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Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]
SCA NO. 149 OF 2004
BETWEEN:
WHITE CORNER INVESTMENT LIMITED
First Appellant
AND:
REDCOCO PROPERTIES LIMITED
Second Appellant
AND:
NOKANGE CONSULTANCY SERVICES LIMITED
Third Appellant
AND:
GOLI KUKA BUSINESS GROUP INC. (NO.2)
Fourth Appellant
AND:
ELIJAH HAROLD also known as ELIJAH COCO HARRO
Fifth Appellant
AND:
REGINA WAIM HARRO
First Respondent
AND:
ALLAN KUNDI
Second Respondent
Waigani : Salika, Davani & Lay .JJ
2007 : 4 May
2009: 27 February
SUPREME COURT - civil appeal - Matrimonial Causes - Matrimonial Causes Rules sections 141 and 142 - discovery and production - circumstances not giving rise to grounds for appointment of a Receiver and Manager.
PRACTISE AND PROCEDURE – Notice of Discovery – affidavits of objection – Court Orders for Discovery – no discovery – O.9 Div. 1 of National Court Rules
MATRIMONIAL CAUSE – Notice of Discovery – objections raised by affidavit – Court Orders for Discovery – Non-compliance – remedies available – Part XI Division 2 of Matrimonial Cause Rules
MATRIMONIAL CAUSE – proceedings or applications – application to be made under Matrimonial Causes Act and rules – s.3 of Matrimonial Causes Act
MATRIMONIAL CAUSE – Distribution of matrimonial property – refusal to disclose details of companies – Mareva injunction – preservation of matrimonial properties – breach of Mareva Orders - Appointment of Receiver/Manager – s.76(1)(l) of Matrimonial Causes Act
Facts
The Respondents obtained orders in the National Court for the appointment of a Receiver and Manager to the Appellant corporations on the basis that the Appellants had repeatedly failed to give discovery even after being ordered to do so.
Held
5. Per Davani J (Dissenting, orders 5 to 10: Where discovery is not given, even after orders are made for the giving of discovery, a respondent can apply for the production of documents, then for the dismissal of proceedings, if the documents are still not provided. However if that order will not achieve the desired result, which is the production by the other party of certain documentation from the family companies named as parties, to then enable the fair distribution of matrimonial properties, then the respondent can apply to the Court for the appointment of a Receiver and Manager but that this would only apply in exceptional cases where no lesser relief can adequately meet the case. The same would apply to a petitioner.
Part XI, Division 2 of Matrimonial Causes Act.
S.76(1)(l) of Matrimonial Causes Act
7. The exercise of such power is exercised only in exceptional cases where no lesser relief can adequately meet the case.
National Australia Bank v Bond Brewing Holdings [1991] VicRp 31; [1991] VR 386
- A Receiver should be appointed where there are breaches of an existing Mareva Order and to prevent the disposal of assets and properties before judgment is handed down.
Cadura Investments Ltd v Rototek Pty Ltd & Ors (2004) WASC 150
Kendling & Kendling & Ors (No. 2) [2008] Fam CA 296 (29th April, 2008)
S.3 of the Matrimonial Causes Act.
Cases Cited
Papua New Guinea Cases
Nil
Overseas Cases
National Australia Bank v Bond Brewing Holdings [1991] VicRp 31; [1991] 1 VR 386
Beach Petroleum NL v Johnson (1992) ACSR 404
Cadura Investments Ltd v Rototek Pty Ltd & ors [2004] WASC 150
References
Matrimonial Causes Act
Matrimonial Causes Rules
P.E Joske, Matrimonial Causes and Marriage Law and Practice, 5th edition
27 February, 2009
1. SALIKA AND LAY JJ: This appeal arises out of matrimonial proceedings for divorce, custody of children and settlement of matrimonial property. The marriage was dissolved by an Order Nisi on 18 December 2001, and custody of 5 of the 6 children of the marriage was then determined. The remaining issues in those proceedings were custody of one child, and property settlement.
2. The fifth Appellant has an interest in a number of companies. These companies and an incorporated business group were joined as parties to the National Court matrimonial proceedings and they are the First to Fourth Appellants. The First Respondent sought discovery against all of the Appellants. She contended in the National Court that there had been a refusal to give discovery despite requests and orders of the court. Based on this contention the First Respondent obtained the appointment of a Receiver and Manager over the corporations in order to obtain access to documents she considered necessary for the preparation of her case for property settlement.
3. At the time of a trial separation of the Fourth Appellant and the First Respondent in 1998 there was a division of the property belonging to the Fourth appellant and the First Respondent received a settlement of property by way of a sale agreement, which the Appellants claim was full settlement of all property issues between Mr & Mrs Harro.
4. The issues arising from these facts, as disclosed by the grounds of appeal and the submissions of the parties are:
Whether there was evidence that the Appellants had neglected to give discovery
5. The First Respondent submits that she filed and served a total of 4 notices for discovery and obtained two orders compelling discovery. She submits that "notwithstanding these 2 orders, the Appellants and their agents steadfastly refused to give any discovery".
6. The Appellants submitted that from the time the 5th appellant was first requested to give discovery regarding his interests in the 1st 2nd, 3rd and 4th appellants the first to 4th appellants gave discovery by affidavit, but objected to production of certain documents on the basis that the respondent had no interest in the appellant corporations. This objection was maintained at the application for orders for discovery and subsequent to the orders for discovery being given, by setting out in the affidavits of discovery the Appellants objection and the documents to which that objection applies. The Appellants contend that this is evidence that the appellants have not failed, refused and neglected to give full discovery over a period of 3 1/2 years between December 1999 and May 2002 as claimed by the Fist Respondent.
7. Matrimonial proceedings are governed by Matrimonial Causes Act (MCA) and the Matrimonial Causes Rules (MCR). Pursuant to Section 1 of the MCA, proceedings with respect to the maintenance of a party to any proceedings or settlements or the maintenance, welfare, advancement & education of children of the marriage are matrimonial causes regulated by the MCA. After the commencement of proceedings under the MCA all relief of any sort that could be obtained under that Act must be sought under that Act: MCA s3. The National Court Rules therefore have no application.
8. The MCR provides for discover, and production of documents. Discovery is the process of listing documents in a party’s possession and control and attaching that list to an affidavit swearing to its completeness. Production is permitting another party to look at the discovered documents.
9. A party is not entitled as of right to production of documents referred to in an affidavit of discovery where the deponent objects in the affidavit to the giving of production. The party seeking production of such documents must obtain an order for production of the specific document: MCR 141 (2) and see Matrimonial Causes and Marriage Law and Practice 5th edition P. E. Joske at [12.89].
10. The Appellants did file documents entitled "Affidavit of Discovery" listing various documents, some by specific reference to the document but mostly by categories.
11. The Appellants in their affidavits of discovery refer in general terms to all of the financial and business records of the Appellant corporations and specifically to the "financial statements for the Respondents (Appellants) for the financial years 1995, 1996, 1997, 1998, 1999, 2000, 2001". All of these documents are listed in the affidavits of discovery as documents to which the Appellants object to production.
12. The affidavit supporting the First Respondent's application for appointment of a Receiver and Manager, the affidavit of Kerenga Kua sworn 21st October 2002 (appeal book pp 214 – 217) and 16th of July 2004 (appeal book pp 225- 227), refer to the Company Secretary of the corporate Appellants discovery affidavits in respect of which Mr Kua says the Appellants Secretary "specifically refuses to give discovery on behalf of the 3rd Respondents ". The same allegation is made in Mr Kua's affidavits in respect of the discovery affidavits of the 5th Appellant. An examination of those affidavits of the Appellants shows what the Appellants submit, namely, that there was no refusal to give discovery in those affidavits, that there was an objection to production of the documents. Mr. Kua's affidavit consists of bare allegations of a refusal on the part of the Appellants to give discovery. No instance is cited of a specific document or class of documents not discovered. The affidavit alleges that the Appellants:
"The Petitioner and the 3rd Respondents had had since 17 December 1999 failed to give adequate discovery of the family assets in custody and control of the Petitioner including in particular details of the Petitioner's interest in the 3rd Respondents among other things, in which the Petitioner and the 3rd Respondents had expressly refused to give discovery".
13. The problem with that passage is it is simply a submission, it is not fact, it is not evidence. There is no evidence of failure of the Appellants to give discovery as distinct from objection to giving production.
14. There are several instances in the Judgement appealed from of references to "the continuous refusal by the 3rd Respondents to discover". There is no reference in the judgement to how discovery has been inadequate, and apart from a failure to disclose a bank account at the then Bank of Hawaii by Mr Harro, which was subsequently rectified, there is no reference to a document or class of documents which the Appellants have failed to include in an affidavit of discovery. Nor do the Respondent's submissions, on this appeal, point to any such failures. In our view it has not been demonstrated that the Appellants have failed or refused to give discovery.
15. There is in the appeal book a Summons for Production and to Give Evidence which requires the Petitioner to produce the documents of the same general description as the documents to which the corporate Appellants object to production. The date for production specified in the summons is the 18th December 2001, which was the original trial date at which property settlement issues were adjourned to a future hearing. No reference is made, in the judgment appealed from nor in the submissions, to this document and we have concluded that there was no failure to comply with the summons which is material to this appeal.
16. Rather, what is pointed to by the Respondent is the affidavits of discovery which say that the deponents object to production of certain documents. This is a statement which the deponents are both entitled and required to make pursuant to the MCR if they do object to production.
17. If the First Respondent wants a document produced and the Appellants object to production of the document, the First Respondent should apply to the court for an order for production. The court will then apply appropriate criteria to decide whether such an order should be made. This is the scheme set out in the Rules.
18. No further orders of the Court were made, nor any further request for discovery served by the Respondents, after the Appellants filed their affidavits of discovery. Therefore, prima facie the discovery was adequate. No orders for production has been sought by the First Respondent and none made by the National Court. The Appellants are therefore not in breach of any such order and have not refused production pursuant to a lawful obligation to give production; they have objected to production pursuant to a lawful right to object to it. It appears to us that the Respondent has confused the separate obligations of discovery, with production and inspection and unfortunately the Court below has been led into the same oversight.
Power to Appoint of a Receiver and Manager
19. We deal with the power to appoint a Receiver, and whether it was appropriate to appoint a Receiver in this case, together.
20. While we do not doubt the jurisdiction of the National Court to appoint a Receiver and Manager in a matrimonial cause in appropriate circumstances, it is an unusual step reserved for those cases of an exceptional nature where no less a relief could adequately meet the case. See for example the Australian cases of the National Australia Bank v Bond Brewing Holdings [1991] VicRp 31; [1991] 1 VR 386 at 540.20 and 541.30 and Beach Petroleum NL v Johnson (1992) ACSR 404 at 405.25-30 and 506.10-20 and Cadura Investments Ltd v Rototek Pty Ltd & ors [2004] WASC 150 at [37].
21. In our view a party does not make out a case for the appointment of a Receiver and Manager when there are statutory remedies which may cure the deficiency, which the party making application sees, in the response of the other party to the applicant party's preparation for trial; where the applicant has not availed of that statutory remedy.
22. In this case the First Respondent had available to her the avenue of asking the court to give orders for specific production pursuant to Rules 141 and 142 of the MCR. Not having sought those and obtained those orders the Respondent could not demonstrate that the Appellants were in breach of relevant orders of the court. Therefore, in our opinion, the circumstances had not been established by evidence, which justified the appointment of a Receiver and Manager and such a order should not have been made.
Whether the property settlement issue was resolved altogether Outside Court
23. The Appellants contend that the agreement for Sale of Business and Goodwill between Golikuka Business Group and the First Respondent and Waim Investments Pty Ltd dated 22 September 1995 finally resolved all issues relating to property settlement. It is a ground of appeal that His Honour failed to so find.
24. We decline to make a finding on this ground because we are not satisfied that it was an issue squarely before His Honour on which His Honour was obliged to make a finding in his ruling on the Respondent's application for appointment of a Receiver and Manager; and also because it is not necessary for us to do so to dispose of the appeal.
25. However, we do note that sections 73 to 75 of the Matrimonial Causes Act give powers to the court in respect of maintenance and settlement of property which cannot be taken away by private agreement, unless the agreement is sanctioned by the court pursuant to Section 76 (1) (k) of the MCA.
26. Further, the relevant clause of the Sale of Business and Goodwill Agreement reads as follows:
"Regina Waim Harro acknowledges that the Golikuka Business was up until date of sale was(sic) a family business and therefore in the event of a Separation in the Marriage between Regina Harro and Elijah Harro, Regina Harro will not make any claim in property settlement from Eliza Harro - in so far as property interest in the business of Golikuka is concerned".
The agreement therefore, in so far as it purports to be a restriction on property settlement claims by the First Respondent, is restricted to the former property of the 4th Appellant. Consequently it appears to us that there were difficulties in the way of this ground of appeal succeeding.
Conclusion
27. In the circumstances that there is no evidence of failure to give discovery or production of documents and consequently no proper basis for appointment of a Receiver and Manager, it is appropriate that the appeal be allowed and orders of the National Court be set aside and the appointment of the Receiver and Manager be terminated forthwith. Cost should follow the event.
28. The Appellants sought other consequential orders relating to discovery which we do not grant as we consider those matters best addressed in the National Court.
29. The court orders:
30. DAVANI .J (Dissenting): This is an appeal against the whole of the National Court’s decision of 10th September, 2004 in proceedings MC 6 of 1999. The appeal lies without leave.
Background
31. The appeal arises out of matrimonial proceedings for divorce, custody of five children and settlement of matrimonial property. The marriage was dissolved by an Order Nisi on 18th December, 2001. Custody of five children of the marriage was also determined that day. The remaining issues in those proceedings were in relation to custody of one child, Martha and property settlement.
32. A number of companies are owned and controlled by the fifth appellant and first respondent, who both own substantive properties and businesses (‘matrimonial property’). These companies and an incorporated business group were joined as parties to the National Court proceedings on 27th October, 2000. This was done on their own applications. Over a period of over 3 ½ years, the appellants objected to the giving of discovery over the named appellant companies. This was after the first respondent had given two Notices of Discovery, two Orders for Discovery and numerous correspondences. The first respondent was insistent on proper discovery because she was of the view that discovery was necessary to facilitate a proper determination of the issue of property settlement.
33. On 10th September, 2004, upon the application of the first respondent, the National Court ordered the appointment of Robert Southwell as Receiver and Manager of the first, second, third and fourth appellants. This was done to place the companies and businesses under the control and custody of a Court appointed official who would then assist in giving discovery on behalf of the family companies and if need be, facilitate property settlement. This accurate information would identify the assets, liabilities, mortgages, shareholding, share issues and transfers and which would then enable the Court to make an informed decision on matrimonial/family property distribution.
34. This appeal is against that decision to appoint a Receiver and Manager over the first, second, third and fourth appellants.
Grounds of Appeal
35. The appellants have summarized their grounds of appeal as contentions which I set out below;
"- The trial judge erred in fact and in law when he found that the appellants did not adequately comply with the discovery process.
- The trial judge erred in fact and in law when he found that the appellants had breached the Court’s Orders for discovery.
- The trial judge erred in fact and in law when he found that the appellants were uncooperative for over 3 ½ years.
- The trial judge erred in fact and in law when he found that O.9 r.50 of the National Court Rules (‘NCR’) gave the National Court power to appoint a Receiver and Manager over the appellants because they had purportedly defaulted when they gave discovery.
- The trial judge erred when he decided that O.13 r.2; O.14 r.9 and O.14 rr.17 to 23 gave the National Court power to appoint a receiver and manager over the appellants because they had failed to give discovery.
- The trial judge erred when he decided that s.155(4) of the Constitution gave the National Court the power to appoint a Receiver and Manager over the appellants because they had failed to give discovery.
- The trial judge erred when he decided that s.93 of the Matrimonial Causes Act (‘MCA’) gave the National Court the power to appoint a Receiver and Manager over the appellants because they had failed to give discovery.
- The trial judge erred when he appointed a Receiver and Manager because the appointment did not facilitate or safeguard the first respondent’s interests in that she did not have an interest to safeguard or facilitate and did not produce any evidence to prove the existence of such interests.
- The trial judge erred when he decided that the appellants’ failure to give discovery affected the Court’s duty to administer justice because there is no evidence of the failure to give discovery and no evidence that this failure affected the Court’s power to administer justice.
- The trial judge erred when he found that the appellants had something to hide when there was no evidence of this fact.
- The trial judge erred when he found that the Court was prevented from performing its constitutional responsibilities because there was no evidence of what the appellants did that prevented the Court from carrying out its constitutional responsibilities.
- The trial judge erred when he failed to find that the property at issue was resolved when Elijah Harold and Goli Kuka Business Group and Regina Waim Harro settled."
Issues
36. The respondents have summarized the grounds of appeal as issues which I adopt and which are;
(i) Whether there was evidence to prove that the appellants had failed, refused and/or neglected to give full discovery over an extended period of time?
(ii) Whether the National Court had the legal powers to appoint a Receiver and Manager over the three companies and one business group in circumstances, where they, including the fifth appellant, continuously objected to the production of certain documents, over a period of 3 ½ years, even when ordered to do so twice by the Court?
(iii) Whether the Court below erred in fact or in law in appointing a Receiver and Manager?
(iv) Whether this matter was settled out of Court?
37. I discuss the appellants’ contentions and submissions under the issues posed by the respondents and discuss these, together with the respondents’ submissions. But before I do that, I discuss the general law on Discovery.
The Law on Discovery
38. General discovery is required under O.9 rr.1 and 2 of the NCR. Discovery is given upon service of a notice. The Court can also order general discovery under O.9 r.5.
39. In Credit Corporation (PNG) Ltd v Gerald Jee [1988-89] PNGLR 11, Woods J. discussed the application of O.9 rr.1 and 2. There the party that was served, simply refused to comply. Woods J. said the rule had automatic application once a notice is served. No further orders were needed to enforce the notice.
40. Of the scope and purpose of discovery, Woods J. said;
"Discovery is therefore to help the parties and, in the end, the Court to obtain a proper examination of the issues and a party is therefore entitled to discovery of any documents that relate to the issues. A document is discoverable if it throws on the issues. Donaldson v Haris (1973) 4 SASR 299.
A party is obliged to disclose all documents in his possession, custody or power which relate to the matter in question. The rules quite clearly cover this." (my emphasis)
41. Sakora J. in Ace Guard Dog Security Services Ltd v Lindsay Lailai (2003) N2459, ruled that the duty to give discovery is not only limited to the matters in question in the action, but extends to evidence which may directly or indirectly advance one’s own case or damage the adversary’s case. Sakora J. extended discovery to documents which may be "directly" or "indirectly" relevant. However, Sakora J. said discovery was limited only by three circumstances;
a) Scope of discovery is limited by "issues" identified in the pleadings;
b) The use of discovered information is limited to the conduct of the proceedings (and not for any collateral purposes);
c) Any claims of privilege.
42. Order 9 rule 16 further provides that discovery will not be given if it is injurious to "public interest".
43. Order 9 rule 15 provides for the court’s powers to deal with a party who defaults in giving discovery. This rule reads;
"15. Default
(1) Where a party makes default in filing or serving a list of documents or affidavit or other document, or in producing any document as required by or under this Division, the Court may make such order as it thinks fit, including –
- (a) if a party in default is a plaintiff, an order that the proceedings be stayed or dismissed as to the whole or any part of the relief claimed by him in the proceedings; or
- (b) if the proceedings were commenced by writ of summons and the party in default is a defendant, an order that his defence be struck out and that judgment be entered accordingly."
44. Order 9 rule 15 allows the Court "...to make such orders as it thinks fit, including... " those prescribed under sub rule (1)(a) and (b) where a party is in default in giving discovery. The Courts’ powers to enforce discovery is very broad.
45. In Credit Corporation (supra), Woods J. held that default in discovery can lead to a Defence being struck out under O.9 r.15 and no further order to compel discovery was necessary. Again, in Titus Keran v Jerry Warun & Anor [1994] PNGLR 130, a Defence was struck out after a 5 month delay in giving discovery.
46. However, the Courts’ powers to administer discovery in matrimonial proceedings is contained only in the Matrimonial Causes Rules, (‘MCR’). Sections 136 to 145. Section 3 of the Matrimonial Causes Act (‘MCA’) provides for that. I discuss this and the Court’s power to administer discovery in matrimonial proceedings, further below.
Analysis of evidence and the law
47. I will now discuss the issues identified.
Issue no. 1 - Whether there was evidence to prove that the appellants had failed, refused and/or neglected to give full discovery over an extended period of time?
48. The appellants submit that when the fifth appellant was requested to give discovery regarding his interest in the first, second, third and fourth appellants, the Treasurer and Company Secretary of these appellants, Ms Kludapalo, filed an affidavit in response, deposing that the first respondent did not have any interest in these appellants and as such, she objected to the production of any of the company records unless each of them approve disclosures and productions.
49. In 2002, when the respondents made a further request to the named appellants to give discovery, Ms Kludapalo, again filed a further affidavit, deposing that the first respondent did not have any interest in these appellants and as such, they objected to the production of any of their records unless each of them approved disclosure and production.
50. On 23rd October, 2000 and 18th December, 2001, the respondent obtained two orders compelling discovery. Despite that, the appellants did not deliver a List of Documents but filed an affidavit objecting to the production of documents.
51. The appellants contend that they were not uncooperative but complied with the Notices of and Orders for Discovery by filing the affidavit referred to above. They contend also that this is evidence that the appellants had not failed, refused and/or neglected to give full discovery over a period of 3 ½ years between 17/12/99 to 31/05/02.
52. But is that the correct approach under the circumstances, the circumstances being that two (2) orders to give discovery are in place against the defendants? The law is clear that discovery must be given unless a party is claiming privilege when he then lists the documents and then, should state the grounds of privilege (O.9 r.6(4)). Form 31 of the NCR is very precise as to this. But the proceedings before the trial judge are matrimonial proceedings. Matrimonial proceedings are governed by the MCA and the MCR. The MCA is an act that relates "...to Divorce and causes, and in relation to such matters, parental rights and the custody and guardianship of infants and for related purposes." The MCR are "...rules of Court relating to the practice and procedure of the National Court in a matrimonial causes jurisdiction." A ‘matrimonial cause’ is defined under s.1 of the MCA. There is no dispute that these proceedings are a ‘matrimonial cause’.
53. Section 3 of the MCA prevents the application of other laws, other than the MCA and the MCR. It reads;
"3. Application of other laws
(2) Subject to subsection (2), where a matrimonial cause has been instituted, whether before or after the commencement date then, whether or not it has been completed, proceedings for any relief or order of a kind that could be sought under this Act in proceedings in relation to that matrimonial cause shall not be instituted except under this Act....".
(my emphasis)
54. Therefore, Mr Kua for the first respondent and the trial judge, correctly relied on sections 136 to 145 of the MCR, the rules on Discovery.
55. Apart from the Requests for Discovery, there were Court Orders in place for the giving of discovery which the appellants did not comply with. That in my view is a blatant refusal of orders, which the trial judge also found. The trial judge could have had recourse to s.140 of MCR, for the production of documents, but that power is discretionary, because of the word ‘may’. It is a process that is encapsulated in sections 136 to 145 which need not be exhausted for the many reasons that are unique to a matrimonial dispute but a process that the Court will have recourse to, if necessary. Although, the trial Court could have ordered the production of documents, (s. 142 of MCR) the appellants may not comply, as had already occurred after the orders for discovery were given.
56. In my view, the defendants have blatantly refused to comply with the orders for discovery, a clear breach of court orders, rules of practice and a complete disrespect of the Court’s orders.
57. This then takes me to the next issue.
Issue no. 2 - Whether the National Court had the legal power to appoint a receiver and manager over the three companies and one business group in circumstances, were they, including the fifth appellant continuously objected to the production of certain documents, over a period of 3 ½ years, even when ordered to do so twice by the Court?
58. The trial judge considered the various provisions of the MCA, MCR, NCR and the Companies Act, referred to earlier and noted that because all the appellants consistently issued objections and did not comply with Court Orders, after issuance upon them of Notices of Discovery and Court Orders, that it was appropriate under those circumstances, to appoint a Receiver and Manager. (pg.11 of trial judge’s reasons and pg. 475 of app. bk).
59. The trial judge held ultimately that the cumulative effect of various provisions referred to him by counsel for the respondent is that the Court has the discretionary power to appoint a receiver and manager in any appropriate situation before it and that the exercise of discretion must be justified. It is therefore necessary to appreciate the various situations warranting the appointment of a Receiver and Manager.
60. Is the appointment of a Receiver and Manager the proper and correct thing to do under the circumstances? It will be necessary for me to review the facts of this case to fully appreciate why this was done.
61. MC 6 of 1999 was filed by the fifth appellant (then the petitioner), naming the first respondent as the first respondent/cross-petitioner and the second respondent as the second respondents. The first, second, third and fourth appellants were described as third respondents in the matrimonial proceedings.
62. The first respondent’s first Request for Discovery was filed on 7th December, 1999 (pgs. 25 & 26 of app. bk).
63. When the first Request for Discovery was issued, the first to the fourth appellants were not yet parties to the MC proceedings. This Request for Discovery filed by Fiocco Posman & Kua Lawyers, requested the following from the fifth appellant (Petitioner then);
"1. All documents of relevance
2. Certificate of Marriage
3.Certificates of Birth of all children of the marriage
4. Certificates of title to real property held in the joint and/or several names of the parties hereto and/or the children of the marriage and/or third parties within and without Papua New Guinea including those set out in paragraph 8(2)(a) of the unsigned cross-petition.
5.Share Certificates in companies held in the joint and/or several names of the parties hereto and/or the children of the marriage and/or third parties within and without Papua New Guinea including those set out in paragraph 8(2)(a) of the unsigned cross-petition.
6. Statutory register or record of all companies owned and controlled by the petitioner including those listed in paragraph 8(2)(a) of the unsigned cross-petition.
7.For the period commencing 1st January, 1999, bank statements in respect of all –
(i) the petitioner’s personal bank accounts and interest bearing deposits
(ii) trust accounts and interest bearing deposits of the children
(iii) companies and/or businesses owned and/or controlled by the petitioner including those companies named in paragraph 8(2)(a) of the unsigned cross-petition.
8.Certificates of registration and insurance of all motor vehicles, vessels or otherwise owned jointly and severally by the petitioner and the respondent, the children and third parties.
9. Quick sale and market valuations of all real and personal property held in the joint or several names of the petitioner including some of the assets.
10. Financial statement audited or otherwise of all companies, including those referred to above in paragraph 8(2)(a) of the unsigned cross-petition for the final years 1997, 1998 and 1999."
64. This Order was very particular as to the types of documents to be produced or inspected.
65. In response, the petitioner or fifth appellant filed an affidavit deposing that although, he had the documents which he set out in three schedules in that affidavit, he objected to produce the following;
- advices from counsel
- company records of White Corner, Redcoco registration papers of vehicles owned by the two companies, title deeds of properties owned by the two companies and company records of Nokange because those were "company records" and that he did not have the authority to disclose until the disclosure is approved by shareholders and directors of the companies.
66. The next Request for Discovery filed by the first respondent, was on 12th February, 2001 when she made the same or similar requests (pg. 166 of app. bk) where the appellants again objected to production of business records of the named companies (appellants).
67. Finally, the marriage was dissolved by order of the Court on 18th December, 2001. Orders were also made in relation to the custody and access of the children of the marriage. However, issues in relation to distribution of matrimonial property had yet to be determined by the Court. This was because all existing matrimonial properties, jointly owned by the fifth appellant (petitioner), all named appellants and the first respondent, had yet to be put before the Court by way of evidence, which the first respondent was seeking to illicit through the discovery process. For that reason, included in the Court Order of 18th December, 2001, obtained by the first respondent, were further orders for discovery to be given by the fifth appellant (the petitioner) and the first appellant to the first respondent. Paragraph number 10 of that Order was specific as to the types of documents that were to be produced or given by the appellants. It read;
"10. The Petitioner, First Respondent and Third Respondent shall within 30 days file and serve on each other a list of all properties real or personal, legal or equitable, owned by them jointly or severally and which are acquired during the marriage from 29 May 1983 to 18 December 2001."
68. Again, the appellants did not comply with these orders.
69. By another Request for Discovery filed on 8th January, 2002, the first respondent again made a similar request for discovery, this time to the first to the fourth appellants named as third respondents in the matrimonial proceedings.
70. The fifth appellant filed a Request for Discovery on 31st May, 2002, which the first respondent responded to by her List of Documents filed on 30th September, 2002.
71. In response to the first respondent’s Request for Discovery, the appellants continued to maintain their earlier position by affidavits they filed, that they "objected to produce" the documents requested based on legal professional privilege and that the other documents requested by the first respondent were company records which the fifth appellant and the company secretary did not have the authority to disclose.
72. It should be noted that in the Request for Discovery of 8th January, 2002, the first respondent specifically requested the first, second, third and fourth appellants to "each and severally" make discovery on oath. The affidavits objecting to give discovery, were sworn by the fifth appellant and one Naomi Kludapalo, the company secretary of the third respondent (first to fourth appellants). All the named appellants did not give discovery for the reasons posed by Ms Kludapalo.
73. This then takes me to submissions by appellants’ counsel.
74. He submits firstly that the order to appoint a Receiver and Manager was hasty in that the first respondent should have first had recourse to or exercised other alternatives or avenues that were available to her under the NCR which was to either;
75. Should the Court have recourse to the NCR? Section 3 of the MCA is explicit and clear that any applications for relief under MC proceedings must be made under the MCA and MCR, none other. Therefore, the Court should not have recourse to the NCR. Application must be made under the MCA and MCR.
76. The provisions relied on by the first respondent in making that application, apart from s.76(l) of the MCA, are also the following;
- s.155(4) of the Constitution,
- s.254(1) of the Companies Act
- O.9 r.15(1) of the NCR
77. Also relied on by Mr. Kua is the Papua New Guinea Companies and Securities Law Guide, Beck and Borrowdale, CCH, 1999, par. 1305 and other texts which I need not set out here.
78. Discovery is necessary, as submitted by the first respondent, because she together with the fifth appellant had substantial businesses prior to their separation and divorce. All these assets remained with the fifth appellant upon separation then the divorce. The first respondent submits that discovery was necessary to enable the Court to determine what assets were under the ownership, control and custody of the fifth appellant, for it to then make appropriate orders on property settlement. The evidence is that the fifth appellant was the majority shareholder, controller, manager and director of the first, second, third and fourth appellants. It was also at the time that the Petition was filed, that a number of new shareholders were introduced into these companies reducing the fifth appellant into a minority shareholder.
79. The first respondent submits that discovery was then necessary for the Court to determine whether or not fair value was given for the new shares or whether it was "a scam" designed to dilute and reduce the assets available to the fifth appellant for property settlement as requested in the Petition.
80. In saying that, Mr Kua for the first respondent referred the Court to s.93(2) of the MCA which empowers the Court to issue orders to stop an action by another party, the effect of which will be to defeat a property settlement claim.
81. The whole of s. 93 of the MCA reads;
"93. Transactions intended to defeat claims
(1) In this section, "disposition" includes a sale and a gift.
(2) In proceedings under this Act, the Court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interests of, a party, if it is made or proposed to be made to defeat an existing or anticipated order in the proceedings for costs, damages, maintenance or the making or variation of a settlement.
(3) The Court may order that money or property dealt with by an instrument or disposition referred to in Subsection (2) may be taken in execution or charged with the payment of such sums for costs, damages or maintenance as the Court directs, or that the proceeds of a sale shall be paid into Court to abide its order.
(4) In making an order or setting aside or restraining the making of an instrument or disposition under this section, the Court shall have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.
(5) A party or a person acting in collusion with a party may be ordered to pay the costs of any other party, or a of a bona fide purchaser or other person interested, of and incidental to an instrument or disposition referred to in this section and the setting aside or restraining of it."
(my emphasis)
82. As to the appointment of a Receiver and Manager, s.254(1) of the Companies Act which is the provision of the definition of a "Receiver" also provides for the appointment of Receivers "by the Court in the exercise of a power conferred on the Court in the exercise of its inherent jurisdiction." (my emphasis)
83. The fifth appellant submits that the trial judge erred when he relied on this provision. He submits that there are no provisions in the NCR or the Companies Act for the appointment of a Receiver and Manager where there has been a default in filing a List of Documents, affidavits or other documents. He submits that the first respondent should have simply asked for an order to produce those documents or for specific discovery. He submits this because there was no default in the giving of discovery or default with regard to inspection.
84. Part XI, Division 2 of the MCR, chapter 282 (ss.135 to 146) and Part XI, Division 3 of the MCR (sections 147 to 151) provide for discovery, inspection of documents, admissions and notices to produce and for the provision of particulars.
85. Section 136(4) of the MCR states that wherever a party on whom a Request for Discovery has been served, he shall make discovery of documents by filing an affidavit for discovery within 10 days after service of the Request upon him.
86. Section 137 of the MCR provides for what should be in the affidavit of discovery. It reads;
"137. Affidavit of discovery
(2) Subject to any order made under section 136 in a particular case, a party’s affidavit of discovery shall –
- (a) specify the documents relating to matters in question in the proceedings that are in the possession, custody or power of the party; and
- (b) specify the documents relating to matters in question in the proceedings that are not but have been in the possession, custody or power of the party and state, to the best of the knowledge and belief of the party, whether they are still in existence and, if so, who has possession of them; and
- (c) specify the documents that he objects to produce on the ground that the documents are –
- (i) professional communications of a confidential character made to him by his lawyer, or made by him to his lawyer, for the purpose of giving him legal advice; or
- (ii) cases for the opinion of counsel, instructions to counsel or opinions of counsel prepared and given in anticipation of or during the process of the proceedings; or
- (iii) letters or copies of letters from him to his lawyer, from his lawyer to him, or from his lawyer to another person in anticipation of or during the progress of the proceedings; or
- (iv) drafts or memoranda made by his lawyer for the purpose of the proceedings; and
- (d) specify the documents that he objects to produce on any other ground and the ground on which he objects; and
- (e) state that he has not at the time of swearing the affidavit and has never had in his possession, custody or power, or in the possession, custody or power of a lawyer, agent or other person on his behalf –
- (i) any deed, account, book of account, voucher, receipt, letter, memorandum, paper or writing that relates to matters in question in the proceedings, or in which an entry relating to such matter has been made; or
- (ii) a copy of or extract from any such deed, account, book of account, voucher, receipt, letter, memorandum, paper or writing,
that is not specified in the affidavit.
(3) In an affidavit of discovery, it is not necessary to specify each letter from a person to another person, but it is sufficient to specify the number of letters from the person to the other person and the dates of the first letter and the last letter.
(4) Where the specifying, in an affidavit of discovery of documents in respect of which privilege is claimed, would derogate from the privilege attaching to documents, it is not necessary to specify each of the documents in the affidavit, but it is sufficient if –
- (a) the documents are tied in a bundle that is marked as an exhibit to the affidavit and are referred to in the affidavit as the documents in that bundle; and
- (b) the number of documents in the bundle is stated in the affidavit; and
- (c) the documents in the bundle are numbered consecutively and each of them is initialed by the person before whom the affidavit is sworn.
(5) An affidavit of discovery shall be in Form 26."
87. Section 145 of the MCR provides for a party’s remedy when the party who is supposed to give discovery, fails to give discovery. It reads;
"145. Non-compliance with order, etc.
Where a party to any proceedings fails to comply with an order to give particulars, to file an affidavit of discovery, to make discovery or to produce documents, the Court may order that –
(a) if the party is the petitioner – the proceedings instituted by the petition be stayed or dismissed for want of prosecution; or
(b) if the party is the respondent – any proceedings instituted by him by an answer to the petition, and any other proceedings instituted by him in relation to proceedings instituted by the petition, be stayed or dismissed for want of prosecution; or
(c) if the party is any other party – his answer or reply, as the case may be, be struck out." (my emphasis)
88. The general powers of a trial judge, as set out in s.76(1)(i) of the MCA are that the Court can make orders if it thinks necessary in order to do justice. This section reads;
"76.General powers of Court
I) In exercising its power under this Part the Court may do any or all of the following:-
...
make any other order (whether or not of the same nature as the orders specified in the preceding paragraphs of this subsection, and whether or not it is in accordance with the practice under other laws before the commencement date) that it thinks necessary to make in order to do justice; or
..."
89. The circumstances of this case are that over a period of five years, Requests for Discovery and Orders for Discovery were issued for the production of documents, to which objections were raised. The first respondent could have then applied for orders to produce documents (s.142 of MCR). Firstly, this is not mandatory. It is not a step she should take or the Court should take if it will all prove to be futile as had been ably demonstrated by the appellants There was no guarantee the appellants would produce the documents requested considering their very uncooperative attitude over the years and the stance they had taken. In the event of non-compliance, the only stipulated remedy available to an applicant is as provided in s.145 of the MCR which is that the proceedings be struck out.
90. That is a discretionary provision where the Court ‘may’ make the Orders provided therein. In this case, this was or is not the result desired by the first respondent. She would not achieve what she wanted, which was a fair distribution of the matrimonial property, if the petitioner’s (fifth appellant’s) Petition was dismissed. That is why she then asked the Court to exercise its powers under s.76(1)(l) of the MCA to make orders necessary to do justice. And the orders she sought were for the appointment of a Receiver and Manager.
91. The writ of appointment and scope of a Receiver’s powers are usually defined by the instrument creating the creditor’s security, such as a debenture in the case of a company. (par.1302 of Kerr on Receivership (4th Ed), R Walton). However, in this case, although Papua New Guinea has adopted the provisions of the New Zealand Companies Act, it did not follow New Zealand by enacting a separate statute (i.e. the Receivership Act 1993). So the Court is left to rely on the Common Law and existing statutes in PNG or the Court’s inherent power in the event legislation is non-existent.
92. Section 254(1) of the Companies Act does not expressly provide for the appointment of a Receiver by the Court. It reads;
"254. Interpretation
(1) In this Part, unless the contrary intention appears –
...
"Receiver" means a Receiver, or a Manager, or a Receiver and Manager in respect of any property appointed –
(a)by or under any deed of agreement; or
(b) by the Court in the exercise of a power conferred on the Court or in the exercise of its inherent jurisdiction,
whether or not the person appointed is empowered to sell any of the property in receivership, but does not include –
(c)a mortgagee who, whether personally or through an agent, exercises a power –
i)to receive income from mortgaged property; or
ii) to enter into possession or assume control of mortgaged property; or
(iii)to sell or otherwise alienate mortgaged property; or
(d)an agent of any such mortgagee;
(1) In this Act, unless the contrary intention appears, a reference to a person by whom, or in whose interests, a receiver was appointed, as the case may be, includes a reference to a person to whom the rights and interests under any deed or agreement by or under which the Receiver was appointed have been transferred or assigned."
93. But such an appointment is envisaged by the definition of a Receiver which refers to the appointment of a Receiver by the Court in the exercise of a power conferred on the Court or in the exercise of the Court’s inherent jurisdiction (par. 1305 of Kerr on Receiverships).
94. The Receiver’s power to obtain documents and information is contained in sections 262 and 264 of the Companies Act. They read;
"262. Power to obtain documents and information
(2) A company and every director of the company, shall –
(a) make available to the receiver all books, documents, and information relating to the property in receivership in the company’s possession or under the company’s control; and
(b) where required to do so by the Receiver, verify, by statutory declaration, that the books, documents, and information are complete and correct; and
(c) give the Receiver such assistance as he may reasonably require.
(3)On the application of the Receiver, the Court may make an order requiring the company or a director of the company to comply with subsection (1)."
"264. Powers of Receivers
(2) A receiver has the powers and authorities expressly or impliedly conferred by the deed or agreement or the order of the Court by or under which the appointment was made.
(3) Subject to the deed or agreement or the order of the Court by or under which the appointment was made, a Receiver may -
(a) demand and recover, by action or otherwise, income of the property in receivership; and
(b) issue receipts for income recovered; and
(c )manage the property in receivership; and
(d)insure the property in receivership; and
(e)repair and maintain the property in receivership; and
(f) inspect at any reasonable time documents that relate to the property in receivership and that are in the possession or under the control of the company; and
g) exercise, on behalf of the company, a right to inspect documents that relate to the property in receivership and that are in the possession or under the control of a person other than the company; and
h)in a case where the Receiver is appointed in respect of all or substantially all of the assets and undertaking of a company, change the registered office or address for service of the company."
95. I am assisted by the position in Australia where issues in relation to appointment of a Receiver and Manager are usually everyday occurrences in their Courts. Such an issue arose in a case from the Family Court of Australia of Kendling & Kendling & Ors (No.2) [2008] Fam CA 296 (29th April, 2008). In that case, O’Ryan J had to consider amongst other issues whether he had the power to make orders sought by the wife who is named as the applicant, for the appointment of a Receiver and Manager to all of the property, undertaking and business of B Ltd who is named as the eighth respondent. In all, there are 10 respondents. In seeking the appointment of a Receiver and Manager, the wife’s main contention is that the Mareva orders currently in place against the husband and B Ltd had proven to be insufficient in light of the recent conduct of the husband and B Ltd, in particular breaches of orders made and a history of non-disclosure of properties and default.
96. These proceedings involved matrimonial properties worth millions of dollars. Again, there is a long history of non-compliance with Court Orders, by the husband. What came before the judge were several applications, some of which were the wife’s, seeking orders that T Pty Ltd (second respondent) repay to B Ltd (eighth respondent) the sum of AUD$45million lent by B Ltd to T Pty Ltd including AUD$35million lent in August 2007 and also that a Receiver be appointed to B Ltd. T Pty Ltd also sought orders to vary Mareva orders previously made by the Court upon the wife’s application so as to refinance a loan for AUD$12million from the National Australian Bank. The wife also sought further injunctions against B Ltd and T Pty Ltd.
97. It was submitted by the wife that there was non compliance by the husband and B Ltd with previous orders made by the Court relating to the disclosure of financial and accounting issues, matters which also involves numerous securities. These all appeared in various affidavits before the judge. The Court then found the husband and B Ltd guilty of contempt for breaches of Court orders. The Court also issued several directions as to how the matter should proceed in relation to the provision of financial or other information necessary for valuation of properties. Of course, without going into the details of the case, a quick perusal of the 87 page decision showed that the history of the matter is indeed very long and detailed, involving a lot of banking and financial information relating to matrimonial properties owned by the husband and the wife. The wife’s concern in this case was that the husband had, for a long period of time, failed to make a full disclosure of these existing matrimonial properties. What are the similarities in the Kendling case to this case?
98. First, both this case and Kendling are matrimonial in nature and involved substantial matrimonial property. In the Kendling case, the wife had to, earlier on in the proceedings, take out Mareva Orders to preserve these properties. In this case, the first respondent also obtained Mareva Injunctive Orders on 29th September, 2000. These Orders read as follows;
"1. That the petitioner be restrained and an injunction be granted restraining him until trial or further order in the case of the company/companies owned, operated and/or controlled by the petitioner whether by its directors or by its servants or agents or any of them or otherwise howsoever from removing from the jurisdiction, disposing of, mortgaging, assigning, charging or otherwise dealing with any of assets owned by himself or any other company/owned and controlled by him within the jurisdiction, including in particular the sum of K500,000 or thereabouts paid by the Tower Insurance or other the petitioner or any company or third party under his control and direction arising out of the insurance payment in respect of the destruction by fire of the commercial property located at Eriku shopping centre, Lae on or about 1999.
..."
99. These orders were varied the second time on 23rd October, 2000 to include the third respondent. It reads;
"The mareva injunction issued by Sheehan .J on 29th September, 2000 which was varied on 16th October, 2000 whose terms of variation be extended to include Redcoco Properties Ltd, Nokange Consultancy Services Ltd and Goli Kuka Business Group Inc.
..."
100. So we have a situation where, after having obtained Mareva Injunctive orders, the appellants, more particularly, the fifth appellant, continued to flaunt these orders by non-compliance, even to the extent of selling shares in the appellant companies to other individuals. Can the Court issue orders for the appointment of a Receiver when a Mareva Injunction is already in place?
101. This issue was not addressed by the trial Judge because it was not raised. But the appellants’ lawyer raised it in his submissions and contentions that he presented as issues. He submitted basically that the trial judge did not have the power to appoint a Receiver. However, this has been done in Australia where the exercise of such power is exercised only in exceptional cases where no lesser relief can adequately meet the case (see National Australia Bank v Bond Brewing Holdings [1991] VicRp 31; [1991] 1 VR 386 at 540.20 and 541.30 and Beach Petroleum NL v Johnson (1992) 9 ACSR 404 at 405.25 – 30 and 506.10 – 20. In Beach Petroleum (supra) Von Doussa .J held that the power to appoint a Receiver and Manager, in an appropriate case, in support of, or as part of a Mareva Order, arises under s.23 of the Federal Court of Australia Act 1976 (Cth). (That section is relevantly identical to s.34(1) of the Family Law Act). I discuss these provisions later below. In fact Von Doussa .J in Beach Petroleum (supra), appointed a Receiver and Manager in support of a Mareva Order. In Cadura Investments Ltd v Rototek Pty Ltd & Ors [2004) WASC 150 Pullin .J stated at para. 37;
"The appointment of a Receiver is a drastic step and a party seeking such relief must not only demonstrate that the protection is required to preserve assets in accordance with the Mareva Order, but also that a lesser remedy that does not involve removing the administration of the assets from the defendants would fit the circumstances of the case".
102. In that case, Pullin .J held that a Receiver should be appointed where there are breaches of an existing Mareva Order, the effects of which are that relevant assets may be disposed of before judgment is handed down.
103. In Beach Petroleum (supra) Von Doussa .J said at 406 that it was;
"...a drastic step not lightly to be taken. The party seeking such a remedy must make out a clear case not only that the protection of the interests of people to whom the company may be or become liable require protection, but also that a lesser remedy which does not involve removing the administration of the company from the defendants would fit the circumstances of the case."
104. In the Kendling case, the Judge relied on Australian Securities & Investments Commission vs Burke [2000] NSW SC 694 (unreported) where Austin .J discussed some of the considerations relevant to the appointment of a Mareva Receiver. That case involved an application for interlocutory relief in proceedings in which the plaintiff sought final orders on the basis that the defendants had contravened sections of the Corporations Law, which prohibit a person from unlicensed dealing in securities, unlicensed conduct of an investment advice business, and unlicensed operation of a managed investment scheme. By ex parte application, the plaintiff had sought and obtained various orders, which included various Mareva orders restraining the defendants from dealing with or removing their assets. The plaintiff then came before Austin .J seeking a further order for the appointment of receivers and managers in relation to the property and businesses of a number of defendants. At par. 5, His Honour said this;
"2.1.4. It is clear that in any circumstances, the appointment of a Receiver is an extra ordinary step for a Court to take (see Meagher Gummow & Lehane, Equity Doctrines & Remedies 3rd Edition p 697 and note the observations of Von Doussa .J in Beach Petroleum NL vs Johnson (1992) 9 ACSR 404)"
105. The judge went on to apply some of the considerations that might be relevant in the taking of the steps in pars. 8 to 9 where he said;
"without wishing to lay down any general rules, it appears to me that the extra ordinary step of appointing a Receiver may be justified, even though Mareva Orders are in place, in a case where there is a real doubt about the existence and location of assets, such as investments and about the number and identity of claimants and the nature of their claims, and additionally the defendants are engaged in business activities which entail that any Mareva Orders must allow assets to be turned over in the course of business. Where those circumstances exist in combination, and especially where there are allegations of serious fraud involved, the Court may conclude that the Mareva Orders are not enough to ensure that the assets are preserved and protected, and indeed identified and brought in for the benefit of investors."
106. In the Kendling case, the Judge held that the appointment of a Receiver was justified. He held that the disadvantages of receivership are outweighed very considerably by the advantages that the Receiver would bring, in assisting to identify and get in assets and to communicate in an orderly fashion with investors whose interests may be at risk. He held that apart from the existing Mareva order, that he also had the power in those circumstances, to appoint a Receiver and Manager to the property of a company as an adjunct to Mareva relief. (pg.66)
107. The legislation, amongst others, that the Judge relied on in making those orders were s.34 of the Family Law Act 1975 and s.23 of the Federal Court of Australia Act 1976.
108. Section 34 of the Family Law Act reads;
"Issue of certain Writs, etc.
(1) The Court has power in relation to matters in which it has jurisdiction to make orders of such kinds, and to issue, or to direct the issue of, writs of such kinds, as the Court considers appropriate."
109. Section 23 of the Federal Court of Australia Act reads;
"Making of orders and issue of writs
The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court considers appropriate."
110. These provisions are very similar to s.76(1)(l) of the MCR which states that when exercising its powers, the Court may make orders necessary to do justice. In this case, the trial judge, made the Orders that he did, relying on his general powers, as had occurred in the Kendling case, Beach Petroleum and Cadura Investments Ltd, amongst other cases, not mentioned here.
111. The trial judge did not err.
Issue no. 3 - Whether the Court erred in fact or in law when it appointed a Receiver and Manager?
112. The appellants submit that the Court erred because;
- It did not have the power to appoint a Receiver.
- The Court should not have relied on s.155(4) of the Constitution because the NCR, MCA and MCR allowed for an aggrieved party to apply for a Notice to Produce.
113. I have demonstrated that although the NCR and MCR provided for the alternative, i.e to apply for an order for production of documents, that the first respondent knew this would not get her the desired results.
114. Section 76(1)(l) of the MCR, the provision on the general powers of the Court, gives the Court the power to make orders necessary to do justice. The prevailing circumstances are such that a Receiver/Manager must be appointed.
115. The appellants’ lawyer submits that relief under s.155(4) of the Constitution is applicable where existing laws do not protect the rights and interests of a person. That the NCR, MCR and MCA provided for this, therefore that the trial judge erred when he appointed the Receiver/Manager. I will accept these submissions if there was specific legislation governing the appointment of a Receiver/Manager in a matrimonial case. Additionally, the first respondent had, in her bid for justice, come up against a brick wall, where the fifth appellant, not only did not cooperate, but dealt with company assets, without the first respondent’s consent and in breach of existing Mareva Orders. In this case, as in the Australian cases portrayed above, there are no existing legislations that can cater for such a situation. The Australian cases we referred to, relied on the Court’s general powers to make these orders. Reliance by the trial judge in this case, on s.155(4) of the Constitution and s.76(1)(i) of the MCR, is correct because s.155(4) cannot override clear provisions of the Supreme Court Act or Supreme Court Rules or any other legislation for that matter. (Bill Skate and Peter O’Neil v Jeffrey Nape, Speaker of Parliament (2004) SC754; Avia Aihi v The State [1981] PNGLR 81).
116. In my view, the tests to be applied in the appointment of a Receiver/Manager in a matrimonial case involving the distribution of matrimonial properties are these, that;
(i) Even though there may be Mareva Orders in place, that where there is a real doubt about the existence and location of assets and investments; or
(ii) Where there are breaches of an existing Mareva Order and to prevent the disposal of assets and properties before judgment is handed down; or
(iii) Where there are allegations of serious fraud; or
(iv) The need to identify and bring in assets; or
(v) Communication with investors whose interests may be at risk; or
(vi) The interests of the people to whom the company may become liable, require protection; or
(vii) That it would apply only in exceptional cases, where no lesser relief can adequately meet the case.
117. I am of the view that if any one of the above circumstances exist, that the aggrieved party can apply for the appointment of a Receiver/Manager to oversee the distribution, recovery or identification of matrimonial properties.
118. I find the trial judge did not err.
Issue no. 4 – Whether this matter was settled out of Court?
119. One of the contentions raised by appellants’ Counsel is that the trial judge erred when he made these orders because the parties have already settled this matter by signing a Deed of Settlement. The trial judge did not address this in his reasons because it was not raised as an issue. However, the Deed was raised in submissions by Counsel and exchanges between the trial judge and both Counsel where it was resolved that although a Deed was drafted, that it was never signed. (pg. 427 and 428 of app. bk.). Apparently, the matter was never settled as the Deed was not signed. It was not raised again.
120. Therefore, the trial Judge did not err in any way.
Conclusion
121. I find that the trial Judge’s reasons on pgs. 477 to 485 of the Appeal Book (pgs. 13 to 21 of the reasons for decision) in relation to the appointment of a Receiver/Manager are correct and very relevant.
122. In this day and age in Papua New Guinea, a lot of husbands and wives are entering into business and acquire numerous assets along the way, usually as joint owners. Our present family law legislation and family law related legislation, if I may say, are very inadequate and are unable to deal with disputes in relation to the distribution of extensive matrimonial property and assets. The MCA and MCR which are a throwback from the 70’s and 80’s, which PNG inherited from Australia at Independence, and which Australia has amended several times over, is not only lengthy and cumbersome but is inadequate and lacking in a lot of respects. The Courts must be seen to be assisting in developing the law where legislation is silent, in this case, the law on property settlement in matrimonial disputes.
123. Usually, where parties have separated and are living apart, the danger of one party dealing with matrimonial properties, without the others’ consent, is very real. If there are no safeguards in place, preferably by legislation, by the time the matter gets to trial, the value of the properties, will often have diminished or depreciated. Or there are often, changes in the shareholding and directorship which the affected party often does not discover, until much later. And by then, it is usually too late.
124. We the Courts, must properly exercise our discretion, where legislation is silent, in seeing that justice is done in all the circumstances of the case.
125. I find that reliance by the trial judge on his general powers and s.155(4) of the Constitution is correct. I find he has not erred in any way.
Formal Orders
126. I make the following orders;
__________________________________________
Titus Lawyers, Lawyers for the Appellants
Posman Kua Aisi, Lawyers for the Respondents
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