IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No.: HBC 206 of 2012

BETWEEN	:	CARPENTERS FIJI LIMITED a duly incorporated limited liability 	company having its registered office at corner of Rodwell and Robertson 	Road, Suva, in the Republic of Fiji.
PLAINTIFF

A N D		:	COMMUNICATION AND TELECOMMUNICATIONS LIMITED a 				duly incorporated company having its registered office at 2 Gorrie Street, 				Suva.
DEFENDANT

Counsel		:	Mr. E. Narayan for the Plaintiff
				Mr. S. Nandan for the Defendant		
		
Date of Hearing	: 	30th January, 2017
Date of Judgment 	:  	24th February, 2017

Catch words - Injunction, winding-up, claim for damages

JUDGMENT
INTRODUCTION
1.	The Plaintiff filed this action seeking a permanent injunction restraining the filing of a 	Winding Up petition and or taking any further action by the Defendant. The Plaintiff also 	claims 	that the action of the Defendant violate the Commerce Commission Decree 2010, 	and seeks damages. The Plaintiff is also seeking indemnity cost.

2.	Following Facts were agreed between the parties in terms of Minutes of Pre Trial 	Conference
i.	The Plaintiff is a limited public company duly incorporated under the Companies 	Act 1983, Law of Fiji.

ii.	The Defendant is a limited liability company duly incorporated under the 	Companies Act 1983, Laws of Fiji, having its registered office at 2 Gorrie Street, 	Suva.

iii.	On or about 16th October 2008, the Plaintiff received Tax Invoice Number 00064 	and 00065 amounting to $38,940.40 which the Plaintiff denied owing through its 	letters dated 14th October 2011 and 1st November 2011.

iv.	On or about 18th July 2011 and on 19th August 2011, the Defendant sent to the 	Plaintiff purported demand notices which the Plaintiff disputed and denied owing 	to the Defendant through its letter dated 14th October 2011.

3.	The Plaintiff called one witness, Mr. Daniel Whippy, the Director of the Plaintiff Company and the Defendant called one witness, Mr. Balbeer Singh, Managing Director of the Defendant, he did not mark documents on behalf of the Defendant to prove the counter claim. There was no ‘agreed bundle of documents’ tendered and the Plaintiff tendered a bundle of documents and marked only 6 documents out of that, and I will consider only documents marked ‘P1-P6’ as documentary evidence tendered at the hearing. 

4.	Mr. Daniel Whippy has been in the Plaintiff, since 14th April, 1975, except for a short 	period, and presently he is Director of Plaintiff. It is an admitted fact that on 18th July and 	also 19th August, 2011 the Defendant, served the Plaintiff demand notices under Section 	221 of the Companies Act (Cap. 247). (see the admitted facts iv above )

5.	The Plaintiff’s first 3 prayers are regarding injunction and the prayer 4 is regarding a 	claim under Commerce Commission Decree 2010. The Plaintiff seeks indemnity 	cost.

 Injunction Against Winding Up 
6.	There is already, an interim injunction granted by Justice Balapatabendi and it was 	extended till the final determination of this action. The winding up action was also 	stayed in the said decision. This order was pronounced inter partes on 4th September,	2012 and sealed on 7th September, 2012.

7.	The Winding Up action filed by the Defendant was based on the counter claim of the 	Statement of Defense. For logical reason I would start with the counter claim. If the 	Defendant is unable to prove the counter claim or part of it as debt owed by the Plaintiff, 	the injunctive relief sought by the Plaintiff should be granted.

8.	So, the burden of proof is with the Defendant to prove the counter claim in the Statement 	of Claim and failure to prove it on the balance of probability ipso facto would result the 	grant of the injunction as stated in the first two prayers, regarding the alleged debt or any 	part of the alleged debt. The prayers sought injunction in the following manner:

	‘An injunction restraining the Defendant Company and or their servants 	and or their agents from taking into further actions and or presenting 	any Winding up Petition to the matters stated in the purported winding 	up notice dated 18th July,2011 and 19th August,2011 against the Plaintiff 	Company.

	An injunction restraining the Defendant to and or their servants and 	their agents in manner whatsoever advertising (including but not limited 	to advertisement in the daily newspaper and the Fiji Gazette any 	Winding up Proceedings that may have been filed in the High Court.’

9.	The Defendant’s counter claim is for a sum of $38,930.40 for services and goods 	supplied, in the usual cause of business. The Defendant had failed to submit  	documents to prove that Plaintiff had requested for such services and that they provided 	such services for that value and that they were not paid by the Plaintiff hence an 	outstanding debt to the Defendant. First, there should be some contract between the 	Plaintiff and the Defendant regarding the supply of the service and or goods to the said 	value or part of the said value to create a debt against the Plaintiff.
10.	The Document marked P1 was for $8,460.00 and this was an invoice issued on 	16/10/2008 and it was issued to the Lautoka Electric Co. Ltd. This company was 	allegedly a sub-contractor who was engaged by the contractor for a building owned by 	the Carpenters Properties Limited, a subsidiary of the Plaintiff. The said contractor who 	allegedly engaged the Latoka Electric Co. Ltd is not a party to this action. No debts arise 	from the said invoice to the Defendant from the Plaintiff.

11.	The Document ‘P2’ was an invoice issued to Carpenters Properties Limited and this was  	not issued to the Plaintiff.  Admittedly, some payments were made by the Plaintiff on 	behalf of the said subsidiary of the Plaintiff. The ‘P2’ was issued on 16/10/2008 for a 	sum of $30,470.00. This sum was never paid, as Defendant failed to produce Local 	Purchase Order or even a quotation addressed to the Plaintiff.  It can be understood that a 	sum of this nature needs proper documentation for disbursement for internal financial 	management. For the same reason it had requested documentation for the payment.

12.	The Defendant failed to produce even a single communication requesting for such 	services from the Plaintiff. The Defendant’s oral evidence was that it was a request of the 	Project Manager. It is unlikely that such an amount of service would be provided 	without any documentary evidence for a request or for quotation supplied and approved 	by the Plaintiff. 

13.	The Defendant could not have sought winding up of the Plaintiff even if the ‘P2’ debt 	was due to them, as the invoice indicated a different entity. Limited liability companies 	have legal personality distinct from the parent company. Carpenters Properties Ltd was 	only a 	subsidiary of the Plaintiff and any unsettled debt of the subsidiary cannot be a 	‘debt’ of the Plaintiff without piercing the corporate veil. This fundamental concept was 	reaffirmed in UK Supreme Court in Prest v Petrodel Resources Limited and Others 	2013 3 WLR 1 in the following manner (Lord Sumpton)

	In Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627 the House of 	Lords held that documents of a subsidiary were not in the “power” of its 	parent company for the purposes of disclosure in litigation, simply by 	virtue of the latter’s ownership and control of the group. These principles 	are the starting point for the elaborate restrictions imposed by English 	law on a wide range of transactions which have the direct or indirect 	effect of distributing capital to shareholders. The separate personality 	and property of a company is sometimes described as a fiction, and in a 	sense it is. But the fiction is the whole foundation of English company 	and insolvency law. As Robert Goff LJ once observed, in this domain “we 	are concerned not with economics but with law. The distinction between 	the two is, in law, fundamental”: Bank of Tokyo Ltd v Karoon (Note) 	[1987] AC 45, 64. He could justly have added that it is not just legally but 	economically fundamental, since limited companies have been the 	principal unit of commercial life for more than a century. Their separate 	personality and property are the basis on which third parties are entitled 	to deal with them and commonly do deal with them.’ (emphasis is mine)

14.	Document ‘P2’ was issued to Carpenters Properties Limited, and not to the Plaintiff. The 	reason that Plaintiff paid some of the debts of its subsidiary could not be a valid reason to 	file Winding Up action against the Plaintiff.  The debt due to a subsidiary Carpenters 	Property Limited could be paid by any company, including the parent company, due to 	various reasons, but if  such entity refuse to pay, such a  company cannot be called as 	‘indebted’ as required by the Section 221(a) of the 	Companies Act (Cap 247). If such 	an interpretation is given commercial transactions would be in jeopardy, as limited 	liability companies have separate existance, the basis on which others are entitled to 	deal with them in the commercial activities.

15.	In any event ‘P2’ would prove only a sum of $30,470.00 was invoiced, but whether it 	was requested and accepted is not proved .It is an abuse to claim the sum stated in the 	demand, including the sum contained in the invoice ‘P1’ as it was never issued to the 	Plaintiff and or its subsidiaries but to Lautoka Electric Co. Ltd.

16.	This shows the conduct of the Defendant that from the inception, they did not have 	sufficient material to justify sending a demand notice under Section 221 of the 	Companies Act, to trigger Winding Up of the Plaintiff. The Winding Up of a company 	in terms of ‘deeming’ provision for a claim that even failed to establish in a writ of 	summons, is an abuse of process.

17.	By document ‘P3’ the Manager Legal of the Plaintiff had requested particulars, namely 	Local Purchase Order and Invoice for the said sum stated in the notice dated 19th August,	2011 for Winding Up. 

18.	No Local Purchase Order or invoice for the sum stated in the Demand Notice was 	submitted, but ‘P2’ invoice for $30,470.00, which was issued to a subsidiary, was 	attached to the reply. Despite this a letter was written on 7th October, 2011 by the 	solicitors for the Defendants, indicating their desire to proceed with the Winding Up of 	the Plaintiff. So, the Defendant had adopted a high risk strategy to recover the alleged 	debt . (See Re a company (No 0012209 of 1991)[1992] 2 All ER 797).

19.	The documents marked ‘P4’ and ‘P5’ are self-explanatory and this indicates the conduct	of the Defendant. 

20.	So, on balance of probability the counter claim of the Defendant is not proved and struck 	off and permanent restraining orders for proceeding with Winding Up against the 	Plaintiff for the alleged debt is granted as prayed in the statement of claim.	

21. 	It should be noted that the case mentioned in the Defendant’s submission Offshore Oil N. 	L. v Investment Group Fiji Ltd 30 FLR 90 has no relevance to the matter before me as 	the facts in that case is markedly different from the 	matter in this case. In that case there 	was an undisputed debt but the issue was interpretation of the loan agreement and 	prerequisites of the demand notice. So the debt was not in issue, though the manner in 	recovery was in issue, as well as interpretation of the loan agreement. In contrast, in the 	case before me, the Defendant could not prove any debt against the Plaintiff. So the ratio 	of the said case cannot rescue the Defendants for their action to proceed with winding up, 	when there was no debt due from the Plaintiff.

The Claim under the Commerce Commission Decree 2010
22.	Neither at the trial nor in the Submission the Plaintiff dealt the claim on Commerce 	Commission Decree 2010. In the paragraph 11 of the Statement of Claim the Plaintiff 	had claimed damages under Sections 87B, 75, 76 and 77 of the Commerce Commission 	Decree 2010. I propose to deal with the said claim briefly.

23. 	The Section 87B of the Commerce Commission Decree 2010 states as follow

“87B. - (1) A creditor, or the agent of a creditor, must not, for the purpose of recovering a trading debt of the creditor - 

		(a) make any demand for payment without indicating the creditor's identity 	and the balance owing to the creditor and, if the demand is made by the agent, the 	agent's identity and authority to make the demand;

		(b) demand payment of any amount that the creditor or agent does not honestly 			believe to be due and owing to the creditor;

		(c) persist in demanding payment from a person who has denied liability without 			making reasonable inquiries to ensure that the demand is based on reasonable 			grounds;

		(d) make any personal calls or telephone calls for the purpose of demanding 			payment - 

			(i) on a public holiday; or

			(ii) between the hours of 10.00 pm of one day and 7.00 am of the next; or

		(e) except as reasonably necessary to determine the debtor's whereabouts, 	communicate with an employer; acquaintance, friend, relative or neighbour of the 	debtor (not being a guarantor).

		(2) A creditor, or the agent of a creditor; must not, for the purpose of recovering 			a trading debt - 

		(a) falsely represent that criminal or other proceedings will lie for non-payment 			of the debt;

		(b) falsely pretend to be authorised in some official capacity to claim or enforce 			payment; or

		(c) falsely represent that a document has some official character that it does not 			have.

		(3) In this section - 

			'agent' includes an employee of a creditor whose main duty of employment 			is to seek to recover trading debts owed to the creditor.

24.	Section 87B of Commerce Commission Decree 2010 heading states as ‘Unlawful actions 	and representations’. In my judgment the facts of the case do not justify application of 	Section 87B which was designed for a different purpose altogether, so there is no proof of 	violation of Section 87B , on the balance of probability.

25.	Section 75 of Commerce Commission Decree 2010   deals with ‘Misleading or Deceptive 	Conduct’ and Section 76 of Commerce Commission Decree 2010 deals with 	‘Unconscionable Conduct’ and Section77 of Commerce Commission Decree 2010 	deals with ‘False or Misleading Representation’, these are all designed to control the 	conduct of scrupulous business activities against consumers and in my judgment none of 	them fits to the conduct of the Defendant on the evidence presented to the court. It is 	suffice to state that the Defendant had abused the process of the court by initiation of 	Winding Up action by serving Section 221 of the Companies Act. The remedies for such 	abuse is not damages, but costs. The Plaintiff had not proved any damages due to the 	actions of the Defendant in serving the notice to wing up.

26.	In my judgment the conduct of the Defendant warrant indemnity costs. The Defendant 	had knowingly instituted a draconian action of Winding Up, even without a single 	documentary proof of such ‘debt’ from the Plaintiff.

27.	In Re a company (No 0012209 of 1991 [1992] 2 All ER 797 a party instituted Winding 	Up action unreasonably and for that an a permanent injunction was granted and at the 	conclusion held, (per Hoffmann LJ) p800
	‘For those reasons the injunction will go. The basis upon which the 	injunction is granted is that the application is an abuse of the process of 	the court. I think that it should be made clear that abuse of the petition 	procedure in these circumstances is a high risk strategy, and 	consequently 	I think the appropriate order is that the petitioner should 	pay the applicant's costs on an indemnity basis’. (emphasis added)

28.	In the award of indemnity cost there are two procedures, adopted in this jurisdiction and I 	do not wish to cite cases. It is suffice to state that indemnity cost can be awarded after an 	inquiry by the Master or a judge or the court can order a ‘global sum’ as indemnity costs 	having considered the circumstances of the case. Considering the additional cost to the 	parties in having a separate inquiry to assess indemnity costs, I prefer the later for its 	utility 	and convenience. This method of award would be helpful for case management 	purpose though that was not the determinant factor to adopt it. I would award a sum of 	$10,000 as indemnity costs for this action considering that 	there was an application for 	injunction, a purported attempt for a Winding Up and also cost of 	litigation as this was 	an action filed in 2012. The indemnity cost should be as near as possible to the actual 	cost, and considering the inflation and other factors the amount of $10,000 can be 	considered as 	indemnity costs. (For obtaining injunction and also for conducting the 	action to the completion)

CONCLUSION
29.	The Plaintiff had failed to prove the counter claim and there is no proof of alleged debt 	on balance of probability. In any event there is no evidence that the Plaintiff owed any 	money to the Defendant. The two invoices (P1 and P2) total to a sum of $38,930.40 and 	none is issued to the Plaintiff. Apart from that there was correspondence from the 	Plaintiff that shows that Defendant abused the process of the winding up against a 	solvent Plaintiff by serving the demand notice to them. The evidence shows that there 	was no documentary proof of any debt by the Plaintiff to the Defendant. So the counter 	claim contained in the statement of defence is struck off. The Plaintiff is granted an 	injunction as prayed, restraining the Defendant from taking any further action regarding 	winding up based on the alleged debt or part of that alleged debt. The Plaintiff’s claim 	based on Commerce Commission Decree 2010 is not proved, hence it is struck off. The 	Defendant had abused the process by initiation of the winding up action by serving 	Notice of Demand in terms of Section 221 of Companies Act. An indemnity costs is 	granted for the abuse of the process by the Defendant in the said action. The Plaintiff is 	granted an indemnity cost of $10,000.

FINAL ORDERS
a.	 An injunction restraining the Defendant Company and or their servants and or their agents from taking into further actions and or presenting any Winding Up Petition to the matters stated in the purported winding up notice dated 18th July, 2011 and 19th August, 2011 against the Plaintiff Company.

b.	An injunction restraining the Defendant to and or their servants and their agents in manner whatsoever advertising (including but not limited to advertisement in the daily newspaper and the Fiji Gazette any Winding Up Proceedings that may have been filed in the High Court.’ (i.e relating to alleged debt or part of it)

	c.	The counterclaim of the Defendant is dismissed, and struck off.

	d. 	The Plaintiff is granted indemnity cost of $10,000.

Dated at Suva this 24th day of February, 2017

							………………………………..
							Justice Deepthi Amaratunga
							High Court, Suva