N2855

PAPUA NEW GUINEA
[National Court of Justice]

MP 535 of 2002

IN THE MATTER OF THE COMPANIES ACT 1997

BETWEEN

PAPUA NEW GUINEA HARBOURS BOARD
Petitioner

AND

CHRIS TEXTILES LIMITED
Respondent

Lae		:	Sevua, J
2003		:	22nd July
2005		:	31st May

COMPANY LAW – Winding up – Application by way of petition – Order for winding up under repealed Companies Act Chapter 146 – Whether Companies Act 1997 provide for winding up – Whether petition for winding up under Companies Rules Chapter 146 can be brought under Companies Act 1997 – Power of Court to order winding up of a company under Companies Act 1997 – Procedures for liquidation under Companies Act 1997 not by petition.

COMPANY LAW – Liquidation – Procedures – Companies Act 1997 – Commencement of liquidation of a company by appointment of liquidator – Section 14 of Companies Rules Chapter 146 no applicable – Part XVIII Companies Act 1997 relevant procedure for liquidation – Section 14 of Companies Rules Chapter 146 applied only before a company is registered under Companies Act 1997.

COMPANY LAW – Liquidation – Correct legal procedures – Application for appointment of liquidator – Companies registered under Companies act 1997 by operation of law – Application for winding up by petition no longer applicable procedure – Correct legal procedure is application for appointment of liquidator.
Companies Act 1997, Part XVIII, Sections 290 – 300; 440, 441, 442, 443 and 449.

Held:

1.	A company could apply by way of a petition under Part II s.14 of the Companies Rules Chapter 146 for an order for winding up when the petitioning creditor is not yet registered as a company pursuant to s.442 or s.443 of the Companies Act 1997.

2.	Once an existing company is registered either pursuant to s.442 or s.443 as a company under the Companies Act 1997, the correct legal procedure is under Part XVIII of the Companies Act 1997.

3.	The application of s.449 (1) of the Companies Act ceases to have effect on the date a company becomes a company registered under the Companies Act 1997.

4.	It is not just and equitable to order the winding of the applicant because the applicant has not come to Court with clear hands.

Cases cited:
Re Trivoli Freeholds Ltd [1972] VR 446
Ebrahimi v. Westbourne Galleries Ltd & Ors [1972] 2 All ER 492
Labu Holdings Ltd v. Gaman Holdings Ltd (MP 324 of 2003) unnumbered and unreported, 8th June 2004 (Kirriwom, J).
Processed Sand Pty Ltd v. Thiess Contractors Pty Ltd (1983) ACLR 965
In the Matter of Paradise Property and Development Pty Ltd t/a Paradise Real Estate [1994] PNGLR 286
In the Matter of SPT Projects Ltd (MP 497 of 2002) unnumbered and unreported, 15th June 2001 (Kirriwom, J).

Counsel:
D. Poka for Petitioning Creditor

31st May 2005

SEVUA, J:	Papua New Guinea Harbours Board, the petitioner herein, has filed this petition praying that Chris Textiles Limited be wound up by the Court under s.291 (3) of the Companies Act 1997.

On 18th June 2001, the petitioning creditor obtained default judgment against the respondent in WS 1463 of 2002 in the sum of K51,496.24 plus interest at the rate of 8%, which amounted to K22,458.04, and costs which are yet to be calculated. A copy of the order was served on the respondent on 20th June 2001. No payment was received, then on 19th March 2002, a statutory demand was issued then served on the respondent on 25th March 2002. Since then the respondent has made no payment to the petitioner.

On 13th June 2002, a petition was filed at the National Court in Lae and subsequently served at the registered office of the respondent on 3rd July 2002 by registered mail. A notice of trial filed on 3rd July 2003 fixed the hearing of this petition in Lae on 22nd July 2003 at 9.00am before Justice Kirriwom. No affidavit of service has been filed. When this matter came before me in Lae on 2nd July 2003, Mr. Poka was directed to file the affidavit of service upon his undertaking in Court however, to date, Mr. Poka has not complied with the Court’s direction, which non-compliance renders him liable to be dealt with for contempt of court under Order 14 Rule 47 (1) of the National Court Rules. However, it could mean that no service was effected on the respondent, hence no appearance.

This application has come to Court in a very convoluted and misconceived way because I think the manner in which it was made; the basis for making it; and the law relied upon, are all based on a misconception of the law.

I set out in full the application because I consider it relevant when the Court considers the appropriate law and procedures in this type of application. The application is the usual petition in Form 2 of Schedule 2 of the Companies Rule Chapter 146.

PETITION FOR WINDING UP

The humble petition of PAPUA NEW GUINEA HARBOURS BOARD (hereafter called "the Petitioner") showeth as follows:-

1.	Chris Textiles Limited (hereinafter called "the Company") was on the 13th day of November 1989 incorporated under the Companies Act.

2.	The registered office of the Company is located at Allotment 16 Section 10, Buka Passage, (PO Box 222), Buka, North Solomons Province.

3.	On the 16th day of June 1998 the Company adopted a constitution and accordingly is governed by that constitution together with the Companies Act 1997 and all associated rules and regulations.

4.	On the 18th of June 2001, the Petitioner obtained a Default Judgment for the sum of K51,496.24 plus interest at the rate of 8% per annum which is in the sum of K22,458.04 and costs of the proceedings (if not agreed to be taxed) against the Company under a Writ of Summons No. 1463 of 2000, at the National Court, Lae.

5.	Pursuant to the provisions of Section 337 of the Companies Act, a Statutory Demand was served by way of postal service to the registered office of the Company as referred to in clause 2 hereof on 12th of April 2002. Copies of the Statutory Demand were also served by post on the directors of the Company on 12th April 2002.

6.	The Company has failed to settle, compromise or pay the outstanding debt of K51,496.24 (plus interest of K22,458.04 and costs) within thirty (30) days from the date of service of the Statutory Demand as referred to above.

7.	As a result of the particulars specified in clauses 4 to 6 of this petition hereof, and by virtue of Section 337 of the Companies Act, the Company is insolvent and is deemed to be unable to pay its debts.

8.	In the circumstances, it is just and equitable that the Company should be wound up.

Your Petition therefore humbly pray as follows:-

(a)	that the Company be wound up by the Court under the provisions of the Companies Act;

(b)	that such other order may be made in the premises as shall be just.

Dated this		20th		day of		May		2002

………………………………
DAVID POKA of
PRYKE & BRAY
Lawyers for the Petitioner

SUMMONS ENDORSED ON PETITION TO Chris Textiles Limited.

You are required to enter an appearance to this Petition within thirty one (31) days (exclusive of the day of service) after the service of it upon you, otherwise you will be adjudged insolvent.

FILED the			day of				2002

……………………………….
MR SAMUEL IKISO
Assistant Registrar

NOTE:
It is intended to serve this Petition on Chris Textiles Limited by registered mail of a sealed copy to Buka Passage, (PO. Box 222), Buka, North Solomons Province.

This Petition was issued by Pryke & Bray, Suite 3.4B, IPI Building, Second Floor, Second Street, (PO Box 1919), Lae, Morobe Province.

Mr. Poka, counsel for the petitioner, after setting out the facts and identifying the affidavits the petitioner relied on, submitted that since the respondent was unable to pay its debt in the ordinary course of business it is just and equitable for the Court to order a winding up of the respondent company.

At this juncture, I wish to make an observation, which I consider to be quite important in this kind of application. I think that many of us, (Judges) have granted orders for winding up without really considering the relevant provisions of the Companies Act 1997. I will elaborate on this issue later in the judgment. But I raise it here at this stage because I am of the view that even counsel for the petitioner in this case was not so sure of the legal basis for this application as transpired from the exchanges between him and the Court, which revealed that he was pursuing his application in a misconstrued and misconceived manner.

The application is premised upon a misconceived fact that the Court has powers under the Companies Act 1997 to make an order for winding up following an application to that effect by way of a petition. Indeed in the originating processes entitled, Petition For Winding Up, the petitioner’s prayer for relief in paragraph 8(a) of the petitioner is, "your Petitioner therefore humbly pray as follows:-

(a)	that the Company be wound up by the Court under the provisions of the Companies Act."

(b)	that such other order may be made in the premise as shall be just.

Another observation I wish to make at this juncture is that, I believe Judges are thrown off guard in an application for an order for winding up. Without much scrutiny of the relevant provisions of the Companies Act 1997, we readily grant orders for winding up purportedly under the Companies Act 1997. Lawyers appearing for the petitioning creditors have not really assisted the Court as to the basis of their applications because there is no provision in the Companies Act 1997 that empowers the Court to grant an order for winding up although I acknowledge that liquidation and winding up have the same effect and are essentially the same process. In any event, they are different procedures under different legislations.

In the present case, the petitioner has come to Court seeking an order that Chris Textiles Limited be wound up in pursuance of the provisions of the Companies Act 1997. It transpired from questions raised by the Court and answers advanced by Mr. Poka, that lawyers are still making this application under the old Companies Rules Chapter 146, but in my view, in a misconceived way. However, proper regard and due consideration must be had on the Companies Act 1997.

Under the repealed Companies Act Chapter 146, Part II of the Companies Rules regulates the procedures for winding up by the Court based on Sections 186 and 239 of the repealed Act and also on the grounds specified in s.240 (1) of that Act. The mode of process is by way of a Petition in Form 2 as specified by s.14 of the Rules. In fact, Part II of the Rules deals with Petitions and s.14 of the Rules sets out the relevant provisions of the Act which require an application by way of a petition. Section 14 to 23 inclusive and ss 42 to 27 inclusive of the Rules are relevant to proceedings by way of petitions. It seems that legal practitioners in both Port Moresby and Lae are still using this procedure, which is not provided for under the Companies Act 1997.

I set out some parts of the provisions of the repealed Act for purposes of comparison with the provisions of the new Act in Part XVIII ss 290 to 300.

Provisions under the repealed Act (Chapter 146)

Section 186 – Winding up
(1)	Application to the Court –

Section 339 – Application for winding up

Section 240 – Grounds of Winding Up by the Court

Provisions under the Companies Rules

PART II - PETITIONS

Section 14 – Applications required to be by petition

PART IV – WINDING UP BY THE COURT AND
APPLICATIONS UNDER SECTION 186 OF THE ACT

Section 42 – Application of Part IV

There are other provisions in the repealed Act and the Rules which are relevant and related to winding up, which I do not intend to cite here, but references to these provisions have already been made.

It is the petitioner’s submission that once the Court grants the order for winding up, the official liquidator will thereafter be appointed. I disagree with that submission because as a matter of law, that is not correct. Even, procedurally, that submission is not correct either. The appointment of an official liquidator is made under s.291 (3) of the Companies Act 1997.

This Court is concerned that many lawyers still come to Court to apply for an order for winding up in both Waigani and Lae without informing the Court of basis for their applications and counsel should be condemned for their unethical and unprofessional conduct for misleading the Court on an application of this nature. As I adverted to, there is no provision for an application for winding up by way of a petition in the new Act, and I now refer to the relevant provisions of the Companies Act 1997.

Part XVIII of the Companies Act 1997 deals with liquidation. By s.291 (4) of the Act, the process of liquidation commences on the date a liquidator is appointed pursuant to s.291. The grounds on which a liquidator may be appointed by the Court are set out in s.291 (3). However for our purpose here ss 3 (a) and (d) are relevant since counsel had referred to them. These grounds are that, the company is unable to pay its debt as they become due, and, it is just and equitable to liquidate the company. So the appointment of the liquidator under this provision triggers off the whole process of liquidation of a company. S.291 (4) states:

"The liquidator of a company commences on the date on which the liquidator is appointed."

Nowhere in the provision of both the 1997 Act and the 1998 Regulation that I have referred to can I find any provision for a winding up application by way of a petition. When asked where the Court would derive its power to grant an order for winding up under the new Act, Mr. Poka could only refer to the preamble of the Act, which he submitted, adopted the repealed Act and Companies Rules. He also submitted that the Companies Regulation adopt the repealed Companies Rules. Unfortunately, all these submissions are misconceived and the Court did not get any assistance from those provisions.

However, what counsel did not know, and failed to bring to the attention of the Court is s.440 of the Companies Act 1997 and also the Transitional Provisions – Sections 441, 442, 443 and 449.

Sections 440 of the Companies Act 1997, repealed the Companies Act Chapter 146. Subsection (2) repealed the Companies Regulations. However, the Companies Rules were not repealed. Therefore it would appear that what I had alluded to earlier on regarding the application of the Companies Rules Chapter 146 in winding up proceedings would somewhat be in conflict with the new Companies Act 1997. But I will refer to the correct provisions of the Act and make some determinations or declarations as to the correct mode of an application of this nature.

By s.449 (1) of the Companies Act 1997, a petitioning creditor could still come to Court to apply for a winding up order by way of a petition in accordance with the old Companies Rules Chapter 146. And, despite what I adverted to earlier, this may be the basis for which applications for winding up have been made after the 1997 Act came into force. However, in my experience, no counsel has ever explained the basis for bringing an application for winding up under the new Act and I believe Courts have more or less taken it for granted that such applications are provided for in the new Act.

Even with the application of s.440 (3) of the Act, I have difficulties in reconciling how one could apply the old Rules under the present scheme of liquidation in the new Act because they are two different sets of procedures, achieving perhaps the same result, but there is nothing in the new Act which stipulate that Courts can apply both Part II of Companies Rules Chapter 146 and Part XVIII of the Companies Act 1997.

I consider that Courts must look closely at the Transitional Provisions in Part XXIV because there are certain legal requirements in order to invoke the application of s.449 (1) (a) of the Companies Act 1997. Those requirements are set out in ss.441, 442 and 443 of the new Act.

Considering the combined effect of these provisions, it is my view that the reason s.440 (3) is applicable is because companies were to comply with ss.442 and 443. That is, the old Companies Rules Chapter 146 in relation to an application for winding up by petition under s.14 of the Rule could still be made if the company has not yet registered as a company under the Companies Act 1997 in accordance with s.442, or the company is not yet deemed to be registered as a company under the new Act in accordance with s.443. It must be noted that the cut off time limit is six (6) months after the 1997 Act came into force. Therefore by operation of law (s.443) all companies are deemed to have been registered under the Companies Act 1997 on 2nd September 1997, 6 months from the commencement date of that law.

Therefore, it is my view that a company could apply for a winding up order under s.14 of the old Companies Rules, but only if it had not yet met the requirement of s.442 (a) and (b). Once the company has been registered in accordance with s.442 under the new Companies Act 1997, it can no longer use Part II of the Companies Rules Chapter 146. I am of the opinion that once a company has fulfilled the requirements of s.442, then any application for liquidation must be made in accordance with the provisions of Part XVIII of the Companies Act 1997. That is, the application must be an application to put another company or the debtor into liquidation which involves the procedures under s.291 (3) of the Companies Act. Then the process of liquidation commences when a liquidator is appointed by virtue of s.291 (4).

I consider that a company which is owed monies by another company cannot make an application for winding up under s.14 of Part II of the old Companies Rules after 6 months from the date the Companies Act 1997 became operative otherwise there would not be any point in having Part XVIII of the new Act relating to liquidation of companies. I reiterate that there is no provision in the Companies Act 1997 which gives jurisdiction to use both procedures. I am of the view that the use of the old procedures, ie. a petition pursuant to s.14 of the Companies Rules Chapter 146, is subject to ss. 442 and 443 of the Companies Act 1997.

Accordingly, I consider that it is appropriate to formulate the law here because the continued use of a petition in winding up under s.14 of the Companies Rules Chapter 146 is a mischievous way of misleading the Court and besides, I am of the view that it would defeat the purpose of Part XVIII of the Companies Act 1997. I consider that the use of the old procedure has limited application because of the combined effect of ss. 442, 443 and 449 (1) of the Companies Act 1997. It therefore is necessary to declare or determine here that, a company’s application by way of a petition pursuant to s.14 of the Companies Rules Chapter 146, seeking an order for winding up could only be made if that company is not yet registered as a company under the Companies Act 1997 in accordance with ss. 442 and 443 of that Act. By law, a company must be registered as a company under the new Act either in accordance with s. 442 or s. 443 of the Act. And once that requirement has been complied with, liquidation is the proper process by which, an applicant must seek.

Section 449 (1) of the Companies Act 1997 provides:-

(1)	Nothing in Part XVIII applies to or affects –

(a)	any application to the Court for the winding up of an existing company made before that company is required or deemed to be registered as a company under this Act.

And the provisions of Part XI of the repealed Act shall continue to apply in respect of any such application, resolution, order, winding up, dissolution or other consequence resulting from it as if the repealed Act had not been repealed.

By this provision, the procedure by way of a petition under Part II, s.14 of the Companies Rules Chapter 146 should only be followed if the applicant is a company which was not yet registered under the new Act under s.442 or s.443. However, it is pertinent to note here that there is a cut off point in s.443 (1) and that cut off point is six (6) months. Therefore the current legal position is that 6 months after the commencement of the Companies Act 1997, an existing company is deemed to be registered under the new Act. As I alluded to earlier, the combined effect of ss. 442, 443 and 449 of the Companies Act 1997 is that, applications for winding up under Part II, s.14 of the Companies Rules Chapter 146 should never be entertained by the Court unless such applications are brought under Part XVIII of the Companies Act 1997, which is, the procedures for liquidation.

It is also timely, in my view, to pronounce that when an existing company has been registered as a company under the Companies Act 1997, either under s.442 or s.443, any application against that company for the purpose of liquidating that company must be made pursuant to Part XVIII of the Companies Act 1997. The process commences by way of an application for the appointment of a liquidator pursuant to s.291 of the Act. And as I have already alluded to, by s.291 (4) the process of liquidation of a company begins on the date of appointment of a liquidator. With respect, that is not the same as an order for winding up. Of course, liquidating a company would be based on the provisions of Part XVIII of the Act.

I reiterate that there would be no point at all in having the legislature stipulate the procedures of liquidation in Part XVIII, if the procedures under the old Companies Rules were to continue forever. With respect, I do not see that as the intention of Parliament in passing the Companies Act 1997, especially in providing for liquidations.

In my view, it is not proper, and it is not correct in law, for lawyers to come to Court and file a petition seeking an order for winding up of a company, when by operation of law pursuant to s.443 (1) all companies are deemed to be registered under the Companies Act 1997, six months after that law came into force. The Act commenced on 2nd March 1998 therefore, by operation of law, all companies are deemed to be registered under the Act as from 2nd September 1998. Therefore I hold that when a company is registered as a company under the Companies Act 1997, whether by operation of s.442 or s.443, the procedures to liquidate that company no longer comes under Part II of the Companies Rules Chapter 146, but under Part XVIII of the Companies Act 1997.

In the present application, counsel has not advised the Court if the applicant is a company to which s.442 applies. In any event, it would have been deemed by law to be registered under the Companies Act 1997, pursuant to s.443 (1). Therefore, I find that the application under Part II of the Companies Rules Chapter 146 is misconceived. That procedure no longer applies. The Companies Act 1997 was certified on 1st September 1997 and became effective on 2nd March 1998. Pursuant to s.443 (1) therefore, all companies previously registered under the repealed Companies Act Chapter 146 would have been registered under the Companies Act 1997 by operation of law, ie, in accordance with s.443 (1) of that Act. This application is therefore misconceived and should be dismissed for that reason.

However, there is another reason which I consider relevant, if the Court were to proceed to determine this application in accordance with Part II of the old Companies Rules. One of the grounds for winding up in the repealed Companies Act is s.240 (1) (h) – the just and equitable ground. So I ask myself, even though the respondent had not responded to the statutory demand of the plaintiff applicant, is it just and equitable for the Court to grant an order for winding up?

I consider that there is a discretion in the Court in relation to the just and equitable ground of winding up. If the Court is of the opinion that a company should be wound up, it would make an order for winding up, but if it is of the opinion that the company should not be wound up, it would not make such an order. In the Supreme Court of Victoria in Re Trivoli Freeholds Ltd [1972] VR 446; Justice Menhennitt at p.468, held that in relation to the ground the it is just and equitable that the company be wound up, the following proposition appear to me to be applicable in this case and to be established by authority. His Honour said:

The ground is that it is just and equitable to wind up the company. These are well known words and there is no adequate equivalent for them. They gave the Court a wide discretion, which must of course, be exercised judicially:

Baird v. Henry Lees, [1924] S.C. 83 at p.90; Re Wondoflex Textiles Pty. Ltd., [1951] V.L.R 458 at pp.484 and 485; [1951] A.L.R. 1005. The question involved is basically a question of fact and all the circumstances must be looked at: Lock v. John Blackwood Ltd., [1924] A.C. 783 at pp.788 and 791; Re Bleriot Manufacturing Aircraft Co. (Ltd) (1916), 32 T.L.R. 253 at p.255; Davies & Co. Ltd. v. Brunswick (Australia) Ltd., [1936] 1 All E.R. 299 at p.309; 36 S.R. (N.S.W.) 215 at p.227; Re. Straw Products Pty. Ltd., [1941] V.L.R. 222 at p.223; [1942] A.L.R. 361; Re. Wondoflex Textiles Pty. Ltd., [1951] V.L.R. 458 at p.464; [1951] A.L.R. 1005; Re Waipuna Investments Pty. Ltd., [1956] V.L.R. 115 at p.118; [1956] A.L.R. 460 (my own emphasis).

This ground was an equitable supplement to the common law of the company to be found in its memorandum and articles of association under the English Companies Act 1948. By that I consider that it is part of equity that a company could be wound up. However, as an equitable principle, I am of the view that the applicant or petitioner must come to Court with clean hands to claim this equitable relief. Unfortunately, it is my view that the applicant in the present case has not come to Court with clean hands.

Although, the respondent did not defend this application, it had filed affidavits in respect of this matter and I refer especially to the affidavit of Francis Lewewitt sworn on 5th November 2002. He deposed to the fact that the respondent had made payments to 19th March 2001, but a charge for the sum of K9,730.39 and payments after that were refused by the applicant’s Port Manager at Buka because the debt was already in Court. Secondly, the respondent denied liability of four invoices which relate to MV Burtide because the vessel was not owned by the respondent. I think the deponent quite correctly said that the respondent could not make payments in settlement of the debt unless the applicant’s Port Manager in Buka accepted payments.

There is no reason why the applicant’s Port Manager in Buka could not accept these payments. If it is not interested in recovering its debt, but in winding up the respondent, that is the wrong reason for the following reason. It is true that at the time of the judgment debt, the respondent was unable to pay its debt. That, the Court acknowledges as a ground for winding up. However, it is evident that the applicant had refused to accept further payments by the respondent to reduce its debts. From the respondent’s evidence, the respondent’s assets are valued at more than half a million kina (K691,847.00). I am satisfied that the respondent was genuine in settling its debt and was genuine in making payments to reduce the debt. The issue of whether to accept the money or pursue winding up becomes relevant. Is it then just and equitable to wind up the respondent company under the circumstances?

I consider that it is not just and equitable to do so, even if the Court was considering this application under Part II of the Companies Rules Chapter 146. I consider also that, that being an equitable relief, the applicant has not come to Court with clean hands. Surely, it could have entered into a scheme of payment because the respondent’s list of debtors showed debts owing to it at a little over half a million kina, K504,690.44 to be exact. So the petitioner could have entered into such a scheme where the respondent would pay as it’s debts are settled. In these hard economic times, it is totally unreasonable for a corporate giant like the applicant to flex its corporate muscles to shut down a small Papua New Guinean owned business, not even when its assets are valued in excess of half a million kina which is ten times more than the judgment debt.

The fact that the respondent had not been able to satisfy the judgment debt could have been due to the fact that its debtors had not been able to settle their debts of more than half a million kina. Certainly that fact alone does not, and could not have meant, that the respondent’s non committal to the petitioner’s statutory demand amounted to its inability to pay its debts in accordance with the judgment of the Court. Given the respondent’s evidence, that could not be hardly so, and I find that although the respondent was unable to pay its debt at the material time, that fact alone did not constitute an inability to pay.

I adopt the principles of fairness which Kirriwom, J did adopt in Labu Holdings Limited v. Gaman Holdings Ltd (MP 324 of 2003) unnumbered and unreported, 8th June 2004 at p.6 of the Court’s judgment in referring to that principle established in Processed Sand Pty Ltd v. Thiess Contractors Pty Ltd (1983) ACLR 956 per Waddell, J at p.961, which was cited by Kapi, DCJ (as he then was) in. In the Matter of Paradise Property and Development Pty Ltd t/a Paradise Real Estate [1994] PNGLR 286:

"if a notice of demand is given for a sum, part of which is genuinely disputed on substantial grounds, an omission on the part of the company to pay any amount in response to the demand will not give rise to a deemed inability to pay its debts" (my own emphasis).

Whether this application came by way of a liquidation process under the Companies Act 1997 or winding up process under Part II of the Companies Rules Chapter 146, it is my opinion that it is not just and equitable to grant the order for winding up sought by the petitioning creditor/applicant.

To highlight that statement I refer to what Lord Cross of Chelsea said in Ebrahimi v. Westbourne Galleries Ltd & Ors, [1972] 2 All ER 492 at 507:

A petitioner who relies on the ‘just and equitable’ clause must come to Court with clean hands, and if the breakdown in confidence between him and the other parties to the dispute appears to have been due to his misconduct he cannot insist on the company being wound up (my own underling).

Since this application, I have noted a number of similar applications that were heard by Kirriwom, J. in Lae. Those applications were filed and presented by the same firm and counsel. It appears evident to me after perusing the unnumbered judgments of Kirriwom, J that the misconception as to the correct procedures is well entrenched in some legal firms and this must be corrected. I have sighted a few of these judgments and although the applicant’s case is by way of a petition under Part II of the Companies Rules Chapter 146, the relief sought nevertheless, were being sought under the Companies Act 1997. Again, I say this is a misconception that must be corrected.

In one of those cases, in the Matter of SPT Projects Ltd (MP 497 of 2002) unreported and unnumbered, 15th April 2004; the applicant by way of a petition, but in the judgment, the trial Judge said it was "a petition under the Companies Act 1997". However, on page 2 of the judgment, Kirriwom, J. said under the current legislative scheme on the winding up of a company unable to pay its debts, the procedure begins with the application of a liquidator under s.291 (3). That, I agree, however, I do not agree that the process commences by a petition. It should have been an application for the appointment of a liquidator then the relevant actions to be taken by the liquidator from s.293 onwards will then be invoked. I reiterate that liquidation of a company commences on the date the liquidator is appointed. Sections 292 to 300 inclusive also relate to liquidation including the duties of the liquidator. Under the Companies Regulation 1998 Part V (Sections 16 to 50) deal with liquidations.

With respect, liquidation does not commence when an order for winding up is made. Courts cannot continue to deal with petitions under Part II of the Companies Rules Chapter 146 when all existing companies are deemed to be registered under s.443 (1) of the Companies Act 1997. Creditors intending to put a debtor into liquidation must be making applications for the appointment of a liquidator pursuant to s.292 of the Act, to kick start the process of liquidation.

I have considered the other case of In the Matter of Island Trading Limited, (MP 31 of 2003) unreported and unnumbered, and I agree with the conclusion reached by Kirriwom, J. although I am not sure whether the application therein was a petition under Part II of the old Companies Rules, or an application for the appointment of a liquidator. I note that s.337 which is alluded to, deals with statutory demands, not appointment of a liquidator. Whilst I note that the Court in both cases had alluded to "a petition under Section 337 of the Companies Act 1997", I consider that, that is not the correct procedure, because that Section does not deal with liquidation.

I maintain what I have adverted to in this judgment and reiterate that a company intending to put another company into liquidation must come to Court by way of an application to appoint a liquidator under s.292 of the Companies Act 1997. I emphasise too that because of s.442, 443 and 449 (1) of the Act, a creditor cannot come by way of a petition for winding up because that procedure has a very limited application only. As of 2nd September 1998, a company who intends to put his debtor into liquidation must follow the procedures under Part XVIII of the Companies Act 1997, and not an application under s.337 either.

One must appreciate that under the scheme of liquidation in the Companies Act 1997 in Part XVIII of the Act and Part V of the Companies Regulation 1998, applications cannot come by way of a petition for an order for winding up, those are things of the past. That procedure is no longer available under the 1997 Act as from 2nd September 1998. Therefore it behoves everyone – lawyers and Judges to be cautious in ensuing that the correct legal procedures are utilized in this kind of application.

For these reasons, and to use a phrase I would like to adopt from Lord Cross in Ebrahimi (supra), the applicant ‘is not entitled, in justice and equity’ to have the relief he seeks in this Court. The Court will therefore refuse the application. I make no orders as to costs since the respondent did not appear to defend the application.

Lawyer for Petitioner		:	Pryke & Bray
Counsel			:	D. Poka
Lawyer for Respondent	:	Latu Lawyers
Counsel			:	No Apperance