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Ekri v Courts (PNG) Ltd [2019] PGSC 63; SC1825 (15 July 2019)

SC1825

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA 50 OF 2019

Between:
MICHEAL RAMSEY EKRI as the Director of Michael’s & Micheal’s Limited (In Liquidation)
Appellant

And:
COURTS (PNG) LIMITED
First Respondent

And:
ANDREW PINI of Pini Accountants And Advisors as Liquidator of Michael’s & Michael’s Limited
Second Respondent

Waigani: Salika, CJ
2019: 19 June; 15 July

Cases Cited:

Kawari Fortune Resources Ltd v Louis Limbo Apurel (2015) SC1614
Peter Makeng v Timber (PNG) Limited (2008) N3317

Counsel:

Mr A Mana, for the Applicant
Mr B Nutley, for the First & Second Respondents

15^th July, 2019

1. SALIKA CJ: INTRODUCTION: This is an application made pursuant to s.5(1)(b) of the Supreme Court Act for an order pursuant to the Court Order of 8 May 2019 to:
   
   • (i) Compel BSP Bank to allow the Applicant /Appellant to have unrestricted access and authority to operate all of Michaels’s & Michael’s Limited (M&M) Bank account with BSP.
   • (ii) Compel Motor Vehicle Insurance Limited (MVIL) to accede to the Applicant’s letter of request and to transfer the registration of certain vehicles; and
   • (iii) Compel any other parties conducting business with the Applicant and M&M to proceed in a ;business as usual’ and “at arm’s length” basis.

Facts

2. On 14 March 2019, Thompson J made a ruling in the National Court proceedings described as MP No 44 of 2018 – In the Matter of the Companies Act v Michael’s & Michael’s Limited & Ors (liquidation proceeding), where the court ordered that Michael’s & Michael’s Limited (M&M) be put into liquidation and a Liquidator was appointed (winding up orders).
   
3. On 16 April 2019, the Appellant filed a Notice of Appeal and an Application for Stay (the subject proceedings) regarding the orders of 14 March 2019 in the liquidation proceedings.
   
4. The Application for Stay was heard on 24 April, 2019.
5. On 8 May 2019, the Supreme Court made a ruling on the Application for stay and ordered that the Court orders of 14 March 2019 in MP No 44 of 2018 is stayed pending the determination of the substantive appeal (stay order).
   
6. On 15 May 2019, Corrs sent correspondences to BSP and ANZ respectively, notifying them of the stay orders and the effect of such orders which is to enliven the position of the company’s status quo prior to the winding up orders. The letter specifically stated that in accordance with the stay orders, BSP and ANZ accord the Appellant the right to access and operate all M&M Bank accounts held at the respective banks.
   
7. The Respondent’s lawyer (O’Brien) responded to the letter of 15 May 2019 by letter date 16 May 2019, postulating that the stay order is in fact an interlocutory order and therefore restricts the company (in liquidation) from engaging in normal business pending determination of the appeal.
   
8. On 21 May 2019, Corrs sent a letter to the Operations Manager at MVIL notifying them of the stay orders and requesting that the Appellant be allowed to continue to sell trucks without any impediments, as was the position prior to the winding up orders.
   
9. By letter dated 23 May 2019, BSP conceded with the view put forward by O’Brien’s letter of 16 May 2019, regarding the effect of the Supreme Court stay order on the appointment of the liquidator for M&M. Accordingly, BSP requested for specific orders that compel it to accord the Appellant the right to access and operate all M&M’s Bank accounts held in BSP.
   

Issues

10. What is the effect of the sty order granted by the Supreme Court on 8 My 2019 on the liquidation process pending the determination of the appeal.
    

General Effect of a Stay Order in Court Proceedings

11. A stay order in court proceedings generally preserves the original status quo of the applicant prior to the decision, which is the subject of the appeal pending determination of the substantive appeal. In Kawari Fortune Resources Ltd v Louis Limbo Apurel (2015) SC1614. The Supreme Court said:
    

“An interim order made under s 5(1)(b) of the Supreme Court Act can, like a stay order under s 19 of that Act, have the effect of preserving the status quo pending the hearing and determination of an appeal or application for leave to appeal but these two types of relief are conceptually different. An interim order is typically an injunction addressed to an opposing party so as to protect an interest of the party seeking the interim order whereas a stay is not so addressed but rather suspends the operation of the judgement or decision under challenge:

12. The Supreme Court affirmed the decision of the National Court in Peter Makeng v Timber (PNG) Limited (2008) N3317. In that case Injia, DCJ (as he then was) discussed whether the court had jurisdiction to grant a stay or other interim relief prior to grant of leave to apply for judicial review. His Honour said:-

The term "stay of proceedings" is not confined to proceedings of a judicial nature, but encompasses the process by which any decision challenged has been reached, including the decision itself. When any other relief is requested, the court may at any time grant such relief as could be granted in an action commenced by writ, most usually an interim injunction. Although a stay of proceedings and an interim injunction perform the same function of preserving the status quo until the full hearing, there are conceptual differences between the two forms of relief. Whilst the injunction protects the interest of the litigant in dispute with another, the stay is not addressed to an "opposing party" but rather is directed at suspending the operation of a particular decision. While the grant of an interim injunction is usually conditional upon the applicant giving a cross-undertaking in damages, there appears to be no such requirement or practice in relation to a stay of proceedings".

13. With respect the authorities cited above relate to circumstances where the Court in general proceedings grants a stay order. The effect of the stay order is that it preserves the status quo until the final determination of the matter. The National Court in the Makeng case with respect adopted the statement from the text book. “De Smith, Wolf and Jowell Judicial Review of Administrative Action 5^th Edition Sweet and Maxwell, 1995 at pages 670, paragraph 15 to 29. With respect, I agree with the proposition of the law there and I adopt that statement.
    

Effect of Stay Order in Liquidation Proceedings

14. In this instant case the National Court ordered that Michaels & Michaels Limited (M&M) be put into liquidation on 14 March 2019. On 16 April 2019 M&M (In Liquidation) filed a Notice of Appeal and an application for stay of the orders of 14 March 2019.
    
15. The Court granted the stay order in the following terms:
    
    1. Accordingly, stay is granted.
       
    2. Costs will be in the appeal.
       
16. The above Court order stayed the orders of the National Court made on 14 March 2019 for a ‘limited period’ pending the determination of the appeal. The stay order in this case was granted on the basis that the winding up petition may not have been properly served on M & M and that, that was one of the grounds of appeal.
    
17. Counsel were not able to assist the Court with PNG case authorities on this subject matter. Counsel for the applicant cited the English case of Credit Lucky Limited and Gui Hiu Doug (Applicant) v National Crime Agency (formerly the Serious Organised Crime Agency (SOCA) (Respondent) [2014] EWHC 83 (Ch), a decision of the High Court of Justice Chancery Division. The applicant in that case applied for orders for rescission, variation or review and alternatively a stay of a winding up order. A winding up order was made by Justice Hildyard on 17 September 2013, subject to the approval of Registrar Derret, who made the winding up order. The approval for the winding up was given on 1 October 2013. An application for rescission and stay were then made and heard on 21 – 22 November 2013. The application there sought a stay of the winding up order under s 147 of the Insolvency Act of 1986, until the appeal was determined.
    
18. Credit Lucky argued that if a stay was granted, there would be no prejudice to SOCA and that the liquidator would remain in place as provisional liquidator. It was further submitted for the applicant that Credit Lucky would not be trading and that if the appeal was unsuccessful the stay would be lifted and the winding up would continue.
    
19. SOCA on the other hand submitted that, it was not the Courts practice to stay a winding up order pending an appeal to another tribunal. SOCA also submitted that the stay would not be in the interest of the creditors, and that the stay would not be in the public interest.
    
20. The Court in addressing the submissions was of the opinion that there was little force in the proposition that the Court should not grant a stay of the winding up simply because it is not the practice of the Court to do so on the ground that an appeal is pending before another Court. In this case, that submission was not advanced in this Court and so it does not arise. However, the English Court said that if the jurisdiction exists to grant such a stay, the Court must exercise that jurisdiction or power judicially without any reference to any fettering as a result of past practice.
    
21. In PNG, s.19 of the Supreme Court Act gives jurisdiction to stay another Court’s orders ordering a liquidation. The applicant applied for a stay and this Court granted a stay pending an appeal. The stay order is for the duration of the pending appeal to be heard and decided. Once the decision on the appeal is given, depending on that decision, the stay will be lifted if the appeal is allowed or will be dissolved if the appeal is dismissed. In the meantime while awaiting that appeal decision, parties are not allowed to do or take certain actions while the stay order is in force or in effect.
    
22. When the Court granted the stay order, it ensured that the applicants rights were secured and when that happened, it meant that the present or prevailing condition at the time is maintained and there are to be no changes in the position.
    
23. In this case, this Court ordered a temporary stay of the liquidation pending the appeal. By the stay order, I intended that the liquidation process be stopped temporarily pending the outcome of the determination of the appeal.
    
24. Accordingly, I order that no further activity be taken or done to the liquidation process until the appeal is heard and determined.

________________________________________________________________
Corrs Chambers Westgarth: Lawyer for Appellant / Applicant
O’Briens Lawyers: Lawyer for Respondent