| Fiji Islands - In re Pacific Timber Development Ltd - Pacific Law Materials |
IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION
WINDING UP CAUSE NO. 84 OF 1998
IN THE MAHE MATTER of PACIFIC TIMBER DEVELOPMENT LIMITED
AND
IN THE MATTER opanies Act (Cap. 247)
Mr. R.r. R. Prasad for the Company
JUDGMENT
This is an opposed winding-up petition.
The "petitioner" (NMBf Insurance (Fiji) Company Limited as the substituted creditor) has petitioned the Court to wind up Pacific Timber Development Limited (the 'company') for the alleged debt of $20,167.00.
The petition states that the said sum of $20,167.00 is made up as follows in respect of outstanding insurance premiums:
a. Fire Insurance Policy No. 95FG00029FI 17,125.00
b. Workmen's Compensation Insurance Policy No. 95FG00018WC 2,417.00
c. Public Liability Insurance Policy No. 95FG00017PL 625.00
$20,167.00
Company's contention
The company denies that it is indebted to the petitioner in the sum claimed or any sum at all. Although it had entered into contract
with the petitioner, it denies having contracted to renew the contract of insurance. It says that the statutory demand has not been served at the registered Office of the company and hence
it was not in a position to properly respond to the petition in time.
The petitioner's assertion that the company made out a cheque for $10,000 and which was dishonoured on presentation is evidence of
part-payment of the amount claimed is denied by the company. The company says that the "cheque was issued in error and represented an overpayment". It further says that "the overpayment arose because an all up compromise amount and settlement had already been agreed upon between the parties hereto
and the National MBf group in general. Further, there was a dispute at the relevant time whether the Petitioner was entitled to claim,
as it does in relation to the petition herein, for renewal of insurance premium in circumstances where the relevant renewals had
not been agreed to by the respondent the compromise was also related to separate compromise arrangements entered into or being discussed
with Matasau Holdings Limited which was then an associated company of the Respondent." (item 4 of DONLON'S affidavit filed 23.4.99)
Petitioner's contention
The petitioner's claim is that the company owes it the sum of $20,167.00 in respect whereof it had served a statutory demand. The
debt remains unpaid. It alleges that the company is unable to pay its debt. It says that the particulars are well-known to the company.
The petitioner further says that the company had paid by cheque the sum of $10,000.00 towards the claim but the cheque was dishonoured
on presentation.
Determination of the issue
Despite an order of this Court the petitioner's counsel Mr. O'Driscoll failed to file written submission in time and also failed to
appear in Court when the matter was adjourned for mention on 28 May 1999. This kind of discourteous behaviour towards the Court is
something which cannot be allowed.
I have before me helpful written submissions from counsel for the company and the late submissions from the petitioner's counsel.
I have given due consideration to them.
I reject the company's argument about the service of the statutory demand. There is no merit in it as the petition was advertised
in the Gazette and in the newspaper. The company was aware of the claim long time back but did nothing about it until after Memorandum
of Due Compliance was filed.
The issue for my determination is whether there is a substantial dispute as to the alleged debt to prevent the making of a winding-up
order against the company.
The general principle is that a petition for winding-up with a view to enforcing payment of a disputed debt is an abuse of the process
of the Court and should be dismissed with costs. (Palmer's Company Law Vol. 3, 15.214 and cases cited therein)
In PALMER'S (ibid.) is set out the principles involved in considering disputes as to debt and I have borne these in mind in considering the matter
before me. There it is stated:
"To fall within the general principle the dispute must be bona fide in both a subjective and an objective sense. Thus the reason
for not paying the debt must be honestly believed to exist and must be based on substantial or reasonable grounds. "Substantial"
means having substance and not frivolous, which disputes the court should ignore. There must be so much doubt and question about
the liability to pay the debt that the court sees that there is a question to be decided. The onus is on the company "to bring
forward a prima facie case which satisfies the court that there is something which ought to be tried either before the court itself
or in an action, or by some other proceedings." (Re Great Britain Mutual Life Assurance Society [1880] UKLawRpCh 276; 1880) 16 Ch.D. 246, 253, per Jessel M.R.).
Bearing in mind the above principles and considering the affidavit evidence before me I find that there is a genuine dispute as to
the debt which is lacking in particulars. There has to be a trial of the disputed debt to determine the issue. This dispute I find
is on substantial grounds as required by law. "Where there was a complex rift of disputed facts and allegations on both sides which cried out for cross-examination it was
inappropriate for the claimant to resort to a petition to Wind up a company which was his adversary" [Walker J in In re Company No. 00212 of 1998 The Times Law Reports (1995 p186)]
As Harman J said in In re a Company (No. 001946 of 1991) ex p. Fin Soft Holding SA (1991) BCLC 737 at 740 that there were not two tests but simply one which is: 'Is there a substantial dispute as to the debt upon which the petition
is allegedly founded?'
Hence, it was held that there is such a dispute then the bona fides of the Company in disputing the debt is simply irrelevant. Also
if there is a dispute the Petitioner would clearly not satisfy the requirement of being a creditor for the purposes of the winding-up
proceedings.
The facts as presented to this Court require viva voce evidence, hence the dispute cannot be decided on petition alone. This is a case in which the following passage from the judgment of
Megarry J in IN re Lympne Investments Ltd (No. 00250 of 1971) 1972 1 WLR 532 at 527 is apt and ought to be borne in mind:
"Nor is it right, or in accordance with the modern practice, to stand over the petition in order that the disputed issues may
be resolved in other proceedings. That practice, I may say, seems to stem from In re London and Paris Banking Corporation [1874] UKLawRpEq 171; (1874) L.R. 19 Eq. 444. The Companies Court must not be used as a debt-collecting agency, nor as a means of bringing improper pressure to bear on a company.
The effects on a company of the presentation of a winding up petition against it are such that it would be wrong to allow the machinery
designed for such petitions to be used as a means of resolving disputes which ought to be settled in ordinary litigation, or to be
kept in suspense over the company's head while that litigation is fought out. Further, Mann v. Goldstein [1968] 1 W.L.R. 1091, cited with approval in the New Zealand Court of Appeal in Bateman Television Ltd. v. Coleridge Finance Co. Ltd [1969] N.Z.L.R. 794, provides authority for saying that when a petition is based on a debt which is disputed on substantial grounds, the petitioner is
not a "creditor" within section 224(1) of the Act of 1948 who has the locus standi requisite for the presentation of the
petition, even if the company is in fact insolvent."
It is in the Court's discretion 'to decline to hear the petition where the debt is contested on substantial grounds' (Offshore Oil N.L. and Investment Corporation of Fiji Limited (Civ. App. 29/84 F.C.A. at p.15 cyclostyled judgment - Barker J.A.).
To conclude, on the affidavit evidence before me, considering the submissions of both counsel and having found that the company's
disputed debt to be bona fide on substantial grounds at the time of presentation of the creditor's petition for the winding-up of
the company, the correct course is to strike out the petition, whether the company was, or was not solvent at the time. (In re Company No. 00212 of 1995, The Times Law Reports April 7, 1995.
The petition is therefore struck out with costs to be taxed if not agreed.
D. Pathik
Judge
At Suva
16 June 1999
Hbe0084j.98s
PacLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.paclii.org/fj/cases/FJHC/1999/49.html
