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Waiaki v Kuikua [2011] PGNC 160; N4446 (21 October 2011)

N4446

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 690 OF 2010

BETWEEN

HENI PEX WAIAKI
Plaintiff

AND

RUDOLF KUIKUA trading as NAKURAK ELECTRICAL LIMITED
Defendant

Goroka: Ipang AJ
2011: 14 & 21 October

CIVIL LAW – MOTIONS – Defendants motion to strike out proceedings – Plaintiff sued Defendant a de-registered entity under Business Name Act, 1963 –After deregistration – Entity no longer exist and cannot be sued under its Corporate name and style.

Cases Cited

John Kami v Department of Works (2010) N4144
A.G.C (Pacific) Ltd v Woo Textile International Ltd [1992] PNGLR 100

Counsel

Mr.D.A.Umba, for the Plaintiff
Ms. M.Irai, for the Defendants

RULING ON MOTION

28th October, 2011

1. IPANG AJ: I have delivered my ruling on the Defendant's and Plaintiff's motions and promised to produce a written judgment on both motions and this I do so now.
   
2. There are two (2) Notice of Motions on foot. The first motion was filed by the plaintiff on the 28th September, 2011. The plaintiff's motion is basically seeking to have the default judgment entered in his favour against the defendant for the liquidated claim in the sum of K19, 050.00 together with interest and costs. Also on foot is the Cross- motion filed by the defendant on the 14th October, 2011.
   
3. The defendant through his Cross-motion seek to have the following orders;
   
   1. That the plaintiffs motion filed on the 28th of September, 2011 and the entre proceedings to be dismissed for being an abuse of the Court process;
      
   2. That the entire proceedings to be set aside for irregularity and non –compliance with the National Court Rules Order 1 Rule 9 and s.16 of the Companies Act, 1997;
      
   3. That plaintiff to pay the costs and incidental to this application;
      
   4. Alternatively, the defendant submitted that the time limited for filing a Defence be further extended pursuant to Order 1 Rule 15 of the National Court Rules.
      
4. I will deal with Defendant's Cross- motion first. Depending on my ruling on the defendant's motion, if I over-ruled defendant's motion then the issue of whether should I grant or refuse plaintiff's motion on default judgment will be determined. So this is the approach I will take to approach the two (2) motions.
   

DEFENDANT'S CROSS MOTION

5. Defendant relies on the following documents in support of Notice of Motion (Cross motion) filed on the 14th of October, 2011;
   
   1. The Affidavit of Albert William Daniels sworn on the 7th October, 2011 and filed on the 14th October, 2011.
      
   2. The Affidavit of service by Philip Mondo sworn and filed on the 20th October, 2011.
      
6. The Defendant's main crux of the moving motion is that the Defendant named in the proceeding is a business name which was deregistered and ceased to exist as a legal entity as of 12 October, 2009. The defendant argued that some months lapsed and on the 18th of June, 2010 the plaintiff filed proceeding against an entity which is non-existent. Defendant argued that he has a separate legal personality from that of Nakurak Electrical Ltd now a deregistered entity and that he has a separate legal personality from that of Nakurak Electrical Ltd is deregistered. Basing his argument on s.16 of the Companies Act, a company is also a separate legal personality from that of Nakurak Electrical Ltd. Defendant dated 29th September, 2011 obtained from Investment Promotion Authority (IPA) confirming that Nakurak Electrical Ltd is deregistered. Basing his argument on s.16 of Companies Act, 1997, Defendant argued that a company is also a separate legal entity in its own right separate from its shareholders and continues in existence until it is removed from the Register.
   
7. In counter arguing Defendant's Cross –Motion, Mr. Umba of Counsel for the plaintiff argued that on the 22nd August, 2011 there were consent orders that;
   
   1. Leave was granted to the plaintiff to withdraw his Notice of Motion and supporting documents filed on the 19th October, 2010.
   2. The Defendant is granted leave to file and serve his defence within 7 days.
   3. The Plaintiff is to file and serve his reply within 14 days thereafter.
   4. Costs be in cause.
      
8. The Plaintiff's main contention is that because there were Consent Orders in place, defendant should comply with the Consent Orders first. The Clause 2 of the Consent Orders directed Defendant to file and serve his defence within 7 days. Plaintiff through Counsel argued that the defendant had not complied with the Consent Orders and so has not filed his defence. What the defendant has raised, the plaintiff argued should be contained in his Defence.
   
9. I do appreciate and acknowledge the argument raised by the Plaintiff. There is need for compliance with Court Orders endorsed by Courts for that matter. However, the Consent Orders were issued prior to the knowledge or news of deregistration of defendant coming into light. In my view, the situation now begs the question of application of logic and common sense. Even if defendant has filed his defence and the matter proceeds to trial, the end result will be that the judgment in the event if entered in favour of the Plaintiff, it cannot be enforced as there is non-existent of defendant as a legal entity.
   
10. This brings on foot the Plaintiff's second leg of argument that the order can still be enforced against directors of the Nakurak Electrical Ltd by uplifting of the Corporate Veil. I am of the view that the suggested approach by the Plaintiff's Counsel is not possible. From the start the Plaintiff has not pleaded his claim properly. Had the Plaintiff properly pleaded his claim, he could then be at liberty to seek leave under s.143 of the Companies Act 1997, to bring this action under the Defendant's own name as Director of Nakurak Electrical Ltd. This is for the reason that Nakurak Electrical Ltd is not the proper Defendant to be sued.
    
11. From the Extract from IPA the following were revealed;
    
    • Certificate of registration of Business Name: "Nakurak Electrical Limited" dated 25th September, 1998. Basically, the Certificate of Registration Name is confirmed that Nakuraks Electrical Ltd is the entity created after registration under the Business Names Act, 1963.
      

Incorporation Date: 25 September, 1998

Registration Date: 25 September 1998

Ceasation Date: 12 October 2009

Registration Status: DEREGISTRATION

12. I am satisfied that the proceedings was filed when Nakarak Electrical Ltd was already de-registered and was incapable of being sued under its own corporate name and style. In John Kami v Department of Works (2010) N4144 a similar issue was raised. The Plaintiff sued as an individual when the claim was for loss suffered by a business. Her Honour Davani,J held that the named plaintiff is not the proper plaintiff to sue because it is the business name that should be suing as the losses were allegedly suffered by it. In A.G.C (Pacific) Ltd v Woo Textile International Ltd [1992] PNGLR 100, the issue of proper person was raised.
    
13. Because of the foregoing reasons I have alluded to I now grant the orders sought by the Defendant in his Notice of Motion dated 14 October, 2011 with costs. Having ruled infavour of the Defendant, it is not necessary to rule on Plaintiff's Notice of Motion for default judgment.

______________________________________________________________

Umba Lawyers: Lawyer for the Plaintiff

Warner Shand Lawyers: Lawyer for the Defendants