting affidavit of the Liquidator himself (supra). These demonstrate the following circumstances. The defendant was at the time of the Winding Up Order (supra) the General Manager of Millenium Corporation Limited ("the company"). Before the winding up, Mr Greg Sheppard of Maladinas Lawyers had been engaged to act on behalf of the company, and, as such, maintained monies in a Trust Account on behalf of the company. The lawyer also maintained a Trust Account in the name of the defendant personally. These are borne out, firstly, by the 14 July 1999 letter from an Alphonse Lalaga (no title or designation and no letterhead) to Maladinas Lawyers (for the attention of Mr Sheppard). In the light of the issues now before this Court, it is instructive that this letter be reproduced in full hereunder (omitting the formal parts):

Re: Cheque to Patrick Leslie — K50,000.00

I authorise and direct you to draw a cheque from funds held in your trust account the amount of K50,000.00 to Patrick Leslie.

In respect to past transactions on Millenium's Trust Account, I confirm Mr Patrick Leslie's authority to operate and receive funds on Millenium's behalf.

In future, you are fully authorised to operate the trust account on his instructions including payments in cheque from and in cash to Mr Leslie. (my underlining)

This letter is Annexure "A" to the affidavit of Patrick John Leslie sworn 17 March and filed 19 June 2000. Secondly, the defendant confirms these, and more, in his affidavit, more particularly paragraphs (8), (10), (11), (14), (15) and (16).

Now, one of the interesting aspects of the depositions under these paragraphs is that, whilst he maintains that the K50,000.00 that was withdrawn from the company was the K50,000 cash he had collected whilst on vacation to Bokoram village in Bougainville between 21 December 1998 and 14 January 1999 (paragraphs (4), (5) and (6)), the defendant, to put it colloquially, seems to "shoot himself in the foot" by what he deposes to under paragraph (8):

8. After maturity date, sometimes in June, 1998, I withdrew the principal amount of K50,000.00 gave it to Greg Sheppard of Maladina (sic) Lawyers to be held in his trust account so that it could be invested with Kina Finance. (my underlining)

The dates are significant. According to his sworn affidavit (supra), comparing paragraphs (4), (5) and (6) with paragraph (8), it would seem that the purported collection of monies in his village from clan members and the investment with the subject Fast Money scheme (offered by the company) took place after the withdrawal of the selfsame amount. That cannot be logically so, and the withdrawal date of June 1998 would appear to me, under the circumstances, to be the result of a deliberate ploy on the part of the defendant to distance that "transaction" from the Winding Up Order and when the company was deemed to have become "unable to pay its debts as they become due in the ordinary course of business".

It is to be noted that in an affidavit sworn (but not dated) and filed 10 December 1999 in support of his application (pursuant to Notice of Motion undated but filed 10 December 1999), which application was dismissed on 16 December 1999, the defendant deposed that the K50,000.00 cash contribution by his people was to purchase trucks for them and that he left this money with "Maladina (sic) Lawyers and instructed them to invest with...