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Hornibrook NGI Ltd v PICMW (PNG) Ltd [2011] PGNC 179; N4590 (10 November 2011)

N4590

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1383 OF 2009

BETWEEN:

HORNIBROOK NGI LIMITED
Plaintiff

AND:

PICMW (PNG) LIMITED
Defendant

Waigani: Hartshorn J.
2011: 3rd & 10th November

Garnishee - disputing liability to judgment debtor

Facts

Leave was granted to the plaintiff/judgment creditor (Hornibrook) to serve upon the garnishee, Morobe Mining Joint Venture (MMJV) a garnishee notice. The garnishee notice attaches the sum of K2,191,203.36 of debt due by MMJV to the defendant/judgment debtor (PICMW(PNG) Ltd). MMJV disputes its liability to pay the debt attached on the ground that it is not indebted to PICMW (PNG) Ltd.

Held:

1. The relationship of debtor and creditor does not exist between MMJV and PICMW (PNG) Ltd and did not exist at the time that the garnishee notice was issued.

2. There is no debt due and owing by MMJV to PICMW (PNG) Ltd capable of attachment by Hornibrook.

Cases Cited:

Papua New Guinea Cases

Albert Purane v. Ase Tipurupeke Land Group Inc (2005) N2806
Philip Aure v. Sai Business Group Inc (2008) N3349

Overseas Cases

Nathan v. Giles [1814] EngR 385; (1814) 5 Taunt 558
Sampson v. Seaton Ry. (1875) L.T. 10 Q. B.28
Tapp v. Jones (1875) L. R. 10 Q. B. 591 at p. 593

Counsel:

Mr. B. Ovia, for the Plaintiff /Judgment Creditor
Mr. I. R. Shepherd, for the Garnishee

10th November, 2011

1. HARTSHORN J. Leave was granted to the plaintiff/judgment creditor (Hornibrook) to serve upon the garnishee, Morobe Mining Joint Venture (MMJV) a garnishee notice. The garnishee notice attaches the sum of K2,191,203.36 of debt due by MMJV to the defendant/judgment debtor (PICMW(PNG) Ltd).

2. MMJV disputes its liability to pay the debt attached on the ground that it is not indebted to PICMW (PNG) Ltd.

3. Hornibrook has obtained judgment against PICMW (PNG) Ltd in the sum of K1,925,397.36, together with interest. Hornibrook had contended that MMJV held certain retention funds amounting to AUD $2.9 million as security for projects that were being performed for MMJV by PICMW (PNG) Ltd. Those funds were to be released on or about 1st June 2010.

4. Hornibrook obtained an injunction in this proceeding on 20th May 2010 that restrained MMJV from paying or releasing those retention funds to PICMW (PNG) Ltd or its agents or associates. The injunction did not restrain MMJV from being able to set off against the retention funds. Hornibrook now seeks to satisfy its judgment with those funds that it contends MMJV owes to PICMW (PNG) Ltd.

5. MMJV submits that it awarded four contracts, three to Philippine Iron Construction and Marine Works Inc. (PICMW (PHIL)), the parent company of PICMW (PNG) Ltd based in the Philippines, and one contract to PICMW (PNG) Ltd.

6. MMJV held retention funds for all of these contracts in the sum of AUD $1,180,147.50 but only the sum of AUD $386,978.80 in respect of the contract with PICMW (PNG) Ltd. Following the expiry of the defects liability period on 20th July 2010 under that contract, the amount of AUD $386,978.80 was set off in full against the claims of MMJV arising under the contract for liquidated damages, back charges, cost recovery and payment assistance.

7. The relationship of debtor and creditor must exist for garnishee proceedings to be successful. In Halsbury's Laws of England Fourth Edition Volume 17 paragraph 528 it is stated that, "Money in the hands of a third person, where the relation of debtor and creditor does not exist between him and the judgment debtor, cannot be attached." and at paragraph 529, "The debt must be one which the judgment debtor could himself enforce within the jurisdiction for his own benefit...". The only question for the court, if it is satisfied that the plaintiff is owed money by way of a judgment debt by the defendant, and that the judgment is unsatisfied, is whether the garnishee owes money to the defendant that the plaintiff can attach by way of a garnishee order: Philip Aure v. Sai Business Group Inc (2008) N3349 per Kirriwom J. and Albert Purane v. Ase Tipurupeke Land Group Inc (2005) N2806 per Davani J.

8. That a garnishee can avail itself of a set off against a judgment debtor, which existed when the garnishee order nisi was made, is settled law: Nathan v. Giles [1814] EngR 385; (1814) 5 Taunt 558; Sampson v. Seaton Ry. (1875) L.T. 10 Q. B.28; Tapp v. Jones (1875) L. R. 10 Q. B. 591 at p. 593.

9. Hornibrook submits that there is no evidence that MMJV has set off the retention amounts as it claims. Hornibrook, however is not a party to any of the four contracts, including the contract with PICMW (PNG) Ltd and does not have any credible evidence that MMJV has not made the set off as it contends. There is also no evidence from PICMW (PNG) Ltd that MMJV is not entitled to make the set off that it has. The evidence of Mr. Adrian Miller on behalf of MMJV that MMJV has made a set off, stands undisputed.

10. Hornibrook further submits that this court should, "lift the corporate veil" so that the retention funds held in respect of the contracts with PICMW (PHIL) are attached and are available for the garnishor, Hornibrook. Hornibrook relies upon a spreadsheet which does not distinguish between the contracts that MMJV had with PICMW (PNG) Ltd and PICMW (PHIL), in support of its contention that the two entities should in effect, be considered as one. The spreadsheet however, is undated, unsigned, was not prepared by the deponent of the affidavit to which the spreadsheet is annexed and is inadmissible.

11. This submission fails and with respect, misses the point. The evidence of MMJV is that the PICMW (PHIL) retention funds have also been set off in full by MMJV against its claim against PICMW (PHIL) for liquidated damages for breach of contract, back charges, cost recovery and payment assistance, after the expiry of the defects liability period on 20th July 2010. This evidence also stands undisputed. Again, there is no evidence from for instance, PICMW (PHIL), that MMJV is not entitled to make the set off that it has. So even if this court did, "lift the corporate veil", and I specifically do not address whether this court would be minded to do so, it would not result in there being funds to be attached for the benefit of Hornibrook.

12. I am satisfied that the relationship of debtor and creditor does not exist between MMJV and PICMW (PNG) Ltd and did not exist at the time that the garnishee notice was issued. There is no debt due and owing by MMJV to PICMW (PNG) Ltd capable of attachment by Hornibrook.

13. Accordingly the garnishee order dated 8th July 2011 against MMJV is set aside. The costs of MMJV of and incidental to the issue of the garnishee notice including the hearing on 3rd November 2011 are to be paid by Hornibrook, to be taxed if not agreed.

___________________________________________________________

Hornibrook NGI Ltd per B Ovia: Lawyer for the Plaintiff/Judgment Creditor
Blake Dawson: Lawyers for the Garnishee