| Fiji Islands - In re Roller Pacific Ltd - Pacific Law Materials |
IN THE HIGH COU FIJI
AT SUVA
CIVIL JURISDICTION
COMPANIES ACTION NO. 52 OF 1996
IN THE MATTER OF ROLLER PACIFIC LIMITED
AND IN THE MATTER OF THE COMPANIES ACT
BETWEEN:
CONSORT SHIPPING LINE LIMITEDn>
Petitioner
AND:
ROLLER PACIFIC LIMITED
Respondent
Mr. H. Lateef for the ioner
Mr. M. Raza for the Respondent
JUDGMENT
This is a creditor's winding-up petition presented bCONSORT SHIPPING LINE LIMITED (the "petitioner&oner") against ROLLER PACIFIC LIMITED (the "company") on the grounds that the company is insolvent and unable to pay its debts and that it is just and equitable that an Order be made
for it to be wound up.
Mr. Raza for the company opposed the Petition and after hearing both counsel I reserved jud.
The Petitioner served on the company a Notice of Demand dated 21 March 1996 pursuant to s221 of the Companies Act (Cap. 247) claiming the sum of $6386.48 "being amount due and owing ... for balance freight charges". No payment was made within the statutory period of three weeks.
The main ground of opposition is that a substantial dispute has been raised by the Company wegard to the debt. This is s is fully
canvassed in the affidavit of REX BASIL HOLLOWS, Managing Director of the Company, sworn 12 July 1996. However, the gist of the argument is that in response to representations made
by the Petitioner, the Company shipped certain goods from Auckland to Fiji believing the freight rates would be lower than the normal
but the Petitioner charged normal rates which the Company disputed. It says that "eventually an agreement was reached by Roller Pacific with Consort and under duress and provided Roller Pacific could pass
the increases to customers". But in March 1996 the Petitioner made the said demand for the balance sum which the company disputed and still disputes on the ground
that the freight rates charged were not what was agreed and that it was "forced to agree to paying the amount or face not clearing the goods and losing substantial business and moneys, and further
its agreement under duress was further subject to Roller Pacific being able to pass on the increased freight rates which it was unable
to do".
Mr. Lateef for the Petitioner submits that he relies o said affidavit of HOLLOWS wherein he admits the debt. He s He says that it
appears that Mr. Hollows wrote the letter of 3 October 1996 (Annexure 'A' to affidavit) to get the goods out and "just to deceive" the Petitioner. He said that the Company can still continue civil action No. 229/96 relating to damages arising out of the subject
matter of the Petition and which forms part of the claim in the Petition.
Now to the consideration of the issue.
The affidavit evidence shows and I hold that thera dispute as to the alleged debt based on substantial groungrounds. In coming to
this conclusion I am not unmindful of the said annexure 'A' in which there is an admission of debt. But then after the said demand notice the Company disputed the debt stating the grounds on
which it is based (annexure 'B' to said affidavit of HOLLOWS). This objection to claim is followed by a Writ of Summons being Civil Action No. 229/96 arising out
of the dealing of which the claim under the Petition forms part.
Now, the law on this subject, it is accepted law that the court will not grant a winding up ordp order where there is a dispute as
to whether or not a debt is actually owed. The companies court in such a situation is not the appropriate forum to decide the validity
of a debt that is the subject of a bona fide dispute based upon substantial grounds. (MANN v GOLDSTEIN (1968) 1 WLR 1091 and STONEGATE SECURITIES LTD v GREGORY (1980) Ch. 676. In some cases the requirement of good faith has been omitted and all that has been required is a dispute on 'substantial grounds'. In Re a Company (No. 001946 of 1991) ex p FIN SOFT HOLDING SA (1991) BCLC 737 at 740 HARMAN J considered 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 where there is a dispute then the bona fides of the company is simply irrelevant. Also, if there is such
a dispute, the petitioner would clearly not satisfy the requirement of being a creditor for the purposes of the winding up proceedings.
There is ale general principle that a petition for winding up with a view to enforcing payment of a di 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 PAL (ibid) is set out the principles involved in considering disputes as to debt and I havI have borne these in mind in considering the
matter before me. There it is stated:
"To fall within the general principle the dispute must na fide in both a subjectivective 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 proceeding."
Having found that the debt is disputed on substantial grounds it is open to Court to dismiss the petition outright (PALMER'S, ibid) particularly when there is already an action afoot brought for the purposes of, inter alia, adjudicating on the disputed debt.
Also it was held in In re Company No. 00212 of 1995 (The Times Law Reports 1995 p.186) that in such circumstances "the correct course was to strike out the petition, whether the company was, or was not solvent at the time". On this aspect I conclude with the following extract from the judgment of MEGARRY J in IN re LYMPNE INVESTMENTS LTD (No.00250 of 1971) 1972 1 WLR 523 at 527 which I consider apt:
"A real te, turning to a substantial extent on disputed questions oons of fact which require viva voca evidence, .... cannot
properly be decided on petition. 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 Re LONDON and PARIS BANKING CORP (1874) [1874] UKLawRpEq 171; LR 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." (underlining mine for emphasis)
For the reasons stated and bearing in mie law on the subject, the Company succeeds in opposing the the Petition to wind up. I therefore
dismiss the Petition with costs to the Company to be taxed if not agreed.
D. Pathik
Judge
At Suva
8 November 1996
Hbe0052j.96s
PacLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.paclii.org/fj/cases/FJHC/1996/70.html
