| Fiji Islands - In re Savusavu Hire Plant Services Ltd - Pacific Law Materials |
IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION
COMPANIES ACTION NO. 47 OF 1998
IN THE MAHE MATTER of SAVUSAVU HIRE PLANT SERVICES LIMITED
AND
IN THE MATTERof the Companies Act
Mr. N. S. Arjun for the Petitioner
Mr. V. Maharaj for Gibsonibson & Company for the Company
JUDGMENT
This is a Petition of M. NABI KHAN TRANSPORT (the "petitioner") to wind-up SAVUSAVU PLANT HIRE SERVICES LIMITED (the "company") for the alleged balance debt of $16,000.00.
The company opposes the Petition.
The chronology of events are: petition dated 27 April 1998 was served on 7 May 1998; memorandum of due compliance was filed on 12
June 1998; other creditors who have filed their intention to attend the hearing of the Petition are Fiji Bandag ($3,829.60), Napco
Motor Spares Limited ($1481.90), Northern Hydraulic Services Ltd ($2,846.33) LATU ($12,906.17) and National MBF Finance (Fiji) Ltd
($189,320.55). The company had on 3 July 1998 filed an affidavit opposing the Petition. Mr. Arjun replied to the said affidavit on
17 July 1998. The opposition hearing took place on 29 September 1998.
The Petitioner's submission
The petitioner says that the company is truly indebted to it in the balance sum of $16,000 being for carting services rendered to
the company. This sum was arrived at after the parties came to a settlement. The original claim was for $45,032.81 but after some
discussion the parties agreed in writing on 27 October 1997 that the company will pay only $34,000.00 and it made some payments thereunder.
A statutory demand was made on 27 March 1998 but not met by the company.
It says that the company is raising the "same allegation about the same deliveries" which was already taken into account
prior to reaching the agreement. The company it says, is making excuses to delay payments as it also is in financial difficulties.
The Petitioner denies that it owes the sum of $760.19 to the Company.
The Memorandum of Due Compliance was filed on 12 June 1998 and on 17 June Mr. Arjun applied for a Winding-up Order. It was then that
Mr. Maharaj stated to the Deputy Registrar that the company opposes the Petition and wishes to file opposition.
Company's submission
In opposition, in his affidavit, Mohammed Afzal a director of the company stated that because Mount Kasi Limited has declined to pay
the full amount to it on the basis of their own calculation, the company should not therefore be made to pay the petitioner the amount
claimed by it despite the fact that the company had previously agreed in writing on 27 October 1997 to pay $34,000 and had made payments
under it subsequently leaving the present balance.
The company said that on 15 April 1998 after s221 notice under the Companies Act was served on it, it denied the claim and stated that $512.99 remains unpaid. Then on 7 May 1998 it informed the solicitors for the
Petitioner that, inter alia, "... a major dispute is that Mount Kasi Limited has reduced our client's claims due to your clients
truck not running to full capacity. Therefore our client has also short paid and naturally the flow on effect would be felt by your
client".
Then later on, the company had on 5 June 1998 written to the petitioner's solicitors that it (petitioner) had not only been paid in
full but that it has been overpaid by $760.19.
For these reasons it says that the procedure by way of Petition under the Companies Act is not the procedure to claim the debt which is alleged to be due by the company to the petitioner.
Consideration of the issue
From the affidavit evidence before me it is abundantly clear, and there is no dispute about it, that the parties had reached an agreement
in writing on 27 October 1997 as to the balance amount payable by the company. Subsequently the company made payments leaving the
balance sum of $16,000.00 when the company stopped paying which gave rise to a statutory demand being made by the petitioner on 27
March 1998. Although on 15 April 1998 the company's solicitors replied to the demand they merely stated that there is substantial
dispute in respect of the claim without any details regarding the dispute and at the same time suggesting that the petitioner take
the matter to court in the normal way and establish liability.
Thereafter the Petition to wind-up the company was issued out of this Court on 27 April 1998.
It was then that company's solicitors on 7 May 1998 came out with the reason for the dispute, stating that "a major dispute is
that Mount Kasi Limited has reduced our clients claims due to your client's trucks not running to full capacity. Therefore our client
has also being short paid and naturally the flow on effect would be felt by your client."
It was not until the Memorandum of Due Compliance was filed and the Petitioner was entitled to an Order to wind-up that the company
stated to Court that it wishes to oppose the Petition. Even until today there is no evidence of how the company had arrived at its
assertion by introducing Mt. Kasi Limited into the picture when the contract was between the petitioner and the company. All that
the alleged dispute amounts to was a general assertion without any facts and figures and this case involves "figures".
There must be something more than mere assertion (RE LOUISBRIDGE PTY LTD 1994 2 Qd. R144 at 145). The company must say something that promotes the company's case and what it stated would not support the
application, namely, to advance further or assist the company's case without outlining in detail the actual dispute.
It is the policy of the Company Law that matters involving statutory demands must be dealt with quickly and that the Company that
receives the demand must act properly to set it aside or else suffer the consequences (DROMORE FRESH PRODUCE PTY LTD v W. PATON (FERTILIZERS) PTY LTD 137 FLR Sup Ct. of NSW Young J p.307 at 309) also DAVID GRANT & CO. PTY LTD v WESTPAC BANKING CORPORATION [1995] HCA 43; (1995 184 CLR 265 High Court).
Be that as it may I will now consider the issue based on the submission made to me.
In Palmer's Company Law Vol 3, 15. 214 is set out the principles involved in considering disputes as to debt as follows:
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."
Therefore to be able to succeed the company has to prove that the dispute is on 'substantial grounds' (Re Lympne Investments Ltd 1972 2 All E.R. 385). In Offshore Oil N.L. and Investment Corporation of Fiji Limited (Civ. App. 29/84 F.C.A. at p.5 of cyclostyled judgment) Barker J.A. said:
"The law is clear that there is a discretion in a Court seized of a winding-up petition, to decline to hear the petition where
the debt is contested on substantial grounds."
On the affidavit evidence before me based on such flimsy and scanty evidence devoid of any details and the lateness of the allegations
and the insolvency of the company with numerous creditors claiming huge amounts I find that there is no substantial dispute [Company,
A (No. 001946 of 1991), Re ex p. FIN SOFT HOLDINGS S.A. (1991) BCLC 737, Harman J.]
Here the Company admitted the amount due and made part-payment. It cannot now turn around and deny owing, more particularly in the
present situation and on the facts presented which is akin to the position in In re Globe New Patent Iron and Steel Company (1875) LR 20 Eq. 33) where the headnote reads:
"A company bought goods, giving in part payment its acceptance, which was dishonoured on presentation, and continued unpaid:
and the vendor presented a petition for winding up the company:-
Held, that the dishonour of the bill was proof to the satisfaction of the Court under sect. 80, sub-sect. 4 of the Companies Act,
1862, that the company was unable to pay its debts, although the Petitioner had not served a demand requiring payment under sub-sect.
1."
Similarly, in Cornhill Insurance PLC v Improvement Services Ltd & Ors. (1986) 1 WLR p114 it was held:
"Held, refusing the application, that where a company was under an undisputed obligation to pay a specific sum and failed to
do so, it could be inferred that it was unable to do so; that, accordingly, the defendants could properly swear to their belief in
the plaintiff company's insolvency and present a petition for its winding up."
In view of the company's admission of debt the petitioner is entitled to proceed with Petition and as held in In re Tweeds Garages Ltd (1962 1 Ch. 407 at 408):
"that the only qualification required of the Petitioner was that it was a creditor; and that, where there was no doubt (and there
was none here) that the petitioner was a creditor for a sum which would otherwise entitle it to a winding-up Order, a dispute as
to the precise sum owed was not a sufficient answer to the petition".
The correct test of approaching these matters is as Harman J said in Cornhill (supra) quoting from Ungoed - Thomas J in Maan v Goldstein (1968) 1 WLR 1091 at 1096 when he said:-
"When the creditor's debt is clearly established it seems to me to follow that this court would not, in general at any rate,
interfere even though the company would appear to be solvent, for the creditor would as such be entitled to present a petition and
the debtor would have his own remedy in paying the undisputed debt which he should pay. So, to persist in non-payment of the debt
in such circumstances would itself either suggest inability to pay or that the application was an application that the court should
give the debtor relief which it itself could provide, but would not provide, by paying the debt."
For these reasons the company's opposition to the Petition fails and the Petitioner is entitled to proceed to wind-up. The company
is ordered to pay the costs of the hearing in the sum of $200.00.
D. Pathik
Judge
At Suva
23 October, 1998
Hbe0047j.98s
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