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In the Matter of The Insolvency Act (Chapter 253) and In the Matter of the Application of Aiye Kingi v Joseph McTeine [1996] PGNC 25; N1487 (6 September 1996)

Unreported National Court Decisions

N1487

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

MP NO 5 OF 1993 (H)
BETWEEN
IN THE MATTER OF THE INSOLVENCY ACT (CH. 253) AND IN THE MATTER OF THE APPLICATION OF AIYE KINGI - APPLICANT
AND
JOSEPH McTEINE - RESPONDENT

Mount Hagen

Injia J
30 August 1996
6 September 1996

INSOLVENCY - Adjudication of insolvency - Discharge of - Conditional discharge - Insolvency Act (Ch No 253), S. 135.

Held

Conditions of a conditional discharge of insolvency under S. 135 of the Insolvency Act (Ch No 253) does not relate to debts which are or may have been incurred by an insolvent prior to the adjudication of insolvency or during the period of insolvency such as the repayment of costs incurred by the Papua New Guinea Law Society in engaging the services of a receiver.

Counsel

P Dowa for the Applicant

Respondent in Person

P Kopunye for the PNG Law Society (with leave of Court)

6 September 1996

INJIA J: The Respondent, Mr Joseph McTeine, now Applicant, is a former lawyer of this Court. On 15th April 1994, he was adjudged insolvent by the National Court at Mount Hagen pursuant to provisions of the Insolvency Act (Ch 253) “(the Act)”. More than two years later, he applies for a certificate of discharge under S. 133 of the Act. Mr McTeine says in his affidavit he was settled his debt of K35,000.00 in full to Mr Aiye Kingi. Mr Kingi confirms that the debt has been settled in full.

The PNG Law Society (PNGLS) which appeared as an interested party with leave of the Court, whilst not opposing the application asks the Court to issue a conditional discharge under S. 135 of the Act, the proposed condition being that Mr McTeine repay to the PNGLS the sum of about K40,000. This amount is for the costs incurred by the PNGLS in engaging the services of David Guin, Chartered Accountants, as receiver under proceeding commenced by PNGLS in OS 125/94 re: PNG Law Society v Joseph McTeine. To this, Mr McTeine says he has agreed to pay K29,745.10 at monthly instalment of K1,000.00 but not the other K10,000.00 or so of which he was not aware of until it was raised during the hearing of this motion.

Sections 133 and 135 of the Act provide as follows:

“133. Discharge after one year with consent of creditors, or after two years in any

(1) Subject to Subsection (2), on the application of an insolvent who has not obtained a certificate of discharge (whether or not an application has been made under Section 132, and after the prescribed notice has been given, the Court may grant a certificate of discharge:

(a) with the consent, testified in writing, of a majority in number of the creditors who have proved in the estate and whose debts amount to K20.00 or more each - at the expiration of the period of 12 months after the date of the adjudication; or

(b) without the consent of any creditor - at the expiration of two years after that date,and may, for that purpose vary any previous decision.

(2) On an application under Subsection (1), the insolvent shall make oath that:

(a) he has made a full and fair discovery of his estate; and

(b) he has not granted or promised any payment or security for the purpose of obtaining the consent of his creditors; and

(c) he has not entered into any collusive agreement for the purpose of obtaining that consent.

(3) On an application under Subsection (1), the Court may withhold or suspend the certificate for such period as it thinks just.

135. Conditional grant of certificate

If on an application for a certificate of discharge, the Court is of opinion that the certificate ought not to be granted unconditionally, it may grant the certificate subject to any condition concerning any salary, pension, emolument, profit, wages, earnings or income that may afterwards become due to, or be earned by, the insolvent, and generally concerning property acquired at a later date.”

This application is treated as an application under S. 133 (b) where the consent of the only creditor in this case Aiye Kingi, or any other creditor who may have proved his debt before the receiver, is not required. This is because it is more than 2 years since the adjudication of insolvency was made. If any consent is required, Mr Kingi has supplied that consent by making representation through his lawyer.

The Applicant has filed an affidavit which sets out the relevant circumstances of the previous insolvency proceedings and the steps he has taken to settle his debt in full. I accept his evidence.

On the question of a conditional certificate of discharge, Section 135 speaks of conditions which relates to salaries, pension wages, property, and so on which an insolvent might acquire or become due to him at a later date. These would not include the debts which were or may have been incurred by the PNG Law Society in engaging the services of the receiver David Guin, Chartered Accountants, in this case. Section 135 does not relate to debts which are or may have been incurred by an insolvent prior to the adjudication of insolvency or during the insolvency. The payment of such debts can be resolved through private amicable arrangements such as the one already in existence between Mr McTeine and the PNGLS, or resolved through litigation. Further, I am reluctant to impose any conditions as to the repayment of the alleged debt to the PNGLS because of the lack of any evidence showing how the debt of such substantial proportion was incurred for a job the receiver, it appears from statements of all interested parties attendant in Court in these proceedings, may not have satisfactorily completed.

The orders of the Court are:

That a Certificate of Discharge of the insolvent Joseph McTeine be issued forthwith.

Each party shall bear their costs of this motion.

Lawyer for the Applicant: P Dowa Lawyers

Lawyer for the Respondent: Respondent in person

Lawyer for PNG Law Society: P Kopunye Lawyers