SC2595
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SC RES NO 1 OF 2022

IN THE MATTER OF THE COMPANIES ACT 1997

AND

IN THE MATTER OF L & A CONSTRUCTION LIMITED (I-3824)

Waigani: Salika CJ, Cannings J, Yagi J
2024: 25th & 28th June

PRACTICE AND PROCEDURE – reservation by National Court of points of law to the Supreme Court for determination – Supreme Court Act, s 15.

COMPANY LAW – whether the Companies Rules Chapter No 146 of Revised Laws were repealed upon commencement of Companies Act 1997 – originating process to be used for making applications under the Companies Act 1997.

The National Court reserved points of law for consideration and determination by the Supreme Court under s 15 of the Supreme Court Act. The points of law were in the form of three questions that arose in a case in the National Court in which the shareholder of a company applied by summons under s 220 of the Companies Act 1997 for orders authorising a person to inspect and make copies of the company’s records and audit the accounts of the company. The questions were, in summary: (1) were the Companies Rules Ch 146 preserved by s 440 of the Companies Act 1997 for a period of only six months from commencement of that Act? (2) if the answer to (1) is yes, what form of originating process is to be used for applications under the Companies Act 1997 if no form of originating process is prescribed? (3) if the answer to (1) is no, are the Companies Rules Ch 146 applicable and if so what originating process is to be used for applications under the Companies Act 1997 if no form of originating process is prescribed? 

Held: 

(1)	The answer to question 1 is no, the Companies Rules Ch 146 were not preserved for a period of only six months after the date of commencement of the Companies Act 1997. The Companies Rules Ch 146 remain in force and continue to apply notwithstanding the repeal of the Companies Act Ch 146 by virtue of s 440(3) of the Companies Act 1997. 

(2)	As the answer to question 1 is no, it was unnecessary to answer question 2.

(3)	The answer to question 3 is yes, the Companies Rules Ch 146 have not been repealed and continue to apply to the present day. If the Companies Rules Ch 146 do not prescribe the form of an originating process the most appropriate originating process to use is an originating summons in accordance with Order 4 rules 3, 26 and 27 and forms 6 and 7 of the National Court Rules 1983.

Cases Cited

Department of Works v International Construction (PNG) Ltd (in liquidation) (2009) SC1051
Gopera Investments Ltd v Reko (2016) SC1623
Papua New Guinea Harbours Board v Chris Textiles Ltd (2005) N2855
Re International Construction PNG Ltd (2007) N3337

Counsel

G Pogla, for the National Court Applicant 
I Molloy & J Kakaraya, for the National Court Respondent

28th June 2024

1.     BY THE COURT: The National Court reserved three points of law for consideration and determination by the Supreme Court under s 15 of the Supreme Court Act. 

2.    Section 15 states:

(1)	A Judge or Judges of the National Court sitting in the exercise of any jurisdiction other than criminal jurisdiction—

(a)	may reserve any case or any point in a case for the consideration of the Supreme Court; or
(b)	may direct any case or point in a case to be argued before the Supreme Court,

and the Supreme Court may hear and determine any such case or point so reserved or directed to be argued.

(2)	Except where the contrary intention expressly appears in a law, the powers conferred by Subsection (1) may be exercised in relation to any appeal or matter that comes before a Judge or the National Court under any law by which a Judge or that Court is designated as the Judge, Court, arbitrator or person appointed to hear and determine the appeal or matter, notwithstanding that the determination of the Judge or of the Court is expressed to be final or without appeal.

3.    The points of law were put in the form of three questions that arose in a case in the National Court, MP 28 of 2021, in which the shareholder, Lady Ni Cragnolini, of a company, L & A Construction Ltd, applied by summons under s 220 of the Companies Act 1997 for orders authorising a person to inspect and make copies of the company’s records and audit the accounts of the company. 

4.    The questions are: 

(1) 	Were the Companies Rules Ch 146 preserved by s 440 of the Companies Act 1997 or otherwise for a period of only six months from commencement of that Act? 

(2) 	If the answer to (1) is yes, what form of originating process is to be used for applications under the Companies Act 1997 if no form of originating process is prescribed? 

(3) 	If the answer to (1) is no, are the Companies Rules Ch 146 now applicable and if so what originating process is to be used for applications under the Companies Act 1997 if no form of originating process is prescribed? 
We have heard submissions from counsel for both parties in the National Court: Mr Pogla who represents the applicant in the National Court, Lady Ni Cragnolini, and Mr Molloy who represents the respondent in the National Court, L & A Construction Ltd. The parties agree on how the questions should be answered.

QUESTION 1: WERE THE COMPANIES RULES CH 146 PRESERVED BY SECTION 440 OF THE COMPANIES ACT 1997 FOR A PERIOD OF ONLY SIX MONTHS FROM COMMENCEMENT OF THAT ACT?

5.    The Companies Rules Ch 146 are an elaborate set of rules of court prescribing the practice and procedure of the National Court involving a range of proceedings concerning companies, including petitions, winding-up, examinations, powers and duties of liquidators and fixing time within which debts, claims and liabilities must be proved. The Companies Rules Ch 146 consist of 113 sections, and two schedules, the second of which prescribes 62 forms for use in connection with the Rules. 

6.    The Companies Rules Ch 146 pre-date Independence and derive from the Companies Rules 1969 made by the Judges of the pre-Independence Supreme Court under s 62A of the Papua and New Guinea Act 1949 (Cth). The Companies Rules Ch 146 were continued in force by virtue of the National Court Act and applied to National Court proceedings concerned with the Companies Act Ch 146 until at least commencement of the Companies Act 1997.

7.    Section 440 (repeal) of the Companies Act 1997 deals with the repeal and preservation of various laws. It states:

(1) 		The following Acts are hereby repealed:–

(a)	Companies Act (Chapter 146);
(b)	Companies (Amendment) Act 1985;
(c)	Companies (Amendment) Act 1986;
(d)	Companies (Amendment) Act 1988;
(e)	Companies (Budget Provisions) Act 1989;
(f)	Companies (Amendment) Act 1990;
(g)	Companies (Amendment) Act 1994.

(2) 		The Companies Regulation is hereby repealed.
(3)		For the removal of doubt, it is hereby declared that the Companies Rules remain in force and are not repealed by this section.

8.    In Gopera Investments Ltd v Reko (2016) SC1623, in the course of determining an application for leave to appeal against an interlocutory judgment of the National Court in a winding-up proceeding, Injia CJ expressed the view that there were two competing views on the question of whether the Companies Rules Ch 146 continued in force for more than six months after the date of commencement of the Companies Act 1997. 

9.    His Honour said that one view was that the Companies Rules Ch 146 did not continue in force for more than six months after the date of commencement of the Companies Act 1997. The opposing view was that they did continue in force beyond that date. His Honour said that the former view was expressed by Sevua J in Papua New Guinea Harbours Board v Chris Textiles Ltd (2005) N2855, while the latter view was expressed by Hartshorn J in Re International Construction PNG Ltd (2007) N3337. His Honour said that it would be good for the issue of the application of the Companies Rules Ch 146 to be resolved by a reservation of the issue to the Supreme Court in an appropriate case. The presiding Judge in the National Court in the present case, Acting Justice Wurr, acted on his Honour’s views and reserved the points of law for our consideration.

10.    In our view question 1 of this reservation is resolved by s 440(3) of the Companies Act 1997: “For the removal of doubt, it is hereby declared that the Companies Rules remain in force and are not repealed by this section.”

11.   The Companies Rules referred to in s 440(3) can refer only to the Companies Rules Ch 146, which are a separate body of law to the Companies Act Ch 146 and the Companies Regulation. The Companies Rules Ch 146 continue in force notwithstanding the repeal of the Companies Act Ch 146 and the Companies Regulation.

12.    There is nothing in s 440(3) or in any other provision of the Companies Act 1997 to suggest that the Companies Rules Ch 146 would continue to apply for only six months after the date of commencement of the Companies Act 1997. 

13.    The answer to question 1 is no, the Companies Rules Ch 146 were not preserved for a period of only six months after the date of commencement of the Companies Act 1997. The Companies Rules Ch 146 remain in force and continue to apply notwithstanding the repeal of the Companies Act Ch 146 by virtue of s 440(3) of the Companies Act 1997. 

QUESTION 2: IF THE ANSWER TO (1) IS YES, WHAT FORM OF ORIGINATING PROCESS IS TO BE USED FOR APPLICATIONS UNDER THE COMPANIES ACT 1997 IF NO FORM OF ORIGINATING PROCESS IS PRESCRIBED?

14.     As the answer to question 1 is no, it is unnecessary to answer this question.

QUESTION 3: IF THE ANSWER TO (1) IS NO, ARE THE COMPANIES RULES CH 146 APPLICABLE AND IF SO WHAT ORIGINATING PROCESS IS TO BE USED FOR APPLICATIONS UNDER THE COMPANIES ACT 1997 IF NO FORM OF ORIGINATING PROCESS IS PRESCRIBED? 

15.    The answer to the first part of question 3 is yes, the Companies Rules Ch 146 have not been repealed and continue to apply to the present day. 

16.    As to the second part of the question, if the Companies Rules Ch 146 do not prescribe the form of an originating process for an application under the Companies Act 1997, s 2 of the Companies Rules Ch 146 will apply. It states: 

Subject to the Companies Act and these Rules, the Rules of Court of the National Court and the general practice of that Court, including the course of procedure and practice in chambers, apply in relation to proceedings to which these Rules relate as far as is practicable.

17.    We adopt the reasoning of the Supreme Court in Department of Works v International Construction (PNG) Ltd (in liquidation) (2009) SC1051. If no form of originating process is prescribed by the Companies Rules Ch 146, the most appropriate originating process to use is an originating summons in accordance with Order 4 rules 3, 26 and 27 and forms 6 and 7 of the National Court Rules 1983. 

18.    The answer to question 3 is yes, the Companies Rules Ch 146 have not been repealed and continue to apply to the present day. If the Companies Rules Ch 146 do not prescribe the form of an originating process the most appropriate originating process to use is an originating summons in accordance with Order 4 rules 3, 26 and 27 and forms 6 and 7 of the National Court Rules 1983.

COSTS

19.    These proceedings have been initiated by the National Court. Both parties agree with the outcome. Learned counsel have assisted the Court greatly with well-researched and considered submissions. It is appropriate that the parties bear their own costs.

ORDER 

1	The answers to the three questions reserved are as follows:

Question 1: No, the Companies Rules Ch 146 were not preserved for a period of only six months after the date of commencement of the Companies Act 1997. The Companies Rules Ch 146 remain in force and continue to apply notwithstanding the repeal of the Companies Act Ch 146 by virtue of s 440(3) of the Companies Act 1997. 

Question 2: As the answer to question 1 is no, it is unnecessary to answer this question.

Question 3: Yes, the Companies Rules Ch 146 have not been repealed and continue to apply to the present day. If the Companies Rules Ch 146 do not prescribe the form of an originating process the most appropriate originating process to use is an originating summons in accordance with Order 4 rules 3, 26 and 27 and forms 6 and 7 of the National Court Rules 1983.

2	The parties will bear their own costs of the proceedings.

3	These proceedings are resolved and the file is closed. 

__________________________________________________________________
Leahy Lewin Lowing Sullivan Lawyers: Lawyers for the National Court Applicant	 
O’Briens Lawyers: Lawyers for the National Court Respondent