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Koitaki Plantations Ltd, In re [2020] PGNC 441; N8595 (7 September 2020)

N8595

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

MP 15 OF 2018 (COMM)

IN THE MATTER
of the Companies Act 1997

AND:
IN THE MATTER OF
KOITAKI PLANTATIONS
LIMITED

Waigani: Hartshorn J,
2020: 3^rd & 7^th September

COMPANY LAW – liquidation - Application for termination of liquidation – s. 300(1) Companies Act 1997 – whether application seeking substantive relief can be made by way of a motion or through originating summons – application seeking substantive relief must be made through originating summons – only applications seeking interlocutory relief can be made through motion – applicant is seeking substantive relief through motion – application amounts to abuse of process – application dismissed - Order 4 Rules 4 and 49(9) National Court Rules

Cases Cited:

Wep Kilip and In the Matter of Kamsi Trading Ltd (2005) SC784
Re Cakara Alam (PNG) Ltd (2009) N4054
Gabriel Yer v. Peter Yama (2009) SC990
Pastor Stephen Bagari v. James Marape (2018) N7412
In re Hela Opene Investment Ltd (In liquidation) (2018) N7630
State v. Daniel Charlie (2019) SC1836

Counsel:

Mr. A. Wasina, for the Applicant
Ms. E. Sahamie, for the Liquidator

7^th September, 2020

1. HARTSHORN J: This is a decision on a contested application which seeks the termination of the liquidation of Koitaki Plantations Ltd (In liquidation) (company). The application is made by a shareholder and director of the company, Mr. Edward Ramu Diro. The application is opposed by the liquidator of the company.

Background

2. The company was placed into liquidation on 19^th September 2019. Mr. Darius Kombe was appointed the liquidator of the company. Mr. Diro seeks that the liquidation be terminated pursuant to s. 300(1) Companies Act and amongst others that the petitioning creditor of the company be ordered to accept or receive payment of K566,055.09 in satisfaction of a judgment debt and costs. The liquidator opposes the application as the company is not solvent, the applicant has not made available company records, books and assets to the liquidator to enable him to proceed with the conduct of the liquidation and it is not just and equitable that the liquidation be terminated.

Preliminary

3. The liquidator submits that this application should be dismissed as it is made by an amended notice of motion. The relief which is sought is substantive and not interlocutory. It therefore should have been sought in an originating summons in a fresh court proceeding. Order 4 Rules 4 and 49(9) National Court Rules are relied upon by the liquidator. Counsel for Mr. Diro did not make submissions on this issue. In previous applications before me that have sought the termination of a liquidator, apart from one that I recall was commenced by originating summons, the applications were made by motion in the petition proceedings. This issue was not raised in those proceedings.

4. Order 4 Rules 4 and 49(9) are as follows:

Rule 4

“Mode of proceedings in interlocutory matters.

Proceedings may be instituted by motion, only if they relate to an interlocutory application.”

Rule 49(9)

“Motions for interlocutory matters only.

Except as otherwise expressly provided in the National Court Rules, Motions shall be for relief on interlocutory matters only and not for the substantive relief claimed in the originating process.”

5. In the petition which commenced this proceeding, the petitioning creditor sought the substantive relief that Koitaki Plantations Ltd be wound up and that a liquidator be appointed. That substantive relief was determined by the order for liquidation and the appointment of the liquidator. The substantive relief sought had been adjudicated upon and the proceeding was completed. A different entity, the applicant Mr. Diro, now seeks other relief which was not sought in the petition. The relief that Mr. Diro seeks is not sought in aid of or to assist in obtaining the substantive relief sought in the petition. The relief sought by Mr. Diro is substantive relief.

6. As substantive relief is sought, it should have been sought in an originating process and not by motion. The following cases support this position: Gabriel Yer v. Peter Yama (2009) SC990, Pastor Stephen Bagari v. James Marape (2018) N7412 and State v. Daniel Charlie (2019) SC1836.

7. Consequently, as the relief sought should have been sought by originating process and not by motion, the motions of Mr. Diro should be dismissed as an abuse of process.

8. If however, consideration is given to the application to terminate the liquidation, the principles that govern such an application to be considered are as set out in the cases of Wep Kilip and In the Matter of Kamsi Trading Ltd (2005) SC784, Re Cakara Alam (PNG) Ltd (2009) N4054 and In re Hela Opene Investment Ltd (In liquidation) (2018) N7630, amongst others.

9. From a perusal of the evidence there are disputes between Mr. Diro and the liquidator concerning amongst others, the number of creditors of the company and the amount which they are owed. This difference in the amount owed is between about K550,000.00 and K8.5 million. Further, Mr. Diro gives evidence concerning a contract of sale of portions of land of the company for K25 million. What is of concern in this regard, is that settlement was under discussion in or about June 2020, about 9 months after the company was placed into liquidation, but the liquidator does not appear to have been involved in this transaction until his consent was sought to enable settlement to occur. This is notwithstanding that from his appointment as liquidator, he has custody and control of the company’s assets: s. 298(1)(a) Companies Act, and a director such as Mr. Diro, remains in office but ceases to have the majority of his powers, functions or duties: s. 298(1)(b) Companies Act.

10. The determination of these differences and concerns is necessary before this court is able to make a finding as to the general solvency of the company. The solvency of a company, pursuant to case authority, is a factor of significance which the court must consider in arriving at a determination of whether it is just and equitable to terminate a liquidation. Consequently, the court is not in a position to be able to grant the relief which Mr. Diro seeks.

Orders

11. The Court orders that:

1. The notice of motion of the applicant filed 17^th August 2020 and the amended notice of motion of the applicant filed 31^st August 2020 are both dismissed;
   
2. The applicant shall pay the liquidator’s costs of and incidental to the said motion and amended motion;
   

c) Time is abridged.
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Legal Impact Lawyers: Lawyers for the Applicant
Jema Lawyers: Lawyers for the Liquidator