Bemobile Ltd v Daniel Wettao

• Jurisdiction: Papua New Guinea
• Judge: Hartshorn J
• Judgment Date: 25 July 2014
• Citation: (2014) N6776
• Court: National Court
• Year: 2014
• Judgement Number: N6776

Full : OS 106 of 2014; Bemobile Limited v Daniel Wettao (2014) N6776

National Court: Hartshorn J

Judgment Delivered: 25 July 2014

N6776

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS 106 of 2014

BETWEEN:

BEMOBILE LIMITED

Plaintiff

AND:

DANIEL WETTAO

Defendant

Waigani: Hartshorn J

2014: 22nd, 25th July

Application to set aside a statutory demand – Sections 338(1) and 338(4) Companies Act

Cases Cited:

Papua New Guinea Cases

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

The PNG Balsa Company Ltd v New Britain Balsa Company Ltd (2004) N2520

Bank of South Pacific Ltd v South Pacific Timber Exports Ltd (2004 N2712 Department of Works v International Construction (PNG) Limited (In Liquidation) (2009) SC1051

Rex Paki v Motor Vehicle Insurance Ltd (2010) SC1015

In re Bemobile Ltd (2011) N4712

In Pacific Rim Constructors – Singapore Pte Ltd v Huala Hire & Construction Ltd (2012) N4710

Overseas Cases

Silverpoint International Limited v Wedding Earthmovers Limited (2007) NZHC 1769

Counsel:

Mr. J. Brooks, for the Plaintiff

25th July, 2014

1. HARTSHORN J: The Plaintiff Bemobile Limited seeks to set aside a statutory demand issued against it by the Defendant, David Wettao.

2. I allowed the hearing of the originating summons to proceed in the absence of the defendant and representation on his behalf as I was satisfied that the lawyers for Mr. Wettao had been notified in writing by letter dated 16th July 2014, which was personally delivered on 17th July 2014, that the hearing was listed at 9:30 am 22nd July 2014. I noted also the acknowledgment of receipt of the letter.

3. Sections 338 (1) and 338 (4) Companies Act, and Order 12 Rule 1 National Court Rules are relied upon by Bemobile for the relief that it seeks.

4. The statutory demand sought to be set aside is dated 14th February 2014 and is for the sum of K43,730.00.

Preliminary

5. As to whether an originating summons is the appropriate form of originating process to be used for an application such as this, I am satisfied that it is after having regard to the decisions of Moran Development Corporation Ltd v Akida Investments Ltd (2003) N2458; The PNG Balsa Company Ltd v New Britain Balsa Company Ltd (2004) N2520; Bank of South Pacific Ltd v South Pacific Timber Exports Ltd (2004 N2712; Department of Works v International Construction (PNG) Limited (In Liquidation) (2009) SC1051; In re Bemobile Ltd (2011) N4712 and In Pacific Rim Constructors – Singapore Pte Ltd v Huala Hire & Construction Ltd (2012) N4710.

6. As to whether s.338 (2) Companies Act has been complied with; that, “The application shall be made, and served on the creditor, within one month of the date of service of the demand”, I am satisfied that it has as the originating summons was filed within one month of the date of the statutory demand and within one month of the date that Bemobile contends that it was served with the demand. In addition, the originating summons was served upon the lawyers for Mr. Wetteo on 10th March 2014. I note that Mr. Wettao is listed on the letterhead of JAL Japson & Associate Lawyers as either a senior associate or consultant - it is not clear which. Further, in a letter dated 3rd March 2014, JAL Japson & Associate Lawyers informed that they act for Mr. Wettao and Amamusa Consultants in regard to the statutory demand the subject of this proceeding, and another related but separate statutory demand, the subject of another proceeding.

7. The filing and service of an application to set aside a statutory demand within one month is all that is required by s.338 (2) Companies Act and I refer to the decision of Moran Development Cooperation Limited v Akida Investments Limited (supra) in this regard.

8. Bemobile contends that the statutory demand should be set aside as:

(a) It has a substantial dispute as to whether the debt claimed in the statutory demand exists at all;

(b) Bemobile has a claim against Mr. Wettao that he was paid money by Bemobile to which he was not entitled.

Law

9. Sections 338 (1) and (4) Companies Act are as follows:

“(1) The Court may, on the application of the company, set aside a statutory demand.

………

(4) The Court may grant an application to set aside a statutory demand where it is satisfied that –

(a) there is a substantial dispute whether or not the debt is owing or is due; or

(b) the company appears to have a counterclaim, set-off, or cross-demand and the amount specified in the demand less the amount of the counterclaim, setoff, or cross-demand is less than the prescribed amount; or

(c) the demand ought to be set aside on other grounds.”

10. These sections are similar to s.290 (1) and (4) Companies Act of New Zealand. Consequently cases from the New Zealand Courts on setting aside applications are relevant as well as persuasive in applications to set aside in this jurisdiction. This is demonstrated in the case of the PNG Balsa Company Limited v New Britain Balsa Company Limited (supra) in which Lenalia J, after considering New Zealand authority, held that in order to demonstrate that there is a substantial dispute, an applicant must, “show a fairly arguable basis” to justify the contention that it was not liable to pay the amount claimed in the statutory demand.

11. I note that in the New Zealand High Court case of Silverpoint International Limited v Wedding Earthmovers Limited (2007) NZHC 1769, it was accepted that the test to be applied still is, whether there is a fairly arguable basis on which an applicant can claim that it is not liable.

12. I also make reference to the following decisions:

(a) In Re Bemobile Limited (supra), the Court held that the applicant must establish that there was a, “substantial dispute” as to the amount claimed in the statutory demand. In that matter the Court held that the statutory demand ought to be set aside as there was a substantial dispute and the proper course was that the dispute ought to be pleaded by way of statement of claim.

(b) In Moran Development Corporation Limited v Akida Investments Limited (supra), Kandakasi J also found that there was a, “substantial dispute” as to the alleged debt and set aside the statutory demand.

(c) In Pacific Rim Constructors – Singapore Pte Limited v Huala Hire & Construction Limited (supra), the Court held that if a debt is disputed, “to a large extent”, the statutory demand must be set aside. See also PNG Balsa Co Limited v New Britain Balsa Co (supra).

13. In the above cases the following principles are set out as to when a statutory demand ought to be set aside:

(a) The applicant must establish that there is a, “fairly arguable basis” or a, “substantial dispute” as to the amount claimed in the statutory demand;

(b) The evidence in support of an application must demonstrate that there is arguably a genuine and substantial dispute and which goes towards supporting the claim that the debt is disputed;

(c) That a mere assertion that there exists a debt or debts is not sufficient to maintain the statutory demand;

(d) That where proof has been given that there exists a substantial dispute, the matter must be resolved by other means, meaning the statutory demand must be set aside.

14. The Statutory demand here, is for K43,730.00 for retainer fees, pro rata payments and accommodation for the month of October, November and December 2013. Bemobile contends that these are alleged amounts associated with a consultant agreement that Mr Wettao had with Bemobile from June 2012.

15. Pursuant to the consultancy agreement, Mr. Wettao would work three days a week for K7,000 per month. There is provision in the agreement for additional days to be worked and for reimbursement of certain expenses. Mr. Wettao was to provide legal services. In addition one of the main purposes of Mr. Wettao’s engagement as a consultant was for the acquisition of sites or areas for the construction of Bemobile cell towers.

16. In May 2013, a contract came into existence between Bemobile and Amamusa Consultants. Amamusa Consultant is a business name owned by Mr. Wettao. The Amamusa contract purports to perform the site acquisition work that was being performed by Mr. Wettao for much larger payments than those to be paid to Mr. Wettao for the same work under this consultancy agreement.

17. As to the Statutory Demand issued by Mr. Wettao for the amount of K43,730.00, Bemobile contends:

(a) Many of the payments claimed relate to additional days claimed for the months of October, November and December 2013 and associated accommodation and meal allowances;

(b) Bemobile has no record of requesting Mr. Wettao to work additional days in October, November and December 2013;

(c) Bemobile has not received any legitimate receipts for meals and accommodation claimed by Mr Wettao;

(d) Mr. Wettao had no contractual entitlement to be paid for accommodation and meals under his consultancy agreement.

18. In short, Bemobile is highly suspicious of all of the amounts claimed by Mr. Wettao in the statutory demand.

19. Further, from a review of records relating to Mr. Wettao’s...