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J's Motors Pty Ltd v Rangip [1998] PNGLR 431 (20 June 1997)

[1998] PNGLR

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

J’S MOTORS PTY LTD

V

TOM RANGIP

MOUNT HAGEN: AKURAM J
21 May and 20 June 1997

Facts

In an application for contempt of court by a judgment debtor, the applicant sought to punish the respondent for non-compliance of a court order. During the hearing it was disclosed that the respondent had been sued by another creditor and the National Court had declared the respondent insolvent under the Insolvency Act, (Ch. No. 253).

Held

1. Any proceedings against a judgment debtor pursuant to s 169(11)(6) of the Insolvency Act (Ch. No. 253) can be taken any time after presentation of an insolvency petition against a debtor but not after a debtor has been declared an insolvent.
   
2. The present contempt proceedings are not proceedings that were in progress at the commencement of the insolvency petition or commenced during its continuance but relates to proceedings which have been commenced and concluded.
   

Counsel

D Poka, for applicant/plaintiff.
T Rei, for respondent/defendant.

20 June 1997

AKURAM J. The applicant is seeking orders by way of motion, contempt of court by the respondent.

The brief history of this application is that the plaintiff took out legal proceedings against the defendant claiming damages in the sum of K23,168.60 for services rendered and a default judgment was entered in the sum of K21,068.28 with interest and costs on the 24th May 1994. The respondent has not settled the judgment debt, which accumulated with interest and costs up to about K71,706.28. Meanwhile, there were other similar court proceedings against the respondent and orders made but the respondent has not met the judgment debts. One of the creditors - American Express International - took out insolvency proceedings against respondent in MP. No. 482/95 and on the 27th of October 1995, the respondent was adjudged insolvent in accordance with the Insolvency Act, (Ch. No. 253). A creditors meeting was called on the 22nd of November 1995, but a trustee was not elected. That process is still pending.

The applicant in these proceedings did attend the meetings of 26th February 1997 and 28th February 1997 and is therefore aware of those insolvency proceedings.

However, on the 21st of March 1997, the applicant or judgement creditor filed a notice of motion seeking orders that the judgement debtor be charged for contempt for not settling his debt within a reasonable time. And again on the 8th May 1997, applicant or judgment creditor filed a further notice of motion seeking orders that the Electoral Commission be restrained from accepting the nomination of the respondent on the ballot paper for the Mul/Baiyer Electorate in the 1997 National Elections for reasons that he was adjudged insolvent. The applicant filed three affidavits in support of his motions and the respondent filed one affidavit in reply.

The counsels have resolved that the second motion of 8th May 1997 be adjourned generally and that they will argue on the first motion of 21st March 1997. I have heard oral submission from the applicants counsel and obtained written submissions from the respondent’s counsel.

The counsel for the applicant submitted that the respondent had been declared bankrupt. There had been meetings to appoint a trustee and sort out the method of payment of his judgment creditors (about four) including the applicant.

The issue of the appointment of the trustee is still in the hands of the Assistant Registrar of the National Court. He submits that the respondent has been declared bankrupt, that no trustee has been appointed and that settlement of creditors is insecure or uncertain. He concedes that when a person is declared bankrupt, a trustee is appointed to deal with his affairs, but where there is none appointed, who deals with his affairs? In the absence of any trustee, the court must enforce the judgment debt pursuant to s 169(1)(b) of the Insolvency Act, (Ch. No. 253), which reads:

"169. Actions against insolvents.

(1) At any time after the presentation of a petition against a debtor, the Court may:

(a) restrain further proceedings in any action, suit, execution or other legal process against the debtor in respect of a debt provable in insolvency; or

(b) allow any such proceedings, whether in progress at the commencement of the insolvency or commenced during its continuance, to proceed on such terms as the Court thinks just.

(2) At any time after the presentation of a petition against a debtor, the Court may also:

(a) appoint a receiver or manager of the property or business, or any part of the property or business, of the debtor; and

(b) direct immediate possession to be taken of the property or business or of any part of it.

(3) An application under this section may be made ex parte." (emphasis added).

He submits that this application is commenced under s169(1)(b) of the Act and that the only question now for this Court to decide is whether Mr Rangip (judgment debtor) can be proceeded against in the absence of a trustee. There is also no official trustee appointed by the Minister under s 5 of the Act. There is therefore neither trustee nor an appointed official trustee. That is why this action is brought under s 169(1)(b) of the Act. The court has power to deal with contempt proceedings.

On issue of contempt, counsel submitted that this is a case where the contemnor has failed to comply with a court order - being a judgment debt. This court also has broad powers under s 155(4) of the Constitution to make such orders and also ad hoc orders. He then submitted that this court make appropriate orders for Mr Rangip to be brought to court to explain why he should not be dealt with.

Mr Rei for the respondent submitted that this court couldn’t deal with these proceedings pursuant to s 169(1)(b) because the provision applies only to situations where a party is not declared insolvent and thus the application is barred. The applicant is reviving this case despite the fact that respondent has been declared insolvent.

Section 169(1)(b) in my view, says: "at any time after presentation of a petition against a debtor", but not after the debtor has been declared insolvent. That is, once the insolvency petition has been adjudicated and the debtor has been declared insolvent, the court has no authority to go further and take any other proceedings against the debtor. The only exception is as allowed by s 168 of the Act where the insolvent may continue certain actions in his own name and for his own benefit, but any proceeds from that action, if he is successful, is to go to the trustee by order of the court. Subsection (1)(b) of s 169 also stipulates that any such process must be proceedings that were in progress at the commencement of the insolvency petition or commenced during its continuance, but does not refer to proceedings which have been commenced and concluded, and orders made, but not complied with, as in this case. That is the initial proceedings commenced in 1993 and concluded in May 1994. This present interlocutory proceeding is new and not to be regarded as being in progress at the commencement of the insolvency proceedings nor commenced during the continuance of the insolvency proceedings.

In view of the above interpretation of s 169(1)(b), I rule that judgment creditor or applicant cannot bring this contempt proceeding against the respondent or judgment debtor.

There is another matter, which I would like to point out that supports my findings. Under Order 13, Rule 2 of the National Court Rules, judgment for payment of money may be made by any of the following means:

(a) Levy of property; or

(b) Attachment of debts; or

(c) Changing order; or

(d) Appointment of a receiver; or in a case in which Rule 6 applies but subject to Rule 8,

(i) Committal; and

(ii) Sequestration.

And Rule 6 requires the attendance of judgment debtor or any person to give evidence or produce any document or thing, or answer or charge of contempt or for any other purpose. If the person fails to appear, the court may issue a warrant for his arrest. The provisions of Rule (2) do not affect the provisions of Order 14 Division 6 concerning contempt proceedings.

In the present case, an initial proceeding did go before His Honour Justice Injia on 10th of March 1995 where he made the following orders:

THE COURT ORDERS that:

1. Tom Rangip of Mount Hagen shall attend:
   

(a) before the Assistant Registrar;

(b) at the National Court at Mt Hagen;

(c) on Wednesday the 5th day of July 1995 at 9:30 am and until he is excused from further attending;

(d) for the purpose of being examined as to the questions:

(i) whether any and, if so, what debts are owing to him; and

(ii) whether he has any and, if so, what other property or means of satisfying the judgment or order by which he is bound; and

(iii) as to the whereabouts of the goods which he is bound, pursuant to the judgement which has been entered against him, to deliver to the plaintiff, or as the case may be.

2. Tom Rangip shall attend and produce all documents or things in his possession, power or custody relating to those questions.
   
3. He need not attend or produce any documents on any day unless his reasonable expenses have been paid or tendered to him.
   

On the 5th day of July 1995 there was no appearance by all the parties and thus, the matter was adjourned to 20th July 1995. On the 20th July 1995, there was no appearance of Mr. O’Connor for the applicant and Mr. Kandakasi so the matter was adjourned sine die. In essence, those proceedings are still pending and can be resurrected by the applicant anytime. Those proceedings have not been exhausted yet.

In view of above findings, I refuse the orders sought in this motion and dismiss it with costs against the applicant.

Lawyer for the plaintiff: Milner & Associates Lawyers.
Lawyer for the defendant: T M Rei Lawyers.