Sunset Rentals Limited v Pacific View Apartments Limited (2020) SC1994

• Jurisdiction: Papua New Guinea
• Judge: Cannings J, Polume-Kiele J and Anis J
• Judgment Date: 04 September 2020
• Court: Supreme Court
• Citation: (2020) SC1994
• Docket Number: SCA NO. 83 OF 2019
• Year: 2020
• Judgement Number: SC1994

Full Title: SCA NO. 83 OF 2019; Sunset Rentals Limited v Pacific View Apartments Limited (2020) SC1994

Supreme Court: Cannings J, Polume-Kiele J and Anis J

Judgment Delivered: 4 September 2020

SC1994

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 83 OF 2019

SUNSET RENTALS LIMITED

Appellant

V

PACIFIC VIEW APARTMENTS LIMITED

Respondent

Waigani: Cannings J, Polume-Kiele J and Anis J

2020: 28th July, 4th September

SUBSTANTIVE APPEAL – whether there were evidence presented before the trial Court that showed that the debtor was unable to pay its debts as they fell due in the ordinary course of business – s. 291(3) – Companies Act 1997 – whether there were also other evidence that were before the trial Court that showed the inability of the appellant to pay its debits – whether it was also established that was just and equitable that the Company be wound-up

PRACTICE AND PROCEDURES – petition grounds – s. 291(3)(a),(b),(c) and (d) – Companies Act – whether all or only one ground is sufficient or required by law, where if established, should or may permit the Court to order liquidation

PRACTICE AND PROCEDURES - solvency test – s. 4 – Companies Act – whether s. 4 is a material requirement or consideration in relation to petitions that are filed under s. 291(3) – legislators’ intention concerning s. 291(3) and s. 4 of the Companies Act

PRACTICE AND PROCEDURES – company as a legal person – s. 16 – Companies Act – distinction between a shareholder’s interest in a company and a company as a separate legal person discussed – limits to the role of an Administrator of an estate of a deceased whose shares are held in the company

PRACTICE AND PROCEDURES – share a personal property – section 36 considered – Companies Act

Cased Cited:

Gawan Kuyan v. Andrew Sallel; Andrew Sallel v. Gawan Kuyan (2008) N3376

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

Investment Corporation of Papua New Guinea v. Paul Pora and the State [1993] PNGLR 45

Chief Collector of Taxes v. Bougainville Copper Ltd (2007) SC853

Tomscoll v. State (2012) SC1208

Fly River Provincial Government v. Pioneer Health Services Limited (2003) SC705

Ken Fairweather v. Jerry Singirok [2013] 2 PNGLR 95

Counsel:

Ms A Kimbu, for the Appellant

Mr S Gor, for the Respondent

4th September, 2020

1. BY THE COURT: The substantive appeal was heard on 28 July 2020. We reserved after the hearing on that day. We now give our decision.

BACKGROUND

2. The appellant owns or is a registered sub-lessee of 2 units, namely, units 902 and 904 at the Pacific View Apartments (Pacific View Apartments) which is situated at 2 Mile Port Moresby. The late Dr Florian Gubon was the sole shareholder of the appellant. He and his wife Mrs Gubon (the Gubons) also jointly own an apartment at Pacific View Apartments called Apartment No. 804. Dr Gubon passed on, on 24 April 2016.

3. The respondent is a body corporate that manages Pacific View Apartments. Unit holders in Pacific View Apartments are also shareholders of the respondent. The Gubons were joint shareholders of the respondent, and with the demise of Dr Gubon, Mrs Gubon appears to remain as the sole shareholder for their shares held in the respondent. Under the constitution of the respondent, each unit owner of Pacific View Apartments shall pay monthly body corporate levy fees to the respondent for its upkeep and management. Services that the respondent provide, include water, electricity, security, elevator access and service, and use of amenities. In 2018, the respondent alleged that the appellant and the Gubons had failed to pay their levy fees for the 3 units which it alleged had accumulated. The respondent filed 2 separate proceedings against the appellant and the Gubons. The respondent sued the appellant in proceeding WS No. 7 of 2017 and the Gubons in proceeding WS No. 8 of 2017. On 19 February 2018, the National Court awarded default judgment in the sum of K44,741.83 in favour of the respondent and against the appellant. Earlier on, on 14 February 2018, the National Court also awarded a sum of K31,752.83 in favour of the respondent and against the Gubons. The debts remained unsettled in full so on 8 September 2018, the respondent filed a petition described as MP 27 of 2018 (the petition) in the National Court, to liquidate the appellant in relation to its outstanding judgment sum of K44,741.83.

4. On 13 June 2019, Justice David (the trial Judge/Court) conducted a hearing of the petition. His Honour granted the petition and ordered that the appellant be put into liquidation. A copy of the National Court Order is at page 13 of the 2 volumes of the Appeal Book (AB). It reads in part:

1. The application is granted. Sunset Rentals Limited is placed into liquidation.

2. David Guinn is appointed Liquidator which takes effect at the date of this Judgment 13 June 2019.

3. Sunset Rentals to pay for the costs of this Petition.

4. Time is abridged.

GROUNDS OF APPEAL

5. The Notice of Appeal (NoA) was filed on 2 July 2020. There are 8 grounds of appeal. We set them out in part as follows:

3.1 The learned trial judge erred in law in granting the Application for Liquidation and placing the Appellant company, Sunset Rentals Limited into Liquidation and further appointing Mr. David Guinn as the Liquidator taking effect as at the date of the judgment when the two (2) tests for insolvency under the Companies Act 1997 were never fully satisfied;

3.2 The learned trial judge erred in law in granting the Application for Liquidation and placing the Appellant company, Sunset Rentals Limited into Liquidation and further appointing Mr. David Guinn as the Liquidator taking effect as at the date of the judgment when the Debtor Company was able to meet its debt and that any delay in the payment of the debt owing was based on consensus reached between parties (Applicant/Debtor Company on the one end and Respondent/Petitioner on the other) to allow the ruling on the Application for Letters of Administration in the related National Court proceeding WPA NO. 38 OF 2016: In the Estate of Dr Florian Gubon, Late of Lido Village, Sandaun Province, Papua New Guinea, Lawyer, Deceased, Intestate to be delivered.

3.3 The learned trial judge erred in law in granting the Application for Liquidation and placing the Appellant company, Sunset Rentals Limited into Liquidation and further appointing Mr. David Guinn as the Liquidator taking effect as at the date of the judgment when the Debtor Company’s liabilities did not out value its asserts or rather the value of the Debtor company far outweighed the liabilities and/or the amount due and owing to the Respondent (Petitioner).

3.4 The learned trial judge erred in law in granting the Application for Liquidation and placing the Appellant company, Sunset Rentals Limited into Liquidation and further appointing Mr. David Guinn as the Liquidator taking effect as at the date of the judgment when the Debtor Company’s liabilities did not out value its asserts or rather the value of the Debtor company far outweighed the liabilities and/or the amount due and owing and that in the event His Honour required evidence to confirm same, that the appropriate order to have been made under the circumstance was to order parties to engage an independent Certified Valuation company to actually proof the total value of the Debtor Company and the properties registered under it before making the substantive orders of 13th June 2019.

3.5 The learned trial judge erred in law in granting the Application for Liquidation and placing the Appellant company, Sunset Rentals Limited into Liquidation and further appointing Mr. David Guinn as the Liquidator taking effect as at the date of the judgment when the Debtor Company, Sunset Rentals Limited and the two (2) properties registered under it described Unit 902, 9th Floor, Pacific View Apartment, 2 Mile Hill, NCD and Unite 904A, 9th Floor, Pacific View Apartment, 2 Mile Hill, NCD were listed as assets of the deceased, the Late Dr. Florian Gubon who is the sole Shareholder and Director of the Debtor Company, thereby forming part of the Estates of the deceased and hence, subject of the Court Orders of 12th February, 2019 and hence, the Respondent ought to have applied under the proceeding WPA NO.38 OF 2016 In the Estate of Dr Florian Gubon, Late of Lido Village, Sundaun Province, Papua New Guinea, Lawyer, Deceased Intestate to have the debtor Company/Applicant and the two (2) properties described removed from the list of inventories and to have the Court Order of 12th February, 2019 varied to have the debtor company and the described properties removed from being included in the estate of the Late Dr. Florian Gubon and subject of the Court Orders of 12th February, 2019 granting Mrs Sainimili Gubon Letters of Administration.

3.6 The learned trial judge erred in law in granting the Application for Liquidation and placing the Appellant company, Sunset Rentals Limited into Liquidation and further appointing Mr. David Guinn as the Liquidator taking effect as at the date of the judgment when the National Court of competent jurisdiction had already on 12th February, 2019...