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China International Water and Electric Corporation (Fiji) Ltd v Saheem [2001] FJHC 167; Hbc0124d.2001s (21 December 2001)

IN THE HIGH COURT OF FIJI
(AT SUVA)

CIVIL ACTION NO. HBC 124 OF 2001S

Between:

CHINA INTERNATIONAL WATER AND
ELECTRIC CORPORATION (FIJI) LIMITED
Plaintiff

and

MOHAMMED SAHEEM
(f/n Mohammed Jaffar)
Defendant

P. Howard for the Plaintiff
N. Prasad for the Defendant

DECISION

On 30 January 2001 the Defendant presented a petition to this Court to wind up the Plaintiff Company (Action No. HBE 12/2001S). The amount said to be owed was $49,566.74.

On 20 February 2001 a notice of opposition to the petition was filed by a member of the company Cheng Tao.

On 15 March a memorandum of due compliance with the Winding Up Rules was filed by the petitioner. On 21 March the Company was given leave to file an affidavit in opposition out of time.

On 17 April an affidavit in opposition to the petition was filed.

On 18 April the Deputy Registrar adjourned the winding up proceedings in view of the writ which had been issued herein on 27 March. Where winding up proceedings are already afoot it seems to me that the better practice is not to commence allied civil proceedings where a principal object of those proceedings is to dispute the petition and to seek an order staying the winding up proceedings. In my view the presentation of a petition constitutes the commencement of proceedings (see RHC Order 5 rule 1) and although Order 29 rule 1 (1) does not mention petitions it does include all the other modes of commencing proceedings. I see no reason why a stay of winding up proceedings should not be sought using Order 29 thereby avoiding the need to commence a second set of proceedings.

The writ herein was accompanied by an application for an interlocutory injunction to stay the winding up proceedings and a supporting affidavit by Sun Yanjun the Plaintiff’s company Project Manager.

On 7 December when the application came on for hearing Mr. Howard principally relied on this affidavit. He told me that the Plaintiff company was a substantial company, a subsidiary of a Chinese State enterprise and was fully able to pay its debts. He told me that the Plaintiff company did not accept that the amount claimed by the Defendant was accurate. It disputed the debt and accordingly winding up proceedings were not appropriate. The Plaintiff Company also had a substantial Counterclaim which it was entitled to set off against the Defendant’s claim. For these reasons Mr. Howard asked that the winding up proceedings be stayed. Mr. Howard did not address me on the second limb of the application which arose from alleged defamation and confirmed that this part of the application was not presently being proceeded with.

In answer, Mr. Prasad who had clearly taken considerable time and trouble to research his submissions, presented three distinct arguments. Two of these lines of arguments were directed at undermining the value of the Plaintiff’s Counterclaim but I do not think that I should reach conclusions upon them at this interlocutory stage when it is evident that substantial issues of fact separate the parties.

The first argument however was of a different order in that it questioned the fundamental assumption relied on by Mr. Howard which was that the debt in question was disputed by the existence of the Counterclaim and that therefore the winding proceedings should be stayed (see Bateman Television Ltd v. Coleridge Finance Co. Ltd [1969] NZLR 794 and Exchange Finance Co. Ltd v. Lemmington Holdings Ltd [1984] 2 NZLR 242).

Mr. Prasad submitted that even if (which was not at all admitted) the Plaintiff company indeed had a bona fide Counterclaim which equalled or exceeded the amount claimed by the Defendant then this would provide no ground for staying the winding up proceedings since the debt itself was not disputed. In support of this proposition he relied on Anglian Sales Ltd v. South Pacific Manufacturing Co. Ltd [1984] 2 NZLR 249 which has been followed on at least two occasions in Fiji by the High Court at Lautoka (In the matter of Kennedy Hotels Limited HPF 65D of 1997L and Treasure Island Limited v. Rups Industries Ltd HBC 0234D of 1998L).

Mr. Prasad referred to paragraphs 10 (a), 13 (a) and 13 (e) of Sun Yangjun’s affidavit. Paragraph 10 (a) reads:

“the total amount while correctly stated the said moneys are not due and owing as the Plaintiff is claiming in excess of the sum by way of damages;”

Paragraph 13 (a) reads:

“the Petition is false in several respects;

(a) the Plaintiff is not indebted in the sum claimed. While the sum is correctly stated it is not due until all matters relating to the Defendant’s breaches of contract and damages relative thereto and due apologies and restitutions are made for the Defendants defamation of the Plaintiff;”

Paragraph 13 (e) reads:

“the Plaintiff is entitled to set off against the said sum claimed the damages the Plaintiff claims from the Defendant.”

Mr. Prasad suggested that these three paragraphs taken together leave no doubt that this is not a case where the statutory debt itself is disputed, rather it is a case where a Company seeks to have winding up proceedings stayed to enable it to litigate a Counterclaim seeking unliquidated damages which it hopes will exceed the value of the statutory debt.

In my view this submission is unanswerable. Following Anglian sales I hold that the Plaintiff Company’s Counterclaim provides no reason for staying the Defendants winding up proceedings. Of course, that does not mean that any decision has been taken on whether an order to wind up the Company should now actually be made. The Petition, although pending before me has not been heard since it gave way to this application. This application is dismissed. I will hear the petition itself at an early date convenient to the Court and to the parties.

M.D. Scott
Judge

21 December 2001