SC1627

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 135 OF 2017
	
BETWEEN:
POM TRADERS SDN BHD
Applicant

AND:

TST 4 MILE LIMITED
 Respondent 

Waigani:  Kassman, J
2017:  17th & 31st October 

SUPREME COURT – objection to competency of application for leave to appeal – grounds of objection – consideration of -  application for leave to appeal not required -  therefore incompetent -  objection to competency upheld 

Cases cited:

MP No. 21 of 2017 (Comm) In the matter of the Companies Act 1997 and In the Matter of TST 4 Mile Limited (2017) N6996
Coca Cola Amatil (PNG) Ltd v Yanda (2012) SC1221
Cal Exports Limited v Camp Administration Limited (2009) SC1050
Henganofi Development Corporation Ltd v Public Officers Superannuation Fund Board (2010) SC1025
Ken Fairweather v Jerry Singirok (2013) SC1293
North Solomon Provincial Government v Pacific Architecture [1992] PNGLR 145
Papua Club Inc v Nusaum Holdings Ltd (2005) SC 812)
Pupuna v Owa (2017) SC1564
Rea Joseph v Manau Sereva (2011) SC1152
Ruma Construction Pty Ltd v Christopher Hill (1999) SC560
Steven Punagi v Pacific Plantation Timber (2011) SC1153
Smith Alvi v Andake Tepoka (2006) SC1151
Timothy Neville v IPBC (2012) SC1193
Tzen Niugini Limited v Yema Gapia Developers Limited (2011) SC 1271
Yarkham v Merriam (1997) SC533 
Tsang v Credit Corporation [1993] PNGLR 112

Legislation cited:

Constitution Section 155(2)(b)
Companies Act Section 297, 338(1)
Supreme Court Act Section 14(3)(b)((iii) Section 14(1)(a) and (b) Section 17, 42
Supreme Court Rules Order 7 Rule 4(e), 6, 25 and Order 10 Rule 5 and Order 11 Rule 9
National Court Rules Order 8 Rule 27 and Order 12 Rule 40(1)(c)

Counsel:

A. MacDonald, for the Applicant
I.  Shepherd, for the Respondent	

DECISION

31st October, 2017

1.    KASSMAN J:  This is my decision sitting as a single judge of the Supreme Court on an objection to the competency of an application for leave to appeal.  

2.    In National Court proceedings commenced by Pom Traders SDN BHD (herein "the Applicant") in MP  No. 21 of 2017 (Comm) In the matter of the Companies Act 1997 and In the Matter of TST 4 Mile Limited (2017) N6996, the National Court on 25 August 2017 stayed the Applicant's petition and ordered the Applicant pay the costs of and incidental to the proceedings incurred by TST 4 Mile Limited (herein "the Respondent").

3.   The Applicant, being aggrieved with the decision of the National Court made on 25 August 2017, filed Application for Leave to Appeal on 27 September 2017.  On 9 October 2017, the Respondent filed Notice of Objection to Competency of the Application for Leave to Appeal. 

Background facts and events

4.   The background facts presented by the Applicant appear to be that on 22 December 2015, the Applicant, through Warner Shand Lawyers, served a Statutory Demand on the Respondent claiming the amount of US$88,343.80 being the balance outstanding on 8 unpaid invoices plus 2% interest on each invoice amount.

5.   On 21 January 2016, a company called Star Woods Limited, through Pacific Legal Group Lawyers, filed in the National Court an Originating Summons OS 18 of 2016 intituled "In the matter of the Companies Act 1997 and In the matter of an Application by Star Woods Limited pursuant to Section 338(1) of the Companies Act 1997 to set aside a Creditors Statutory Demand for Payment of Debt and BETWEEN TST 4 MILE LIMITED AND POM TRADERS SDN BHD". The Originating Summons stated "THE PLAINTIFF CLAIMS: 1. Pursuant to Section 338(1) of the Companies Act 1997, an Order that the Creditors Statutory Demand for Payment dated 21 December 2015 demanding the sum of US$88,343.80 and served on the Plaintiff on 22 December 2015, be set aside."  On 15 May 2016, the Originating Summons proceeding OS 18 of 2016 was discontinued.  

6.   Three days later on 18 May 2016, the Applicant, through Fiocco & Nutley Lawyers, filed a Creditors Petition MP No. 21 of 2017.  The Applicant referred to the filing and service on the Respondent of the Statutory Demand on 22 December 2015 and stated the failure by the Respondent to pay the debt.  The Applicant also referred to the fact OS 18 of 2016 had been filed seeking an order to set aside the Statutory Demand but that proceeding was discontinued on 11 May 2017.  Further, the Applicant stated there was an admission by a Mr Barry Tan, a shareholder and director of the Respondent that the Respondent was indebted to the Applicant for the sum of US$77,322.02 together with interest at 2% per month. Furthermore, the Applicant claimed the total sum of US$88,343.02, with interest thereon at 2% per annum, remained unpaid and so the Applicant claimed the Respondent was unable to pay its debts as they fell due in the ordinary course of business and the Applicant claimed an order the Respondent be wound up and a liquidator be appointed.

7.    On 8 June 2017, the Respondent, through Ashurst Lawyers, filed a Notice of Motion seeking the stay or dismissal of the proceedings.  On 25 August 2017, that application was heard and granted ex tempore where the National Court ordered "1. The Petition is stayed" and "2. The Petitioner shall pay the Respondent's costs of and incidental to the proceedings and the Notice of Motion filed 8 June 2017."  That Order was filed on 6 September 2017.           

Application for Leave to Appeal - comments

8.   Consideration of the Respondent's Notice of Objection to Competency requires an examination of the Application for Leave to Appeal and I make the following comments on that document.  The application begins with the sentence "The appeal requires leave to argue as Grounds of Appeal any points of law not raised in the first instance."  I take that to mean the Applicant seeks leave to raise in the appeal legal arguments that were not raised or addressed in the National Court when that court made the decision of 25 August 2017 and I also note that sentence implies the Applicant has yet to determine what grounds of appeal it intends to raise.  Further, I note the Applicant has not filed a Notice of Appeal either prior to or after filing the Application for Leave to Appeal so it is not the case that the Applicant will be asking for leave to have the "proposed grounds of appeal" added to other grounds of appeal raised in an existing Notice of Appeal. 

9.   There is then, what I would call, general discussion of certain matters under headings "Nature of the Case", "Questions involved" and "Reasons why leave should be granted". Those headings are required in an Application for Leave to Appeal in the prescribed Form 7 in the Supreme Court Rules as required by Order 7 Rule 4(e) and Order 10 Rule 5.  I say it is a general discussion because, with respect, the paragraphs fail to succinctly state the pertinent or relevant facts and circumstances to describe what the case is about, the questions or issues that arise for determination in the appeal or proposed appeal and the reasons why leave should be granted.

10.    At best, the Applicant raises a ground of appeal in the final paragraph under the heading "Nature of the Case" where the Applicant says  "By filing proceedings in Malaysia after the Appellant filed and served its Creditor's Petition the Respondent was able to convince the Court it had a “genuine and serious” counterclaim.  And was thus entitled to stay the Creditors’ Petition.  It is the granting of the stay which the Appellant seeks to set aside."  I understand the Applicant is raising as a ground of appeal the argument that the National Court erred in finding that the Respondent had established that it had a genuine and serious counterclaim to the Applicant's Statutory Demand. This argument is repeated in two paragraphs under the heading "Questions involved".  In that part, the Applicant also raises two other grounds of appeal.  Firstly, that the National Court erred in failing to find the Respondent's Notice of Motion failed to state it relied on the National Court's inherent jurisdiction.  Secondly, that the National Court erred in failing to find that the Respondent had failed to provide sufficient evidence of its solvency.   

11.   From my reading of the Application for Leave to Appeal together with the Affidavit in support of Alexander MacDonald, I understand the Applicant is saying Mr MacDonald, who is now acting for the Applicant, was not the lawyer acting or having carriage of the matter or matters for the Applicant in the National Court proceedings between the Applicant and the Respondent which are now brought to this court; has been unable to obtain the transcript of relevant parts of the proceedings which are critical to ascertaining the issues and arguments raised by the parties and lawyers; has been unable to get the assistance of the former lawyer for the Applicant who had carriage of the matter for the Applicant in the National Court; and is unable to extract a complete version of events that occurred and documents filed in the National Court proceedings as the former lawyer's correspondence file notes are insufficient and records of the Applicant from those proceedings are also insufficient.

12.    Ordinarily, an Applicant who files an Application for Leave to Appeal will also file an Affidavit attaching relevant documents which would assist the court determine the Application in an informed manner.  Those documents would include all necessary documents filed in the National Court, the reasons for decision and the formal order of the court.  In addition, the transcript of the proceedings of the National Court would also assist.  

13.    In this case, documents of the National Court would include the Petition and all Affidavits filed by the parties and particularly the Notice of Motion, Affidavit in Support and in response and the order of the National Court of 25 August 2017.  All written submissions relied on by the parties should also be included.  In this case, the Applicant annexed to the Affidavit of Alexander MacDonald the Petition filed 17 May 2017, the Notice of Motion filed by the Respondent on 8 June 2017 and the Order of the National Court of 25 August 2017 entered on 6 September 2017.  That was insufficient for purposes of the consideration of the Application for Leave to Appeal in determining whether there are arguable grounds of appeal.  This inadequacy was made worse by the failure of the Applicant to provide a transcript of arguments on the Notice of Motion seeking the stay orders and the decision of the court of 25 August 2017 which was delivered extempore.   

14.    Under the heading "Reasons why leave should be granted", the Applicant says:

"1.	The Appellant’s current lawyer did not represent its client prior to or at the hearing of the grant of His Honours order to stay.  Due to Registry practice there is currently no transcript.  The former lawyer relied upon oral rather than a written submission at the hearing of the stay application and the correspondence file notes are insufficient to determine what was argued by the Respondent’s lawyer at the hearing of the application.  Thus it is not known what legal issues were raised by the Appellant’s lawyers at first instance.  But it is anticipated at least some of the grounds and arguments to be relied upon at the appeal were not raised in the first instance.  Thus leave is required to plead and argue these grounds.

2. 	The Grounds of Appeal and subsequent arguments raise important procedural issues of law regarding the jurisdiction, beyond those can specified under the Companies Act, that an aggrieved debtor can rely upon and under what circumstances.

3. 	Grounds of Appeal raise important issues regarding the status of proceedings filed and even judgments granted in a foreign jurisdiction and whether they can constitute a counterclaim in Papua New Guinea and under what circumstances.

4. 	The Grounds of Appeal raise important legal points regarding the type and standard of evidence of solvency necessary to upset the presumption of insolvency created by not contesting a Statutory Demand."

Notice of Objection to Competency 

15.    On 9 October 2017, the Respondent filed Notice of Objection to Competency of the Application for Leave to Appeal filed 27 September 2017.  The objections raised by the Respondent are: 

"1.	The interlocutory judgment made in the National Court on or about 25 August 2017 was in the nature of a final decision and as such leave to appeal is not required under section 14 of the Supreme Court Act.

2. 	An appellant does not require leave of the Supreme Court to raise questions or points of law pursuant to section 14(1) of the Supreme Court Act.

3. 	In the alternative if the Application for Leave to Appeal filed 27 September 2017 is in fact and application brought pursuant to Order 7 Rule 25 to add additional grounds of appeal, then that application is also incompetent for the following reasons: 

(a)	The Application does not specify the jurisdiction of the Court; and 

(b)	No Notice of Appeal has been filed within the time prescribed by section 17 of the Supreme Court Act."

First ground of objection to competency

16.    On the first ground of objection, I agree with the Respondent's submission that the interlocutory judgment made on 25 August 2017 was in the nature of a final decision and leave to appeal was not required. The National Court ordered "1. The Petition is stayed" and "2. The Petitioner shall pay the Respondent's costs of and incidental to the proceedings and the Notice of Motion filed 8 June 2017." There was nothing further to be determined in those proceedings once the proceeding was stayed by that Order. The Applicant had the right to appeal the final decision, provide it exercised that right within forty days of the decision appealed, and there was no need to seek leave of the court to appeal that final decision.

17.   The Respondent says the application for stay of the proceedings before the National Court was made pursuant to Order 8 Rule 27 and Order 12 Rule 40(1)(c) of the National Court Rules following the Supreme Court’s Ruling in Cal Exports Limited v Camp Administration Limited (2009)SC1050.  Section 297 of the Companies Act was not available, as there were no proceedings on foot. This point was conceded by the Applicant.

18.   I also note and agree with the submissions of the Respondent that in Tzen Niugini Limited v Yema Gapia Developers Limited (2011) SC1271, the Chief Justice noted that a grant of stay under section 297 of the Companies Act “appears to be permanent” and although that particular issue was not critical to the case before him, he appeared to support the notion that the Respondent, ought to have filed an objection to competency of the application for leave to appeal from an interlocutory judgment that was before him on the basis that it was in fact a final order. In this case, the Respondent has filed this objection to competency of the application for leave to appeal. 

19.   In Timothy Neville v IPBC (2012) SC1193, the Court considered a Notice of Objection to Competency of the Appellants Application for Leave to Appeal.  One of the grounds of objection was that leave to appeal was not required as the decision of the lower court was in the nature of a final order.  The Supreme Court agreed that the interlocutory judgment was in the nature of a final decision citing North Solomon Provincial Government v Pacific Architecture [1992] PNGLR 145 and Ruma Construction Pty Ltd v Christopher Hill (1999) SC560 and concluded, in the case before them, that the interlocutory judgment was final in nature as there was nothing left to be determined in the proceedings before the National Court.  As in this case, the Appellants did not file a Notice of Appeal within forty days of the date of the decision which was sought to be appealed.  By section 17 of the Supreme Court Act, a person who desires to appeal or obtain leave to appeal shall file notice of appeal or file application for leave to appeal within forty days of the judgment in question. As leave to appeal was not required, the Application for Leave to Appeal was incompetent.  The Court found that an incompetent Application for Leave document “should not and cannot be turned into a Notice of Appeal because the Application for Leave to Appeal document is incompetent in the first place”.  An incompetent document should not be allowed to become competent for the purposes of instituting an appeal.  The Application for Leave to Appeal document can only be converted into a Notice of Appeal where leave has been granted under Order 7 Rule 6 of the Supreme Court Rules and not otherwise.  The only proper Notice to file is a “Notice of Appeal”.  As no Notice of Appeal had been filed, the entire Appeal was incompetent and was dismissed.  The circumstances were similar to the circumstances in this case.

20.    The circumstances were different in Henganofi Development Corporation Ltd v Public Officers Superannuation Fund Board (2010) SC1025 where the Appellant simultaneously filed an Application for Leave to Appeal (or an application to raise points of law not raised in the National Court) and a Notice of Appeal.  The Notice of Appeal raised only questions of law and questions of mixed fact and law.  In Henganofi as the Application for Leave to Appeal was incompetent on the grounds that it raised questions of law and mixed questions of law and fact and leave was not required.  It was dismissed but the Notice of Appeal was competent and the Appeal was allowed to proceed.  The Applicant does not have that option in this case.

21.   In Steven Punagi v Pacific Plantation Timber (2011) SC1153 and in Rea Joseph v Manau Sereva (2011) SC1152, a five man bench of the Supreme Court held that an unnecessary leave application is incompetent and therefore it should be dismissed.  The Supreme Court also said in Smith Alvi v Andake Tepoka (2006) SC1151 that an application for leave to appeal filed by the law firm without instructions of the applicant was a sham and an abuse of process and was for that reason dismissed. 

22.    The Applicant concedes, in submissions filed and made orally, the decision of the National Court of 25 August 2017 is a final decision.  For that reason, it is conceded the application for leave to appeal is incompetent as Section 14(3)(b)((iii) of the Supreme Court Act provides leave of the Supreme Court is not required where a party appeals from an interlocutory judgment made or given by the National Court where the judgement is a final decision. 

23.    Accordingly, as the Application for Leave to Appeal was not required and is therefore incompetent, this objection to competency must be upheld and the Application for Leave to Appeal dismissed with costs to the Respondents. 

Second ground of objection to competency

24.   The second ground of objection is based on paragraph 1 of the application itself where the Appellant says that it requires leave “to argue as grounds of the Appeal any points of law not raised in the first instance”.  

25.    Section 14(1)(a) and (b) of the Supreme Court Act provides that an appeal lies to the Supreme Court from the National Court on a question of law or on a question of mixed fact and law. Leave is not required to raise points of law. 

26.    If the Appellant wants to raise points of law not raised in the National Court it requires leave but can only do so if an Appeal is on foot. In  Papua Club Inc v Nusaum Holdings Ltd (2005) SC 812, the Supreme Court held an appellant can raise an issue of law before the Supreme Court that was not raised in the trial provided it is set out in the notice of appeal and it does not concern a question of fact only and the leave of the court is obtained to argue the point.

27.   The Respondent argues the document that was filed on 27 September 2017 is neither an Application for Leave to Appeal nor a Notice of Appeal but is an application either to amend a Notice of Appeal to add additional grounds or, perhaps an Application under Order 11 Rule 9 for directions in which case neither is validly before the Court as no Application for Leave to Appeal or Notice of Appeal has been filed.

28.    The Applicant concedes, in submissions filed and made orally, the proposed grounds of appeal raise questions of law or questions of mixed fact and law. For that reason, it is conceded the application for leave to appeal is incompetent as Section 14(1)(a) and (b) of the Supreme Court Act provides that an appeal lies to the Supreme Court from the National Court on a question of law or on a question of mixed fact and law and, as such, leave of the Supreme Court is not required.

29.    Accordingly, as the Application for Leave to Appeal was not required and is therefore incompetent, this objection to competency must be upheld and the Application for Leave to Appeal dismissed with costs to the Respondents.

Third ground of objection to competency

30.    The third ground of objection, raised as an alternative to the first and second grounds of objection, is that if the Application for Leave to Appeal filed 27 September 2017 is in fact an application brought pursuant to Order 7 Rule 25 to add additional grounds of appeal, then that application is incompetent for the reasons (a) the Application does not specify the jurisdiction of the Court; and (b) no Notice of Appeal has been filed within forty days from the decision in question as provided by section 17 of the Supreme Court Act.  In submissions filed, the Respondent also says if the Application for Leave to Appeal filed 27 September 2017 is an application under Order 11 Rule 9 of the Supreme Court Rules for Directions, it is not validly before the Court as no Application for Leave to Appeal or Notice of Appeal has been filed. 

31.    The Applicant says it does not know what grounds were argued in the National Court and it has yet to determine what grounds of appeal are available to it.  I refer to the Applicant's reasons which I described above under the heading titled "Application for Leave to Appeal - comments". The Applicant, in submissions, then embarks on an analysis of the case law and proposes three methods that will allow the Applicant to raise grounds of appeal on points of law not raised in the National Court.

32.  The first method proposed by the Applicant is to file, within time, an Application for Leave to Appeal and a Notice of Appeal which was what the Supreme Court held in Yarkham v Merriam (1997) SC533 which followed Tsang v Credit Corporation [1993] PNGLR 112. In this case, the Applicant filed Application for Leave to Appeal and failed to file Notice of Appeal so this method is not applicable and of no assistance to the Applicant. 

33.    The second method proposed by the Applicant is to file pursuant to Order 7 Rule 25 a Notice of Appeal and, after the transcript is made available, file a supplementary Notice containing the proposed new grounds as amendments.  The Applicant also concedes it does not know what grounds will be available until the transcript is obtained. This presents the critical problem for the Applicant.  The Applicant concedes it does not know what grounds will be available until the transcript is obtained. Furthermore, the Applicant has not filed a Notice of Appeal.  This concession by the Applicant confirms the Application for Leave to appeal filed by the Applicant is an abuse of process.  I also remind myself that I have already determined that the Application for Leave to Appeal was not required as the decision in question was final and is therefore incompetent.   

34.     The third method proposed by the Applicant is to allow the Application for Leave to Appeal filed as being sufficiently descriptive of the request for the Supreme Court to exercise inherent jurisdiction to grant leave to appeal points of law not raised in the National Court. The Applicant sought to rely on Coca Cola Amatil (PNG) Ltd v Yanda ( 2012) SC1221 where the Supreme Court refused an objection to competency of a Notice of Appeal which failed to state an address for service finding the want of form was a mere irregularity that did not render incompetent the Notice of Appeal.  The Supreme Court when referring to Section 42 of the Supreme Court Act said the intention of section 42 is "to ensure that form does not triumph over substance" and "That is not to say that the rules of court are to be ignored; far from it; only that mere procedural irregularities may not be fatal in particular circumstances." The Coca Cola Amatil case is of no assistance to the Applicant as that applies to a want of form which can be said to be a mere irregularity. In this case, the Applicant concedes it does not know what grounds will be available until the transcript is obtained.  That is not an issue that goes to want of form which can be said to be a mere irregularity.  The Applicant has yet to determine the grounds of appeal on the point of law that it wishes to raise.

35.   As stated above, in Rea Joseph v Manau Sereva (2011) SC1152, a five man bench of the Supreme Court held that an unnecessary leave application is incompetent and therefore it should be dismissed. The Supreme Court also said if an appellant, represented or not, mistakenly interprets the Supreme Court Act or Rules and unnecessarily applies for leave to appeal, he may have further recourse by seeking a review pursuant to section 155(2)(b) of the Constitution.  So that may be an option for the Applicant after it obtains the transcript of proceedings that led to the decision appealed of 25 August 2017.

36.    I also note the Supreme Court also said in Pupuna v Owa SC1564, the option of seeking a review pursuant to section 155(2)(b) of the Constitution is not available where an appeal to the Supreme Court is dismissed for want of prosecution.  In that case, the Supreme Court held:

 "A dismissal of an appeal by the Supreme Court is a final determination and cannot be appealed against or reviewed except by way of a "slip rule" application." and "An application for review under Section 155(2)(b) of the Constitution raising the same grounds of grievance as in an appeal previously dismissed by the Supreme Court amounts to an abuse of process of the Court."

37.    I also add the Supreme Court said in Ken Fairweather v Jerry Singirok (2013) SC1293 "A single Judge granting leave to review lacks the capacity to grant leave to an applicant to argue a point of law not put before the National Court. Leave would have to be granted by the Full Court of the Supreme Court." 

38.   I am satisfied the Respondent has made its arguments on the objection to competency and the filing of the Application for Leave to Appeal was unnecessary and is therefore incompetent for the reasons discussed above. 

39.   The orders of the Court are:

1)	The objection to competency filed 9 October 2017 is upheld.

2)	The Application for Leave to Appeal filed 27 September 2017 is dismissed.

3)	The Applicant shall pay the Respondent's costs of the proceedings on a party and party basis, to be taxed if not agreed.

Judgment accordingly,
___________________________________________________________________
Jema Lawyers:       Lawyers for the Appellant	
Ashurst Lawyers:  Lawyers for the Respondent