Northern Projects (Fiji) Ltd v Asia Pacific Management Ltd [2007] FJHC 38; HBC180.2007 (14 May 2007)

This is an application by the plaintiff to injunct threatened winding up proceedings by the defendant against it.

The matter arises out of a contract to instal awnings at Sofitel Resorts Limited. The principal contractor with Sofitel was the plaintiff. The defendant was the subcontractor. The scope of the work is contained in annexure F to plaintiff’s first affidavit. It is dated 18th August 2005 and reads:

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To provide weather protection to the open faces of the Central Facilities Building to enable all areas of the building to function normally and safely in all but the most extreme weather conditions.

*Wet Weather*	*Protection should keep rain off areas containing* *Furniture and Key walkway areas such as the retail corridor. If possible, the fabric should avoid "closing in" the verandahs.*
*Windy Weather*	*Protection should ensure reasonable comfort for* *guests using the facilities and walkways and assist in keeping dust and debris out of the building. If possible, the fabric should avoid "closing in" the verandah areas.*
*Hot, sunny Weather*	*Shade protection should be arranged in such a* *way as to retain as much of the view or outlook as possible while keeping the sun off guests and furniture areas. This protection will need to be adaptable to also provide wind and rain protection."*

The plaintiff states that the awnings were installed by December 2005. It states that defects in the work were discovered in February 2006 when inclement weather conditions set in. The defendant it states rectified out some defects but not all.

The defendant states that there was some problem reported to it. However, it states that these were teething problems which could be rectified by servicing and maintenance. It emphasizes that the payment under the contract was on the basis that fifty percent deposit was to be paid at the time of the order and fifty percent balance was to be paid thirty days after installation. Therefore moneys had become due and payable under the contract.

The total contract price was $187,747.74. The deposit was paid on time it appears. The plaintiff is holding onto $32,582.87. It says it will only pay the defendant if defects are rectified while the defendant states that time for payment has passed and it would rectify the works if the plaintiff paid first.

Even though a winding up petition has not been issued, the law regarding such petitions is relevant to these proceedings. A court seized of a winding up petition can decline to hear the petition where the petition is contested on substantial grounds – Offshore Oil NL v. Investment Corporation of Fiji Ltd. – 30 FLR 90: Justice Pathik in winding up proceedings 40 of 1996 In the matter of Silimaibau Sunset Express (Fiji) Limited on page 4 at fourth paragraph stated:

"There is a general principle that a petition for winding up with a view to enforcing payment of a disputed debt is an abuse of the process of court and should be dismissed with costs."

He was of the view that winding up proceedings should not be used to exert improper pressure on a company to resolve a disputed debt. If a debt is disputed on substantial grounds, then the petitioner is not a creditor within the provisions of Section 221(a) and Section 222 of the Companies Act.

Palmers Company Law Volume 3 at paragraph 15.214 explains the meaning of the word "substantial" as follows:

"Substantial means having substance and not frivolous, which disputes the Court should ignore. There must be so much doubt and question about the ability 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 satisfied 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."

I am mindful of the fact that a creditor’s right to petition a court for a winding up order in appropriate circumstances is a right conferred by a statute. A would be petitioner should not be restrained from exercising it except on clear and persuasive grounds: Bryanston Finace v. De Vires (No. 2) – 1976 1 WLR 41 at 53.

I am of the view that there is a substantial dispute related to the installation of awnings. The plaintiff is complaining of defective workmanship in that the awnings have no resistance to the wind as they flap around unacceptably, and in fully extended position too much rain blows through gaps adjacent to the column. In other words the awnings were not fully fit for the purpose for which they were installed.

It is also obvious that the parties have had some verbal discussions regarding the defects and E-mails exchanged. The defendant suggests that the completion certificate issued by the project manager dated 20th December 2005 entitled it to payment. However at this juncture the work had not been tested which could only be done once rain fell. The plaintiff now states that it got someone else to attend to the defects.

The relative claims of the parties are inextricably linked to the awnings. The plaintiff’s claim as alleged arises from the material breach of its rights under the contract. The defendant’s claim also arises from the same contract for non-payment. The principles of equitable set off operate and all adjustments which must be made for or against each party should be taken into account. It is not an issue I can resolve on affidavits alone: - Treasure Island Limited v. Rups Industries Limited – ABU 14 of 2001 where the accountant for Treasure Island signed a confirmation request from Rups which stated:

"This is a request for confirmation of your account with us which had a balance owing of $333,660 as at 31 March 1998. If the balance agrees with your records, please sign the letter in the space provided below ..."

Ordinary – The Accountant for Treasure, Mesake Talaboko, signed the Confirmation Request under a line which read:

Despite this confirmation, the Court of Appeal concluded that the claim of parties were "so bound up that it would be unjust and unconscionable not to allow by way of set-off any adjustments which the court considers ought to be taken into account". It granted Treasure Island an interim restraining order preventing Rups from proceeding with winding up proceedings until finalization of a civil case between the parties.

Accordingly I order that the defendant be restrained from presenting a petition to wind up the plaintiff company to the High Court of Fiji. I also order costs against the defendant in the sum of $700.00 to be paid in fourteen (14) days.