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Piunde Ltd (in liquidation), Re [2018] PGNC 543; N7663 (10 July 2018)

N7663

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

MP NO. 34 OF 2014

IN THE MATTER OF THE COMPANIES ACT 1997

AND

IN THE MATTER OF PIUNDE LTD (IN LIQUIDATION)

Waigani: Kariko, J
2018: 9^th & 10^th July

PRACTICE & PROCEDURE – application for lawyer to be disqualified from appearing – oral application – alleged conflict of interest

Cases Cited:

Salvatori Algeri v Patrick Leslie (2001) N2119
The State v Independent Timbers & Stevedoring Ltd (2016) N6331

Legislation:

Companies Act 1997

Counsel:

Mr C Gagma, for the Applicant
Mr I Shepherd, for the Respondent

RULING

10^th July, 2018

1. KARIKO, J: The directors and shareholders of Piunde Limited (In Liquidation) made an oral application yesterday for Ashurst Lawyers and counsel Mr Shepherd (together referred to as “Ashurst”) to be disqualified from acting for the liquidator.
   
2. Although no formal motion was filed, I allowed argument on the oral application.
   
3. The applicant alleges that Ashurst has a conflict of interest because the lawyers also act for Associated Mills Limited, the petitioner that filed for Piunde Limited to be put into liquidation.
   

Consideration

4. Having considered the submissions by counsel, I make these observations.
   
5. Firstly, while both counsel suggested that a previous similar application was made but not pursued, I have been unable to confirm that from the court file. Whether that occurred or not is a matter I do not consider material to my decision except to note that it is rather surprising that this application has been made now when Ashurst has been representing the liquidator for just over two years since Piunde Limited was placed into liquidation.
   
6. Secondly, if there is a conflict of interest as alleged, then the proper party to make the application is Associated Mills Limited. That is, if Associated Mills Limited believes that by firstly acting for it, Ashurst Lawyers has created a conflict of interest by now also acting for the liquidator, then Associated Mills Limited should make the appropriate application. On the other hand, had Ashurst Lawyers previously acted for Piunde Limited and has confidential information adverse to the interest of Piunde Limited in these proceedings, the current application for disqualification would be in order. Refer to The State v Independent Timbers & Stevedoring Ltd (2016) N6331 for an instructive discussion on disqualification of a lawyer for breach of confidentiality and conflict of interest.
   
7. Thirdly, while it is correct that Associated Mills Limited is a creditor, a liquidator does not act for creditors. In the case of Salvatori Algeri v Patrick Leslie (2001) N2119 the Court acknowledged a liquidator as an “officer of the court”, who shall act bona fide, impartially and skilfully, and must file reports and accounts with the Court.
   
8. Fourthly, the duties of the liquidator are set out in the Companies Act 1997. Under Section 303, the principal duty of a liquidator of a company is to take possession of, protect, realise, and distribute the assets, or the proceeds of the realisation of the assets of the company to its creditors. Where there are surplus assets or proceeds from realization of those assets, they are to be distributed in accordance with the Act.
   
9. Finally, if a party believes the liquidator has breached his obligations as an officer of the court or failed in his duties as liquidator, a proper application may be made to terminate the appointment of the liquidator.
   

Conclusion

10. I find the present application misconceived, and I therefore refuse to disqualify Ashurst Lawyers from acting for the liquidator and order that the applicants pay the liquidator’s costs of yesterday’s appearance.

____________________________________________________________
Gagma Lawyers: Lawyer for the Applicant
Ashurst Lawyers: Lawyer for the Respondent