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In re Laucala Beach Holdings Ltd [2003] FJHC 108; HBE0073D.2001S (30 May 2003)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

WINDING-UP ACTION NO. HBE0073 OF 2001

IN THE MATTER LAUCALA BEACH HOLDINGS LIMITED

and

IN THE MATTER OF COMPANIES ACT

Mr. H. Lateef for Petitioning Creditor
Mr. G. P. Shankar for the Company

DECISION

By Notice of Motion dated 11 July 2002 Laucala Beach Holdings Limited (the ‘Company’) is seeking the following orders:

1. That time be extended for filing service and hearing of this notice, and affidavit in support under order 3 rule 4 and inherent powers of the Court.
   
2. That the Petition be dismissed on the ground that the claim is a liquidated amount, and the guarantee for unspecified sum is null and void as being contrary to the Fair Trading Decree.
   

Background facts

The Australia and New Zealand Banking Group Limited (the “Petitioner”) has filed a Petition being Action No. 73/01 to wind up Laucala Beach Holdings Limited (the “company”).

In Civil Action No. 290/01 in a judgment delivered on 15 February 2002
this Court ordered, inter alia, that the Petitioner may proceed to wind-up this Company (among others). In that case there were six plaintiffs; the fourth plaintiff was Laucala Beach Holdings Limited (the Company). The defendant there was the petitioner in the present action. By that action by way of writ of summons the plaintiffs opposed the winding up Petitions numbers HBE0072, 73, 74, 75 and 76 of 2001. The present opposition application relates to the said HBE0073.2001.

In this Petition, Memoranudm of Due Compliance was filed on 10 June 2002. At late stage Mr. G. P. Shankar applied to make a formal application wanting to oppose the Petition the second time but on a different ground. As ordered, a motion and affidavit in support was filed on 11 July 2002. To this the Petitioner replied through Christopher Robin Griffith, Head of Asset Management of the Defendant Bank.

Company’s submission

The Property Manager of the Debtor Company (Mr. Asish Narayan) stated that although a Ruling was given in Civil Action No. 290 of 2001 it was not in this winding-up Petition.

He said that it is his counsel’s understanding that the Petition could proceed but that does not disentitle the debtor from raising dispute or issues.

Mr. Narayan raises two legal issues. He says that “the law requires liquidated claim to entitle the Creditor to present Winding Up Petition but in this case the debtor does not owe any money to the creditor”. The debtor executed guarantee document “to guarantee payment of debt by Vivrass Development Limited and Burgess (Fiji) Limited”. Second issue raised by him is that “the guarantee is the unspecified sum and therefore null and void as being contrary to the Fair Trading Decree”.

Petitioner’s submission

The Company had guaranteed the debt of Vivrass Development Limited and Burgess (Fiji) Limited. Burgess was wound up by this Court on 16 April 1999 for the sum of $1,516,389.00. The Company has admittted signing an unlimited guarantee, guaranteeing payment on behalf of the two abovementioned companies.

Mr. Lateef submits that the Fair Trading Decree No. 25 of 1992 does not apply to the ‘contractual relationship’ between the company and the creditors as sections 78 and 79 of the Decree fall within Division 4 of the Decree dealing with ‘door to door sales’. This was a loan to the principal debtor which can be a contract but not a contract to supply goods and services as required under s76 of the Decree.

Counsel further submits that the guarantee is valid and enforceable as it has been given for valuable consideration and signed under the seal of the Company. The guarantee also complies with the provisions of The Indemnity Guarantee and Bailment Act Cap. 232.

It is further submitted that the debt claimed under guarantee ought to be classified as a liquidated debt and not damages especially if the principal debtor was advanced loan or cash monies.

Mr. Lateef finally submits that the issues raised by the company had been raised earlier in the said action HBC0290.2001 and on which this Court delivered a decision on 15 February 2002. He submits that this Court is now functus officio and that the said decision is binding on all partes (res judicata).

The issues

The issues in this case are as set out in Mr. Lateef’s submission which are as follows:

(a) whether the Guarantee (annexure “B” in the Creditor’s Affidavit) contravenes Sections 78 and 79 of the Fair Trading Decree 1992 (hereinafter “the Decree”); and

(b) whether the guarantee is valid and enforceable against the company;

(c) whether the creditor can institute Winding Up Proceedings against the company pursuant to the guarantee.

Consideration of the issues

As I see it, the main ground for opposing the winding up is that although the claim of the Petitioner against the Company is for a liquidated amount, the guarantee in question is for unspecified sum. Therefore counsel says that the guarantee is null and void as being contrary to the provisions of the Fair Trading Decree.

On the applicability of the Decree, I agree with Mr. Lateef’s legal submission that the Decree does not apply for the reasons he has advanced in his written submissions.

The Court had in Action No. 290/01 ruled that the Petitioner may proceed to wind up the Company. There the Company was a party to the action. The Petition was opposed and the Company did not dispute the debt and did not deny that there was a valid guarantee. It was the first plaintiff (Vivrass Development Limited) in that action which disputed the debt.

The Court gave a Ruling against the Company after opposition to its winding up (among others) was presented to it by the same counsel who appears in the present action. The Company through its counsel is having a second bite at the cherry.

In view of what I have stated above, the Court is functus officio to deal with this application. Counsel has raised new grounds of opposition. Mr. Shankar has sought leave to file the present motion. Lest there is denial of justice I will allow him to present his case. However, after having considered his submission I find that there is no merit in his grounds of opposition.

It was on 15 February 2002 that Ruling to proceed to wind up the company was made. Whereupon on 10 June 2002 the Petitioner proceeded, as it was required to do in the process of winding up a company under the Companies Winding-up Rule 28(1) by filing Memorandum of Due Compliance. Thereafter on 24 June 2002 Mr. Shankar opposed the Petition.

It is not denied by the Company that it has signed a ‘guarantee’ in favour of the petitioner. As maintained by the petitioner this guarantee I hold is valid and enforceable. As I have already held there is no breach of the Fair Trading Decree as its said provisions do not apply to this contract.

The Company overlooks the terms and covenants to which it finds itself engaged when it executed the security documents.

Conclusion

In the outcome, for these reasons the Company’s opposition to the Petition to wind up is rejected as being without any merits and its motion to dismiss the Petition is refused.

The Petitioner has complied with the Companies Winding Up Rules and one of the last things that it is required to do is to file Memorandum of Due Compliance when applying for an order to wind up the Company and this it has done.

I therefore order that the company be wound up.

D. Pathik
Judge

At Suva
30th May 2003