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In the Matter of Damansara Forest Products (PNG ) Ltd (In Liquidation) [2005] PGNC 155; N2789 (12 February 2005)

N2789

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE AT WAIGANI]

MP NO. 417 OF 2004

IN THE MATTER of the Companies Act 1997

AND

IN THE MATTER of
DAMANSARA FOREST PRODUCTS
(PNG) LIMITED (IN LIQUIDATION)

Waigani: Gavara-Nanu, J

2004. : 19th November
2005. : 12th February
      

PRACTICE AND PROCEDURE – Consolidation of proceedings – Circumstances in which consolidation may be ordered – The appropriate tests to be applied.

PNG Cases cited:
AGC (Pacific) Limited -v- Sir Albert Kipalan and Others N1944.
Breckwoldt & The Co. (N.G. Pty Ltd) -v- Gnoyka [1974] PNGLR 106.
Masket Iangalio and Electoral Commission -v- Wauni Wasi Ranyeta & Miki Kaeok SC568.

Other cases cited:
Daws -v- Daily Sketch (1960) 1 W.L.R 126.
Horwood -v- British Statesman Publishing Company Ltd [1929] W.N. 38.
Payne -v- British Time Recorder Company [1921] 2KB. 1.

Counsel:
I. Shepherd for the applicant.
B. Andrew for the respondent.

GAVARA-NANU, J: The applicant, RH Trading Limited moves on the Notice of Motion filed on 18th November, 2004, for an Order that this proceeding MP. No. 417 of 2004, be consolidated with proceeding WS.No.942 of 2002.

The applicant also seeks Orders that MP No. 417 of 2004, and WS No. 942 of 2002, be forthwith referred to the civil list for Davani J. for mention and for directions by her Honour for the setting down of both proceedings for trial of all issues between the parties remaining for determination.

The principal relief claimed is for consolidation of this proceeding MP.No. 417 of 2004 with proceeding WS No. 942 of 2002.

The Court has a broad discretion to order consolidation of pending proceedings or actions and the main purpose for consolidation is to save time and cost. However, order for consolidation of different proceedings is not usually made, unless there is a common question of law or fact arising in those proceedings, which has a direct bearing on the rest of the issues in the proceedings, which can be conveniently determined and disposed of. See Payne -v- British Time Recorder Company (1921) 2K.B 1 at p.16; Horwood -v- British Statesman Publishing Company Ltd (1929) W.N. 38; Daws -v- Daily Sketch (1960) 1 W.L.R 126. See, also AGC (Pacific) Limited -v- Sir Albert Kipalan and Others N1944.

Order to consolidate different proceedings would be more readily given by the court if the parties in the proceedings are same and where they are represented by same lawyers. Consolidation would however be refused if the court is of the view that consolidation would result in a party being embarrassed or prejudiced at the trial. This may arise where issues in the proceedings are different and the types of relief claimed are different. In such circumstances an order to consolidate proceedings would cause unnecessary injustice to the parties, particularly the respondent. See, Breckwoldt & The Co. (N.G. Pty Ltd) -v- Gnoyka (1974) PNGLR 106 at pp. 120 – 121.

The test for ordering consolidation of different proceedings seems to be, whether the claims and the parties in the proceedings can be joined in one statement of claim or action. See, AGC (Pacific Limited) -v- Sir Albert Kipalan & Ors (supra).

In Masket Iangalio & Electoral Commission -v- Wauni Wasi Ranyeta & Miki Kaeok SC. 568, the Supreme Court discussed principles of consolidation. The observations made there by Los J. embrace the matters alluded to above.

"The common law position in relation to consolidation would appear to be that to get the matter on for a decision as to whether two or more matters should be heard together as one, it has to be by way of summons with notices to other parties, see Daws -v- Daily Sketch (1960) 1 All ER 397. Then a number of substantive matters must be looked at as to decide whether consolidation is possible. That is to say whether there are common questions of law involved. Or whether there are common questions of facts involved even in different causes of action. But the court does have discretion to exclude any parties if such inclusion is embarrassing, see Horwood -v- Statesman Publishing (1929) All ER 558.

If two or more actions are consolidated, representation must also be consolidated.

...In a proper consolidation it would mean that all actions are joined as one hence represented by one counsel excepting junior counsel. If this cannot happen then a joint hearing is not a consolidated action.

... There is no absolute prohibition against consolidation. But the issue must be properly brought before the court with appropriate and sufficient notice to other parties. A judge before whom an application is made to consolidate, certain actions, must consider the facts, practicalities and circumstances of the cases sought to be consolidated. If any two matters for instance cannot be consolidated, they could be heard consecutively".

His Honour went on to say that consolidation could not be ordered by the trial judge in that case because the grounds of petition and the types of relief claimed were different to those in the other petition, and thus the two proceedings could not be merged or consolidated into one action.

In proceeding MP No. 417 of 2004, Mr. Robert Southwell, the liquidator for Damansara Forest Products (PNG) Ltd has issued a Summons to R.H Trading Ltd in which Mr. Southwell seeks declaration that his appointment as liquidator for Damansara Forest Products (PNG) Ltd is valid. According to Mr. Southwell, liquidation is well advanced. In his affidavit, Mr. Southwell says all assets of Damansara Forest Products (PNG) Ltd have been realized except for two vessels, which are subject of liquidation in respect of the proceedings in WS No. 1454 of 2000 and WS No. 942 of 2002.

In proceeding WS No. 942 of 2002, R.H Trading applied for orders that Mr. Southwell was not properly appointed as liquidator. In that proceeding, the parties were Damansara Forest Products (PNG) Ltd (in liquidation) as the plaintiff with Mr. Southwell appointed as its liquidator and R.H Trading Ltd as the defendant. The matter is part heard. At the trial before Davani J. on 19th August, 2004, the plaintiff claimed return of its equipment which was in possession of the defendant. The defendant refuted the claim and said that it had the right to be in possession of the equipment and that it’s possession over the equipment was legal. It is noted that the defendant had possession of the equipment after the Sheriff’s Office issued a writ of levy over the plaintiffs’ assets to satisfy a judgment given against it in respect of proceeding WS No. 705 of 1998. At the trial, it was also contended by the defendant that both parties had on or about 9th February, 2002, settled the matter by agreeing that the defendant take possession of the equipment in satisfaction of the judgment against the plaintiff which was in the sum of K550, 275.00 together with interests of K63,067.60. The judgment was given on 11th October, 1999.

However, the plaintiff claimed that at the time of the purported settlement, it was in liquidation and therefore it could not pay its debts as they became due in the ordinary cause of business and thus any agreement between the parties was void abinitio, pursuant to s. 340 (2) of the Company’s Act. In support of that contention, the plaintiff relied on the resolution passed by its share holders for its liquidation. In response, the defendant argued that Mr. Southwell was not properly appointed as liquidator for the plaintiff and therefore pursuant to 0rder 10 r 14 of the National Court Rules, the proceedings in respect of WS 942 of 2002 should be dismissed and judgment should be entered for the defendant. The plaintiff countered the argument by submitting that the legality of Mr. Southwell’s appointment was not pleaded by the defendant in its defence and therefore it could not be raised and relied upon. It was therefore submitted that the proceedings should be adjourned to allow the defendant to plead the issue of the legality of Mr. Southwell’s appointment as the liquidator in its amended defence.

Davani J. refused to enter judgment for the defendant and ordered the parties to amend their pleadings including the order that the defendant file an amended defence to plead the legality of Mr. Southwell’s appointment as the liquidator for Damansara Forest Products (PNG) Ltd. It is noted that, Davani J’s orders were given on 1st September, 2004, and these proceedings in MP 417 of 2004, were instituted on 3rd November, 2004.

The question that arises now is - Is consolidation of this proceeding MP No. 417 of 2004 and proceeding WS No. 942 of 2002 possible? In my opinion, the answer to this question must be in the affirmative. I hold this view on the basis that all the conditions required for consolidation are met, in that the issue regarding the legality of the appointment of Mr. Southwell as the liquidator for Damansara Forest Products (PNG) Ltd which is the basis for the action in proceeding MP No. 417 of 2004 is the same issue that arises for determination in proceeding WS No. 942 of 2002. The issue of legality of the appointment of Mr. Southwell as the liquidator for Damansara Forest Products (PNG) Ltd is therefore the central issue or the common question of law arising in the two proceedings which has a direct bearing on all other issues in the two proceedings. Furthermore, the parties in the proceedings are same and they are represented by same lawyers. It therefore follows that I should order consolidation of the two proceedings, which I now do.

One of Mr. Andrew’s points of contention as I understood it is that because Mr. Southwell’s appointment as liquidator for Damansara Forest Products (PNG) Ltd, in proceeding MP No. 417 of 2002 is by statute viz. the Companies Act, the proceeding should be tried separately. Assuming that to be Mr. Andrew’s contention, I am of the opinion that it must fail, because the fact that the appointment of Mr. Southwell is by statute does not operate as a bar to the two proceedings being consolidated. The very fact that the issue regarding the legality of Mr. Southwell’s appointment as the liquidator for Damansara Forest Products (PNG) Ltd arises as the common question of law in the two proceedings meets the requirement for ordering consolidation and there being no other competing issues, consolidation should be ordered as a matter of course. It would indeed be waste of time and costs if proceeding MP No. 417 of 2004 was tried separately from proceeding WS No. 942 of 2002, whilst the issues arising in the two proceedings are the same or related and therefore can be conveniently determined at once. There is no doubt that consolidation of the two proceedings would save time and costs.

In the result, I order that this proceeding MP No. 417 of 2004 be consolidated with proceeding WS No. 942 of 2002.

I also order that this proceeding MP No. 417 of 2004 and proceeding WS No. 942 of 2002, be forthwith referred to the civil list for Davani J. for mention and for directions by her Honour for the setting down of both proceedings for trial of all issues between the parties remaining for determination.

The respondent will pay the applicant’s costs.
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Lawyers for the applicant : Blake Dawson & Waldron Lawyers. Lawyers for the respondent : Young & Williams Lawyers.