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Western Aluminium Joinery Pte Ltd v J. Kevi Refrigeration & Air Conditioning Services Pte Ltd [2022] FJHC 418; HBE6.2022 (12 July 2022)

IN THE HIGH COURT OF FIJI
(WESTERN DIVISION) AT LAUTOKA
CIVIL JURISDICTION

WINDING UP ACTION NO. HBE 6 OF 2022

IN THE MATTER of J KEVI REFRIGERATION & AIR CONDITIONING SERVICES PTE LIMITED a limited liability Company having its registered office at Suite 10, Level 1 Ganesha Complex, Nadi Back Road, Nadi, Fiji.


AND


IN THE MATTER OF THE WINDING UP PROCEEDING UNDER COMPANIES ACT OF 2015 of the Companies Act


BETWEEN: WESTERN ALUMINIUM JOINERY PTE LIMITED a limited liability company having its registered office at 18 Nasoki Street, Lautoka, Fiji

APPLICANT


AND: J KEVI REGRIGERATION & AIR CONDITIONING SERVICES PTE LIMITED a limited liability Company having its registered office at Suite 10, Level 1 Ganesha Complex, Nadi Back Road, Nadi, Fiji

RESPONDENT


APPEARANCES : Ms. A. Chand for the Applicant

Ms. Tunikula J. for the Respondent


DATE OF HEARING : 22th May, 2022


DATE OF DECISION : 12th July, 2022


DECISION


  1. This an application preferred by WESTERN ALLUMINIUM JOINERY PTE LIMITED, a Limited liability company, having its registered office at 18, Nasoki Street, Lautoka ( the Applicant) pursuant to section 513(c) of the Companies Act 2015 (the Act) to wind up J KEVI REFRIGERATION & AIR CONDITIONING SERVICES PTE LIMITED , a limited liability company, having its registered Office at Suit 10 , Level 1 Ganesha Complex , Lot 2, Nadi Back Road, Nadi, Fiji ( the Respondent) on the ground of insolvency.
  2. The Applicant Company on 9th April 2021 served the Statutory Demand dated 08th April 2021on the Respondent Company claiming $ 155,200 (One Hundred and Fifty Five Thousand Two Hundred Dollars)
  3. Section 516 of the Companies Act provides that an application may be made to have the Statutory Demand set aside within 21 days from the date of service. In this matter, it is admitted that the Respondent did not make an application to set aside the Statutory Demand. Therefore, the only issue that becomes relevant for adjudication at the subsequent hearing, if the Respondent is duly before the Court, is whether the respondent company is solvent as claimed by it.
  4. If the Respondent Company hereof which , admittedly, not opted to have the Statutory Demand set aside, has elected to oppose the Application for winding up at this stage, for which the section 529 of the Companies Act 2015 lays certain conditions as follows.

Section 529 of the Companies Act provides:


  1. In so far as an application for a Company to be wound up in Insolvency relies on a failure by the Company to comply with a Statutory Demand, the Company may not, without leave of the Court, oppose the application on ground- (emphasis mine)
    1. that the company relied on for the purposes of an application by it for the demand to be set aside; or
    2. that the Company could have so relied on, but did not so rely on (whether it made such an application or not).
  2. The Court is not to grant leave under subsection (1) unless it is satisfied that the ground is material to proving that the Company is Solvent.

  1. Necessary formalities, prior to the hearing, being complied with by the Applicant, as per the Registrar’s report, when the matter came up for hearing on 26th May 2022, Counsel for the Applicant vehemently objected to the Affidavit in opposition that had been filed by the Respondent Company on 19th May 2022. Counsel relied on the aforesaid Section 529 of the Companies Act, which requires the Respondent Company to seek leave of the Court before filing any affidavit to oppose the application.
  2. Accordingly, the Applicant’s Counsel argued to the effect and moved that ;
    1. The Company failed to take steps under section 516 of the Companies Act to have the Statutory Demand set aside.
    2. If, section 516 had not been complied with, the Respondent ought to have sought leave from the Court to file its opposition to the Winding up Application.
    3. In the absence of an Application for leave to file Respondent’s Affidavit in Opposition;
      1. The Respondent’s Affidavit in Opposition filed on the 19th on May 2022 has to be struck out; and
      2. Order in terms of Winding up Application be made.
  3. Had the Respondent Company complied with the above section 529 of the Companies Act 2015 by making an Application seeking leave to oppose the Application for Winding up and if the leave is accordingly granted, the only matter for adjudication at this stage would be whether the Respondent Company is solvent?.
  4. At the conclusion of the hearing, which was warranted owing to the objection taken up by the Counsel for the Applicant under section 529, parties opted to file written submission and accordingly only the Respondent Company has filed its written submissions.
  5. In this matter in hand, the Respondent Company; admittedly, did not make an application seeking leave under the above provisions. Instead what the Respondent has filed on 19th May 2022, just 7 days prior to the hearing on 26th May 2022, is a NOTICE OF INTENTION TO APPEAR and an AFFIDAVIT IN OPPOSITION as per the section 15 of Companies (Winding up Rules) 2015.

15 (1) On the hearing of an application under section 513 of the Act, a person may not , without the leave of the court, oppose the application unless the person has, not less than 7 days before the time appointed for the hearing-

  1. Filed an affidavit in opposition to the application; and
  2. Served on the applicant or the applicant’s solicitor-
    1. A notice in the form of Form D 6 in schedule 2 of the grounds on which the person opposes the application; and
    2. A copy of the affidavit.

(2) An affidavit in reply to an affidavit filed in opposition to an application (including further affidavit in support of any of the facts alleged in the statutory affidavit) must be filed within 3 days of the day of service on the applicant of the affidavit in opposition.


(3) A copy of the affidavit in reply must, after it is filed, be served as soon as practicable on the person by whom the affidavit in opposition was filed or the person’s solicitor”


  1. Counsel for the Respondent in his written submissions has taken up a stance that the alleged debt is non-existent, which according to him resulted due to the applicant’s failure to furnish further and better particulars to ascertain the alleged sum. He states that this is material to prove the solvency of the Company.
  2. Counsel for the Respondent in his submissions also states that the court should consider that although the Respondent did not file an application seeking leave under section 529, since the court has accepted the affidavit in opposition so filed on 19th of May 2022 by falling in line with section 15 of the Winding up Rules 2015, which is the exception with regard to seeking leave to oppose. Accordingly, counsel argues that since this affidavit has been filed 7 days prior to the hearing, the court should hear the evidence.
  3. The above argument of the Respondent’s Counsel, with regard to compliance of Rule 15 (1) of the Winding up Rules by the Respondent Company to oppose the application, appears to be acceptable as the Respondent has filed the same 7 days prior to the hearing date for it to participate at the hearing and no leave is required under this rule as the rule seems to have been duly complied with.
  4. But the position of the Counsel for the Applicant, who opted not to file any affidavit in reply to the said affidavit in opposition, is that since the Respondent has failed to file an application seeking leave as required by the section 529 of the Companies Act 2015, the Respondent cannot be permitted to oppose the application for winding up as he intends to.
  5. The only case law authority relied on by the Counsel for the Respondent Company to fortify his position, was in RPA Group (Fiji) Ltd, in re (2020) FGHC 325; HBE 52-2019 ( 18 May 2020), wherein the absence of an application for leave under section 529, as in this matter in hand, has not been an issue. It is the failure on the part of the Applicant to file an Affidavit in reply that seems to have influenced the learned judge in granting leave to oppose the Application.
  6. The compliance to section 15 of the Winding up rules by the Respondent will not absolve the Respondent from the requirement of seeking leave to oppose the application under section 529 of the Companies Act 2015, if the Respondent Company intends to rely on the ground that it could have so relied on, but did not so rely on at the setting aside hearing (whether it made such an application or not). The Respondent Company hereof, admittedly, did not make such an application for setting aside or to seek leave under section 529.
  7. The Applicant prior to the hearing should be aware of the ground/s that the Respondent intends to rely on to oppose the application. The Respondent Company hereof seems to have intended to rely on the, purported, grounds averred in the impugned Affidavit in opposition, which grounds could very well have been relied on irrespective of the fact that an application for setting aside was made or not by it.
  8. However, careful reading of the section 529 of the Companies Act 2015 reveals, that the leave is required under this section, only if the Respondent Company is to rely on the grounds that it had relied on in the setting aside application or the grounds that could have been relied on by it (whether an application to set aside was made or not).
  9. On perusal of the contents of the affidavit of opposition in question, it appears that most of the grounds averred therein are grounds that could have been relied on by the Respondent, if an application for setting aside had in fact been made by the Respondent Company or not. Accordingly, if the Respondent Company is to rely on the same ground/s at this hearing, leave of the Court is a pre-requirement under section 529to oppose the Application.
  10. The Respondent has not made an application seeking for leave as provided under section 529, in order to rely on those grounds and as such the Respondent cannot be allowed to oppose the application for winding up on those grounds in the absence of leave.
  11. However, if the Respondent Company intends to rely on some other grounds, which need not have been relevant in the adjudication of a setting aside Application , the Respondent cannot be precluded from adducing those grounds at the intended hearing, without the leave being obtained in advance as required by the section 529 of the Companies Act.
  12. The question of solvency/ insolvency is not a matter for adjudication at the hearing of the setting aside application whether it is adduced or not. The questions that the court is called upon to adjudicate at the setting aside hearing are; (1) whether the alleged debt is disputed, or (2) whether there is an offsetting claim.
  13. Hence, my considered view is that for the Respondent Company to oppose the application and to adduce evidence on the ground of solvency as claimed by it , there need not be leave, had obtained in first hand , as required by the section 529 as it falls out of the ambit of that section and setting aside hearing.
  14. However, once again I wish to reiterate that the Respondent cannot be allowed to rely on the majority of grounds averred in the impugned affidavit in opposition, which could have been relied on at the hearing for setting aside application, if such an application had in fact been made or not by the Respondent Company.
  15. Hence, by virtue of the impugned affidavit in opposition filed by the Respondent under Companies (Winding up rules) 2015, this Court does not see any hurdle for the Respondent to take part at the hearing and oppose the application, by relying on the ground of solvency as claimed by it, however subject to condition stated in the foregoing paragraph. If the Respondent Company was to rely on those grounds averred in the affidavit, leave of the court is a pre-condition.
  16. For the reasons adumbrated above, I make the following orders.
    1. The Respondent Company shall be at liberty to take part at the hearing and oppose the application for winding up.
    2. However, the Respondent Company shall not be allowed to rely on the grounds averred in the Affidavit in opposition, which could have been relied on by it at the hearing for setting aside statutory demand.
    1. The Applicant, if needed, can file and serve the affidavit in reply within 7 days from today.
    1. Costs in cause.
    2. The matter is adjourned to fix for substantial hearing.


A.M. Mohammed Mackie
Judge


At High Court Lautoka this 12th day of July, 2022


SOLICITORS:
For the Petitioners: Anishini Chand Lawyers
For the Respondent: Lal/ Patel/ Bale Lawyers


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