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In re Pangia Constructions Pty Ltd [1995] FJHC 126; Hbe0050j.95s (19 July 1995)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

COMPANIES ACTION NO. HBE 50 OF 1995

IN THE MATTER of PANGIA
CONSTRUCTIONS PTY
LIMITED

AND

IN THE MATTER of the
Companies Act, Section 221

Between:

HUME INDUSTRIES (South Seas) COMPANY LIMITED
Petitioner

- and -

PANGIA CONSTRUCTIONS PTY LIMITED
Respondent

Mr. S. Parshotam for Petitioning Creditor
Mr. Richard Naidu for Company/Debtor

JUDGMENT

This is a Petition by HUME INDUSTRIES (South Seas) COMPANY LIMITED (hereafter referred to as the "Petitioner") to wind up PANGIA CONSTRUCTIONS PTY LIMITED (hereafter called the "Company") pursuant to provisions of section 220 of the COMPANIES ACT Cap 247 LAWS OF FIJI Vol 14 (hereafter referred to as the "Act").

The Petition which was presented on 21 April 1995 is being opposed by the Company on the grounds hereafter appearing. Mr. Richard Naidu now represents the Company (previously it was represented by other counsel).

Background To The Case

The Company was incorporated under the laws of Papua New Guinea on 8 September 1971 as a proprietary company limited by shares.

Although the principal place of business was Port Moresby, Papua New Guinea, but it is authorized to establish branches elsewhere and a branch was opened, inter alia, in Rakiraki, Fiji.

In August 1993 it was registered as an unregistered company (foreign company) under Part X of the Act.

The company had on 13 August 1993 complied with s.367 of the Act by giving the name of JUSTIN MARK FALLON c/- Pangia Constructions Pty Ltd, Kings Road, Rakiraki as being the person authorised to accept on behalf of the Company service of process and any notice required to be served on the Company.

The situation of registered Office as required under s367 was given as COOPERS & LYBRAND, 7th Floor Pacific House, Corner Butt Street and MacArthur Street, Suva.

The company has incurred a number of debts and the supporting creditors number 19 and with the Petitioner it is 20. The debt owed totals in excess of one and a half million dollars.

The Petitioner is owed $464,000.00 for goods sold for the period September 1994 to January 1995.

Demand Notices (3 of them) were served on the Company and FALLON but the debt has not been paid despite numerous applications to pay.

The Petitioner is claiming that the Company is insolvent and unable to pay its debts and that in the circumstances it is just and equitable that it should be wound up.

Pursuant to Rule 28(1) of the COMPANIES (WINDING-UP) RULES, 1983 the Petitioner filed a Memorandum of Due Compliance.

The Issue

The Petition is opposed by the Company's Solicitors on the ground that the demand notice or notices have not been served in accordance with the provisions of the Act relating to winding up of an unregistered company, that service of Petition is bad and that there is no evidence that the Company is unable to pay its debts.

The issue for Court's determination therefore is to decide on these matters and that if the company succeeds on the grounds raised then counsel prays that the Petition should be dismissed.

Company's Submission

Mr. Naidu submits that there are defects in the proceedings particularly in relation to Notices which he says are a "nullity".

He says that Notice was sent under s.221 but he questions its relevancy to an unregistered company. He submits that winding up of such a Company is governed by s 359 (in Part IX). Therefore notice should have been under s. 359(4)(a) and not under s. 221. The said section 359(4)(a) gives the Company 30 days after service to act on it.

As to delivery of notices, Mr. Naidu says that one cannot serve by post. Therefore the third notice that was sent by registered post was not properly served. It should have been a s.359 notice, that is "by leaving at its principal place of business or by delivering to a secretary ...".

Therefore he says that since none of the notices were served under that section they were a "nullity". He says that it is a "technicality" but the procedure must be followed.

Another submission which he made was that the notice should be under the hand of the creditor. This argument has no merit which Mr. Naidu conceded later during the hearing.

He further submitted that the Petition was not served in accordance with Rule 24 which requires service at the registered office. This was not done in this case.

Mr. Naidu's alternative argument is that it will be just and equitable that the petition be dismissed and that there is no evidence that the company is unable to pay its debts.

Petitioner's Submission

Mr. Parshotam submits that Court has jurisdiction under Part IX of the Act to wind up the company (an unregistered company) under sections 358 and 359. Although there is a receiver/manager appointed in the place of incorporation of the Company, it is no bar to the making of a "local" winding up order.

The circumstances under which it could be wound up are as provided, inter alia, under s359(3)(b) & (c) respectively namely for its inability "to pay its debts" and "if the court is of opinion that it is just and equitable that the Company should be wound up".

Provisions relating to service of "any process or notice" on an unregistered company is contained in s.373 of the Act. He says that under this section service need not be effected personally on the person whose name has been delivered to the Registrar of Companies under s.367. It is sufficient that the document is "left at or sent by registered post to the address which has been so delivered".

Mr. Parshotam says that requirements as to service have been fully complied with in this case. The demand was properly signed by the creditor's agent which is in accordance with the law (BATEMAN TELEVISION LIMITED v CULERIDGE FINANCE LIMITED (1969) NZLR 794). There is no affidavit to show that the notices have not been received by the Company. In fact, he says, pursuant to a notice of 13 February 1995 the Company made a payment of $51703.71 and furthermore Mr. Burnett the former solicitor for that company wrote stating, inter alia, that the company is unable to pay its debt after he received a Notice dated 6 March 1995 (see annexure O to affidavit of Yee Hing Sue).

Furthermore, Mr. Naidu now accepts that notice was served on Coopers & Lybrand and hence the affidavit of MURPHY in this regard is not correct.

In the circumstances of this case he says that no question of service arises. In fact the company admits that service of demand notice was effected. There is no particular form of Notice under s.220 and another under s.359. This is a case of inability to pay its debts.

On service of Petition Mr. Parshotam submitted that the Company was represented from 12 May to 24 June and by their appearance they are deemed to have waived service requirement.

Mr. Parshotam further submits that in these proceedings BRIAN JOHN MURPHY the duly appointed agent of the Receiver/Manager has no locus standi and he ought not to be heard and that his affidavit filed herein should be ignored.

Determination Of The Issues

A. Locus Standi Of Receiver's Agent

At the outset I shall deal with certain preliminary points that were raised by Mr. Parshotam in his submission.

Mr. Parshotam says that the Receiver and/or his agent has "no role to play" in these opposition proceedings, that is, he cannot oppose.

Mr. Naidu told the Court, after Mr. Parshotam had made some preliminary remarks, that the Receiver is opposing the Petition for he is empowered to do so under the debenture which under clause F(3)(l) gives the power to the receiver "to bring or defend any action suit or legal proceedings in the name of the Mortgagor or otherwise for all or any of the purposes aforesaid;" He said that the Receiver has "no sinister motive" and he is also there to protect unsecured creditors.

Mr. Naidu when asked by Court said that he appears "for the Company and instructed by Receiver/Manager who is empowered to defend legal proceedings against Company". He then referred the Court to said clauses F(3)(1) and (g) of the debenture.

It is important that Mr. Naidu make up his mind as to who he represents whether both the Company and the Receiver's agent or just the Company.

I cannot see how he can represent the Receiver's Agent in these opposition proceedings as no notice has been given that the Receiver is opposing and I have grave doubts that he is empowered to oppose under the said clause F(3)(1). I am of the view that the said clauses in the debenture to which he made reference have no relevance to these proceedings. I reject his submission altogether in this regard.

Be that as it may, I will accept the Notice of Change of Solicitors filed herein and regard Mr. Naidu as appearing for the Company and not for Receiver in these proceedings. Mr. Naidu corrected the Notice of change by my stating that the word 'defendant' therein refers to the Company and this was only done when Mr. Parshotam sought clarification.

This therefore means that I cannot take note of Receiver's agent's (MURPHY'S) affidavit sworn 30 June 1995 presumably filed in support of the opposition as on 23 June 1995 Court ordered that Company file affidavit in opposition on or before 30 June 1995 and at that time G.D. Burnett & Co, Solicitors appeared for the Company through Mr. Jamnadas.

The position therefore is that the Company has disobeyed the said Court order and in the face of this disobedience it wishes the Court to hear the opposition proceedings without bothering to file an affidavit setting out the grounds on which it opposes the Petition. The matter becomes more serious when on 12 May 1995 the Company was given 21 days to file its answering affidavit and two reminders were sent by Mr. Parshotam on 5 June 1995 and 20 June 1995 to do so. The order was not complied with even up to the time of the hearing on 3 July 1995. Under Rule 31(1) OF COMPANIES (WINDING UP) RULES, 1983:

"Affidavits in opposition to a petition shall be filed within seven days of the date on which the affidavit verifying the petition is filed, and notice of the filing of every such affidavit shall be given to the Petitioner or his barrister and solicitor on the day on which such affidavit is filed".

In this case despite time having been extended by Court, the Company failed to comply with the Orders made to do so. The company is in contempt. It has not given any grounds on which it opposes as there are no affidavits filed in opposition. Instead Mr. Naidu now orally argues that notices are defective, they are not properly served, the Petition also has not been properly served. At no time before the Company raised any of these matters. On 12 May 1995 all that Mr. Jamnadas said was that he wants time to file Affidavit in opposition stating that the "Court has no jurisdiction". Then on 23 June he said he will oppose because of "anomalies - service of Notice and manner in which Notice was signed" and also "whether this Court has jurisdiction". Even if I was to look at MURPHY'S affidavit, half of it is factual and have no bearing on the issue, some of the paragraphs are not true later corrected by Mr. Naidu during the hearing, and that leaves only his belief as to how service of Petition was affected apart from service of demand. He also states that the Company "has not ceased trading or business within Fiji or Papua New Guinea" and that does not prove anything as it will be seen later in my judgment that the company is truly unable "to pay its debts".

The round about the way in which the Company has attempted to present its opposition without an affidavit from itself as required by the Rules and thereby depriving the Court of the benefit of the true situation in regard to service of demand and its ability or inability to pay its debts, has resulted in the Company not rebutting Mr. Parshotam's arguments in support of the Petition.

The Court is not interested in the Receiver's agent for the purposes of these proceedings.

It is only the petitioner and the Company who are entitled to be heard as of right (Re IBO INVESTMENT TRUST LTD [1903] UKLawRpCh 149; (1904) 1 Ch 26. But opposition can come from a different class e.g. secured creditors for in PALMERS COMPANY LAW Vol 3 Part 15 15.217 it states that:

"Where the opposition comes from creditors of a different class, e.g. secured creditors, the court may prefer the wishes of the unsecured creditors since in some cases refusal of the order will rob them of what is virtually their only remedy." (Re CRIGGLESTONE COAL CO. [1906] UKLawRpCh 87; (1906) 2 Ch. 327; Re RUBBER IMPROVEMENTS CO (1962) C.L.Y. 362).

It means that the Receiver himself will have no locus standi in these proceedings but the secured creditor has and it could appear at the hearing either in support of or in opposition to the Petition. In fact, if the receiver so wished, he could have himself commenced winding up proceedings against the company if he could show that a benefit to him would accrue from the winding up (Re BOROUGH OF PORTSMOUTH TRAMWAYS CO (1892) 2 Ch.362)

As far as the Receiver's position is concerned, I agree with Mr. Parshotam's submission in regard to the effect of winding up on receivership, namely, that the right of the debenture-holder to appoint a receiver is not affected by the presentation of a winding up petition (Re HENRY POUND, SONS & HUTCHINS (1942) Ch.d. 402). As secured creditors they stand outside the liquidation (STRONG v CARLYLE PRESS [1892] UKLawRpCh 189; (1893) 1 Ch. 268).

B. Winding Up Provisions

I have given careful consideration to submissions made by both counsel.

In dealing with the issues before me I refer to the following statutory provisions relating to winding up which have a strong bearing on determination of the issues.

Grounds For Petition - Part VI Of The Act

The Petition to wind up the Company in this case is made under Part VI of the Act which provides for cases in which a Company may be wound up by Court. This is a general section to wind up a company.

Registration As Foreign Company - Part X Of The Act

In Part X of the Act in sections 366 to 376 provision is made for establishment of place of business in Fiji of companies incorporated outside Fiji (unregistered company).

Documents Etc. To Be Delivered To Registrar By Such A Company

This Company is a "foreign company", that is a company incorporated outside Fiji (s366 of the Act). As such as required under s.367 of the Act it delivered to the Registrar of Companies certain documents. These documents included for our purposes (a) list and particulars of directors and Secretary of company incorporated outside Fiji, (b) list of name and addresses of Person Resident in Fiji Authorized to accept service on behalf of company incorporated outside Fiji, dated 9 August 1993 and (c) notice of Situation of Registered Office of a foreign Company dated 9 August 1993. Under (b) above the name of JUSTIN MARK FALLON was given and under (c) name of COOPERS & LYBRAND, Pacific House, Suva was stated.

Winding Up Of Unregistered Companies - Part IX Of The Act

In Part IX of the Act provision is made for winding up of unregistered companies in sections 358 to 365. But s. 359(1) is worth noting and it provides inter alia that:

"Subject to the provisions of this Part, any unregistered company may be wound up under this Act and all the provisions of this Act with respect to winding up shall apply to an unregistered company, with the exceptions and additions mentioned in the following provisions of this section". (underlining mine)

It is clear from the above provisions that provisions of PART VI apply to PART IX which relates to winding up of an unregistered company when it says in 359(1) that "all the provisions of this Act ..... shall apply to an unregistered company, ....." Furthermore, it should be noted that, as provided in s364, "the provisions of this Part (Part IX) with respect to unregistered companies shall be in addition to and not in restriction of any provisions hereinbefore in this Act contained with respect to winding up of companies by the court, ..."

This aspect of the matter has been discussed by JESSEL, M.R. in RUDOW v GREAT BRITAIN MUTUAL LIFE ASSURANCE SOCIETY 1881 17 Ch.D. C.A. p. 600 or 612. There, after referring to the proviso similar to the one under s.364, namely "Provided that an unregistered company shall not except in the event of its being wound up, be deemed to be a company under this Act and then only to the extent provided by this Part", said:

"His Lordship read "being wound up" as if it had been "having been wound up," which would make the Act absolutely unworkable. It is necessary that the provisions anterior to the actual order for winding up should apply to an unregistered company, and that he seems to have forgotten. It is plainly the meaning of the Act that all the provisions of Part IV. shall apply as much to unregistered companies as to registered companies."

The salient point that should be borne in mind is that both part VI and Part IX apply to an unregistered company in winding up proceedings.

C. Service Of Statutory Demand

The abovementioned provisions lead me to consider provisions relating to service of demand and these are contained in the Act itself.

It is contended for the Company that service of demand notice and Petition was bad and that the Court ought not to make a winding-up Order in such a situation.

In my judgment for the reasons which I give hereafter the service of the demand notice and petition were proper, they were acknowledged as having been received and were therefore good and even if there were certain deviations from the mode of service they do not vitiate the proceedings to wind up in all the circumstances of this case.

The requirements as to service of notices etc in winding up are as follows:-

(a) s. 359(4)(a) of PART IX provides that:

"359 (4) An unregistered company shall, for the purposes of this Act, be deemed to be unable to pay its debts -

(a) if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding $100 then due, has served on the company, by leaving at its principal place of business or by delivering to a secretary or some director, manager or officer of the company, or by otherwise serving in such manner as the registrar may approve or direct, a demand under his hand requiring the company to pay the sum so due, and the company has, for 30 days after the service of the demand, neglected to pay the sum or to secure or compound for it to the satisfaction of the creditor." (underlining mine)

(b) Under Rule 18 Companies (Winding Up) Rules 1983 it provides that "all notices, summonses and other documents, other than those of which personal service is required, may be served by post."

(c) And under the general winding up section in Part VI s. 221(a) provides:

"221. A company shall be deemed to be unable to pay its debts -

(a) if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding $100 then due has served on the company, by leaving it at the registered office of the company, a demand under his hand requiring the company to pay the sum so due and the company has, for 3 weeks thereafter, neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor." (underlining mine)

In relation to this case the details of Demand Notices (which are not disputed except as to mode of service) that were served on the Company are fully stated in the affidavit of YEE HING SUE sworn on 3 July 1995 and they are as follows:

"11. On 24 January 1995, the Petitioner served on the Company at the office of Coopers & Lybrand, Suva a Demand Notice requiring the Company to pay the sum of $479,417.18 which demand was in the terms as per Annexure "H" hereto.

12. .....

13. The Demand Notice and the said letter were duly acknowledged by an officer of Coopers & Lybrand on 24 January 1995.

14. A further Demand Notice dated 13 February 1995 was sent to the Company by ordinary mail to Justin Mark Fallon. This Demand Notice was accompanied by a letter from the Petitioner's solicitors dated 15 February 1995 addressed to the said Justin Mark Fallon.

15. There was an error on this Demand Notice in that the amount claimed as being owing by the Company to the Petitioner was shown as $51,703.71 instead of $451,703.71.

16. In response to this Demand Notice and letter, the Company made a payment of $51,703.71 to the Petitioner's solicitors on 3 March 1995.

17. On 6 March 1995, the Petitioner served on Justin Mark Fallon, the person authorised to accept on behalf of the Company service of process and any notices required to be served on the Company, by pre-paid ordinary post a Demand Notice requiring the Company to pay the sum of $464,000.00 which demand was in the terms as per Annexure "M" hereto.

18. On 29 March 1995 your Petitioner served on Justin Mark Fallon, the person authorised to accept on behalf of the Company service of process and any notices required to be served on the Company, by pre-paid registered post under Section 373 of the Companies Act a Demand Notice requiring the Company to pay the sum of $464,000.00 which demand was in the terms as per Annexure "M" hereto (the same as the one set out in Paragraph 17 hereof)."

In fact Mr. Burnett upon instructions from the Company replied to Demand Notice of 6 March 1995 by stating, inter alia, that the company is "presently unable to pay the amount claimed" and is "unable to provide .... any firm proposal for the payment of the amount owing to it for a period of twenty-eight days'".

There is no evidence that there is a dispute as to the debt and at no time service of notice was challenged by solicitors Burnett and Jamnadas. It was after this letter from Burnett that the Petition was presented in Court. There was no question of insufficient service; on its own admission it is a clear cut case of Company's inability to pay its debt. There were several appearances in Court after service of Petition by Mr. Jamnadas.

The Petition is based on the Company's inability to pay its debts (either under s. 221 or s. 359(4)). The said s. 359(4) states as to when a company is "deemed to be unable to pay its debts" in the case of unregistered company like this one. Under s. 359(4)(a) the demand is required to be "served on the company by leang it at is principal place of business or by delivering to a secretary". So, what did the Petitioner do in this case? Notice of 24 January 1995 was served on Coopers & Lybrand. Therefore it was served as required and it was acknowledged. Demand of 6 March 1995 was served on the said FALLON by ordinary post which was not as required by 359(4) as it should have been "delivered". And demand of 29 March 1995 was served by registered post; although it was not delivered as required by s 359(4), it was however served in accordance under s 373 which provides for mode of service of notice on unregistered company as follows:

"Any process or notice required to be served on a foreign company shall be sufficiently served if addressed to any person whose name has been delivered to the registrar under the foregoing provisions of this Part and left at or sent by registered post to the address which has been so delivered:...." (underlining mine)

Therefore, I am of the view that although the third notice was not served strictly in accordance with s 359(4)(a) it nevertheless complied with s373.

This I find as a sufficient and proper service. Neither s 359(4)(a) nor s 221(a) state that service in the manner provided is mandatory or that serious consequences will flow if not strictly complied with. They do not say that the petition is in that case to fail. These provisions are merely directory as to the mode of service of demand. That leaves it open to the Court, in a proper case, as in this case, to accept the mode of service adopted by the Petitioner which would be accepted as sufficient service. It was up to the Company then to file affidaivt in opposition which it failed to do except in the manner aforesaid. These statements are based on the case of In re AFRICAN FARMS LTD [1906] UKLawRpCh 43; (1906) 1 Ch. 640 from the judgment of WARRINGTON J. Mr. Naidu has argued that there has to be a 'strict compliance' and failure to comply could lead to "draconian consequences". He referred to a number of cases based on this argument. Without dwelling too long on this submission suffice it to say that in the light of our own statutory provisions those cases have no relevance to the issue before me and they do not assist him. Also, as I read the relevant provisions relating to service of notices in the Act and the Rules, this is not a case where "strict compliance" is expected as no such interpretation could be put on the wording of these sections as will become clearer later in my judgment.

At this juncture I would like to touch on one very important aspect of the issue before me. It is this, that the Petition is based mainly on the Company being "unable to pay its debts" (s 221 and s 359(4)). As for an unregistered company s 359(4) of the Act sets out in 359(4)(a)(b)(c) and (d) the four instances in which a company is unable to pay its debts; s 359(4)(a) deals with case where over $100 is due and a demand is served and that is a subsection on which emphasis has been laid by Mr. Naidu. But s 359(d) there is no requirement of service but it merely provides "if is otherwise proved to the satisfaction of the court that the company is unable to pay its debts".

Similarly, under the general section 221 there are three instances in s 221(a)(b)& (c) in which a company "shall be deemed to be unable to pay its debts". In s. 221(a) there is requirement as in s. 359(4)(a) of service of demand; but in s. 221(c) there is no requirement of service which is similar to s. 359(d).

As I understand the said sections 221 and 359, to prove the company's inability to pay its debts, there is no need to serve a demand as required under either s. 221(a) or 359(4)(a). If demands have been made like on the three occasions in this case, there is sufficient compliance of service under s. 373 as that is the section which provides for service of any "process or notice". The last demand, that is, of 29 March 1995 in this case was served under s. 373 and there is therefore proper service.

Therefore the main issue is whether the company is unable to pay its debts. The essential thing is that the company has notice of demand. Under no circumstances in this case can it be said that the company did not have sufficient notice of demand. The notices are not a nullity.

In these circumstances, if my approach and reasoning is correct then one wonders what all the hullabaloo is about. Mr. Naidu is really clutching at straws in this case. One can take "technical" points about the deeming provisions, but the Petitioner can always fall back on a long-stop position by proving that the company is unable to pay its debts like it did in this case. It is unwise to rely on technical points rather than on merits.

In the approach that I have adopted in this case I am supported by the case of IN re GLOBE NEW PATENT IRON AND STEEL COMPANY (1875) L.R. Vol XX p.337 where it was held in similar circumstances that the company was unable to pay its debts (arising out of goods sold) "although the Petitioner had not served a demand requiring payment under sub-section I "(provision similar to s. 221(a) or 359(4)(a)). There, there was no other evidence of the debt than the formal affidavit verifying the Petition. I refer to the following passage from the judgment of SIR G. JESSEL, M.R. which is pertinent:

"That case appears to me to be rather in the Petitioners' favour. I have no hesitation in saying that sub-sec. 1 has no application to sub-sect. 4. A company may be wound up by the Court whenever it is unable to pay its debts; and by sect. 80 a company is to be deemed to be unable to pay its debts in any of four cases. I think the fourth case includes the other three. The first case is, where a creditor for 50 or upwards has served a demand of payment, and the company for the space of three weeks after service has omitted to pay the debt. The second case is where execution issued upon a judgment has been returned unsatisfied. The third case is under Scotch law; and the fourth case is where it is proved to the satisfaction of the Court that the company is unable to pay its debts. The only question for me to decide is this, whether this is proved to my satisfaction. It appears that the Petitioners sold goods to the company, and took in part payment a bill, which was dishonoured, and continues unpaid. That is proof which ought to satisfy me, and which does satisfy me, that the company is unable to pay its debts."

(underlining mine).

The complaint that the statutory demand under s.221 was not signed by the creditor itself holds no water as it can be signed by its authorized agent. (BATEMAN TELEVISION LIMITED v COLERIDGE FINANCE LIMITED (1969) N.Z.L.R. 794; on appeal [1971] UKPC 8; 1971 NZLR 929, PC).

On the facts as outlined hereabove the Company is in a state of hopeless insolvency judging by the list of creditors to whom in excess of one and a half million dollars is owed and it has admitted through its former solicitor of being unable to pay its debt to the petitioner. The Petitioner has not received a cent from the company pursuant to the last statutory demand.

The situation in this case is similar to the o in IN REGENT UNITED SERVICE STORES (1878) 8 Ch.D. C.A. p.75. That case involved the question as to service of the petition. There MALINS, V.C (at p.77-78), who was upheld on appeal, expressed certain views which I find very pertinent to the issue before me and that is another answer to Mr. Naidu's arguments that I cannot resist repeating them here. I therefore set them out and they are follows:-

"In this state of things what ought to be done? There is no valid objection raised to the petition. I have here a Petitioner who cannot obtain payment of his debt, no offer is made to pay it, and I am satisfied there are no means of paying it; no offer is made to pay the creditors.

What, then, is the objection? Mr. Glasse says he appears for the company, but I do not know that Mr. Glasse really does appear for the company."

Then MALINS V.C asks

"Now, what is the ground of objection? It is only this, that the petition was not left at the offices of the company; but is anybody ignorant of the fact that the object of presenting the petition is to obtain payment of the Petitioner's debt? The company know that they are insol-solvent, and what, therefore, do they want with this service? I am surprised at Mr. Buckley, who admits that there must be a winding up order made, saying that a copy of the petition must be left at the offices of the company, although the necessity has been obviated by a solicitor appearing for the company when the interim order was made. What harm will be done by the order to wind up? If I were to put it off until next Friday, it is perfectly certain that I should be compelled to make the order then, because it is a matter of absolute right to all these creditors to have the company wound up. What do I care about the opposition of Mr. Brooksbank's clients, who are shareholders? What right have shareholders to oppose this winding-up? If they will find money to pay the creditors, I will listen to them, but, until they do that, I cannot pay any attention whatever to their opposition.

Therefore, seeing the miserable state of insolvency which this company is in, and seeing that the petition has been duly served upon the solicitor of the company for the time being, I consider this opposition to be a mere solicitor's opposition for the purpose of seeing what business can be made out of it.

It appears to me, therefore, that this is a petition on which for the benefit of all parties I ought to make an immediate order to wind up this company compulsorily." (underlining mine)

I adopt the above remarks in this case and that is the answer to Mr. Naidu's argument as to defective service of demand and Petition. By no stretch of the imagination could it be said that service of demand notice was a nullity.

On the requirements as to service it has been stated by BAGGALLAY L.J. in REGENT (supra p. 80) that:

"There is no doubt that the 3rd rule of the General Order of November, 1862, provides for a service being made at the registered office of the company, if there be any such registered office; but that is not an imperative rule, which is never to be deviated from. I think that the general tendency of all the authorities is to show that if there is such a service as gives full and complete information to everybody to whom information ought to be given, it is sufficient, although provisions and rules of this kind, which are not part of the Act of Parliament, but are merely made for the purpose of carrying it into effect, may not have been literally complied with." (underlining mine)

In the case before me as already stated the notices were acknowledged and even payment made in one instance. Then how could service of demand and Petition be held to be defective and pursuant to which the Company's counsel appeared on the hearing of the petition on a number of occasions. In these circumstances I cannot understand why any other service is necessary.

One cannot overlook the following Rule 202 of the Companies (Winding-up) Rules, 1983, which provides that formal defect, which is what it is in regard to service in this case, does not invalidate proceedings:

"202. - (1) No proceedings under the Act or these Rules shall be invalid by reason of any formal defect or any irregularity, unless the court before which any objection is made to the proceedings is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court."

(underlining mine)

In view of what I have stated hereabove neither any "substantial injustice" nor any injustice has been caused by the alleged defect or irregularity.

It is to be noted, as was stated by SCOTT J in BUSINESS COMPUTERS INTERNATIONAL LTD v REGISTRAR OF COMPANIES and others (1987) 3 WLR p.1134 at 1142 that:

".... Service of process is a step, and usually an essential step, in the prosecution. It must usually be proved before an order can be obtained against an absent defendant. ..... The safeguards against ineffective service of process ought to be, and I think must be, found in the rules and procedures that govern litigation".

The "Rules and procedure that govern litigation" in this case are as stated hereabove and nowhere is it stated that dire consequences will flow from non-compliance as emphasized by Mr. Naidu; if anything, under Rule 202 any "formal defect or any irregularity" does not vitiate proceedings.

D. Service Of Petition

Mr. Naidu submits that service of Petition is bad as it was not served at the registered office of the Company as required by Rule 24(1) of the Rules which provides:

"24. - (1) Every petition shall, unless presented by the company, be served upon the company at its registered office, if any, and, if there is no registered office, at the principal or last known principal place of business thereof, by leaving a copy of the petition with any member, officer or servant of the company, or, if no such member, officer or servant can be found, by leaving a copy at such registered office or principal place of business, or by serving it on such member, officer or servant of the company as the court may direct;....."

In this case it was served by post addressed to the said FALLON the person authorized to accept on behalf of the Company service of process and any notices required to be served on the Company according to records maintained by the Registrar of Companies.

In this case although the Petition was not served in the manner required by Rule 24, it was nevertheless served and it was brought to the notice of the Company. Pursuant to service the Company was represented by counsel on several occasions and the matter of defective service was not raised at all. Therefore, in the circumstances any defect in the service is deemed to have been waived. In any case further to service there was filed a memorandum of due compliance under Rule 28 stating, inter alia, that the Petition was advertised.

In regard to this issue I refer to the passage quoted hereabove from IN REGENT (supra) which was a case which involved the question of service of petition. There MALINS V.C said, inter alia, and whose view I adopt, namely, "what do they want with this service?" when the "Company knows that they are insolvent". The "object of presenting the petition is to obtain payment of the Petitioner's debt" but "the necessity has been obviated by a solicitor appearing for the Company".

E. Inability To Pay Its Debts

I refer to what I have already stated hereabove in this regard.

As to when a company is unable to pay its debts is provided for both in PT VI and PT IX of the Act in sections 221 and 359. I had to deal with this issue earlier in my judgment because it is interwoven with service of demand in the Act itself.

I have no doubt whatsoever that under the above sections in this case the Company is deemed to be unable to pay its debts and the fact of Receiver/Manager having been appointed is ample evidence of its shaky position. No part of their debt has been paid.

Also in SYD. MANNIX PTY LTD v LESERV CONSTRUCTIONS PTY LTD (1971) 1 NSW 4LR. P.788 AT 790 JACOBS J.A said:

"It seems to me that when the statute provides that a company shall be deemed to be unable to pay its debts if the statutory notice has been given and if the company has for twenty-one days thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor, it means what it says, and it is irrelevant to that language whether the notice expires before or after the presentation of any particular winding-up petition."

Therefore, in all the circumstances of this case at the date of the presentation of the Petition and thereafter the Company was at all times unable to pay its debts.

This argument of Mr. Naidu also fails.

Conclusion

In the outcome for the reasons given hereabove I am satisfied that the petitioning company has proved its petition under the provisions of Part VI and Part IX of the Companies Act Cap. 247 which relate to winding up of companies and that the respondent company is unable to pay its debts. Furthermore, Mr. Naidu's opposition grounded on "technical" grounds have no merit in the circumstances of this case for the reasons outlined hereabove particularly bearing in mind that the debt is not disputed and nothing had been paid towards the debt within the period allowed under the notice which was well beyond the 30 days (under s. 359(4) and 3 weeks (under s.221) of the Act.

I accordingly order that the company, namely PANGIA CONSTRUCTIONS PTY LTD., be wound up by this Court under the provisions of the Companies Act, 1983. The Company is ordered to pay the Petitioner's costs of these proceedings which is to be taxed unless agreed upon.

D. Pathik
Judge

Delivered in Open Court
at Suva this 19th day of July, 1995.

HBE0050J.95S