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Pacific Building Solutions Pte Ltd, In re [2022] FJHC 54; HBE34.2021 (16 February 2022)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. HBE 34 of 2021

IN THE MATTER OF PACIFIC BUILDING SOLUTIONS PTE LIMITED a limited liability company having its registered office at 9-12 Nukuwatu Street, Wailada Industrial, Lami, Viti Levu.

AND

IN THE MATTER of the Companies Act 2015

BEFORE:
Hon. Mr. Justice Vishwa Datt Sharma

COUNSEL:
Mr O’Driscoll for the Applicant
Mr Singh R. for the Respondent

DATE OF JUDGMENT:
16^th February, 2022 @ 9.30 am

DECISION
[Notice of Motion for Leave to oppose the application for Winding Up
pursuant to Section 529 of the Companies Act 2015]

INTRODUCTION

1. The Respondent Company Pacific Building Solution Pte Ltd filed a Notice of Motion and sought for the following Orders-
   1. That Leave be granted to oppose the Winding Up Application;
   2. Costs be in the cause.
2. The application is made pursuant to Section 529 of the Companies Act 2015 and filed in support of an Affidavit deposed by Robert Peter Semaan.

Background

3. Application for Winding Up was filed together with an Affidavit Verifying Application for Winding Up on 20^th August 2021.
4. Full Compliance Certificate was issued on 08^th October 2021 in terms of Rule 19(2).
5. The Respondent Company filed its Notice of Intention to Oppose the Winding Up application on 24^th September 2021.
6. Notice of Motion was filed by the Respondent Company on 24^th September 2021 seeking for Leave to oppose the application.
7. No Response Affidavit was filed by the Applicant, Teqyise Business Innovation Pte Ltd.
8. The application was heard on oral submissions with case authorities.

Determination

9. The issue for Court’s determination is “whether the Respondent Company should be granted Leave to Oppose the Winding Up application?”
10. Section 513 of the Companies Act (2015) lays down the circumstances in which a company may be wound up by Court.
11. The relevant provisions Section 513 (c) and (d) of the Companies Act refers and is reproduced hereunder-

“513 (c) the Company is insolvent.”

“513 (d) the Court is of opinion that it is just and equitable that the Company should be wound up.”

12. Section 514 of the Act decrees as follows-

“514 (1) A Company........is solvent if, and only if, it is able to pay all its debts, as and when they become due and payable.”

13. Section 517 of the Act deals with dispute to the alleged debt and offsetting of claim to which the demand relates-
14. Section 529 of the Companies Act 2015 provides-

Company may not oppose application on certain grounds

529.—(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 the leave of the Court, oppose the application on a ground—

(a) that the Company relied on for the purposes of an application by it for the demand to be set aside; or

(b) 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.

15. It is not in dispute that the Respondent Company had not filed an application seeking for an Order for Setting Aside the Statutory Demand served on it in terms of Section 516 of the Companies Act 2015.
16. However, under Section 529(1) of the Companies Act 2015, what the Court has to determine is “whether the Respondent Company should be allowed to rely on the same grounds at the Hearing of the Applicant’s Winding Up application as it would have relied on at the Hearing of the Respondent Company’s Motion seeking to Set Aside the Statutory Demand pursuant to Section 516 of the Companies Act, supposedly, if such an application was hereinbefore made at the time of the Service of the Demand Notice”.
17. The application seeking for Winding Up has been filed on the grounds that the Respondent Company is “Insolvent” and that there is “No genuine dispute” as to the existence or amount of the debt of $36,653-24.
18. Hence, on the grounds mentioned hereinabove, this Court will then only take into consideration whether the Respondent Company is in fact “Insolvent” and that there is “No genuine dispute” as to the debt claimed herein.
19. The burden of proving that the Respondent Company is “Solvent” and there being “genuine dispute” lies entirely with the Debtor Company.
20. The Respondent Company filed a Notice of Intention to Oppose the application for Winding Up on 24^th September 2021.
21. Subsequently, the Respondent Company filed the current application and sought for Leave to Oppose the application on the grounds-
    1. The Company is solvent and able to pay its debt;
    2. The Statutory Demand dated 27^th July 2021 appears to be signed by the Financial Controller of the Applicant and not by any Officer of the Company; and
    3. There is genuine dispute.
22. The Respondent Company submitted that-
    • The Company has substantial assets and capable of making payments.
    • The Company is solvent and has more than $36,653.24 in the Solicitor’s Trust Account. The same can be deposited in Chief Registrar’s Interest Bearing Account.
    • The Applicant needs to establish the debt amount as invoiced.
    • Section 529 of the Companies Act provides what needs to be established.
23. However, the Applicant submitted-
    • Relied on case authority HBE 11 of 2020 In the matter of Jarad Holdings Pte Limited.
    • Section 529 of the Companies Act deals with Leave.
    • Relied on Section 516 of the Companies Act. The Respondent Company should have filed an application for Setting Aside Statutory Demand, it did not.
    • Section 529 (2) does not allow for Leave to be granted.
    • Respondent Company has not satisfied the test for solvency.
    • Referred to case HBE 11 of 2020 at paragraph 56.
24. I have made reference to the case authority HBE 11 of 2020 In the matter of Jarad Holdings Pte Limited furnished to Court at the Hearing. At paragraph 56 which states-

“The threshold issue is whether “JH” has established materiality. The authorities show that “material” means that an Applicant, under Section 529, must show that the debt in respect of which it is seeking Leave is pivotal to the issue of solvency. That is, the Defendant must demonstrate that if the debt exists then the Company will be insolvent and if the debt does not exist, then the Company will be solvent.”

25. This Court is of the view that there must be sufficient evidence shown and established at the Leave stage by the Respondent Company in order for the Court to accede to the Respondent Company’s application for Leave to Oppose the Winding Up application.
26. I have thoroughly perused and considered the Affidavits filed herein coupled with the oral submissions made by the parties to the Court.
27. I find that the Respondent Company’s Affidavit in Support of the Motion filed herein establishes triable issues which needs to be heard by this Court on Affidavit evidence and that the Respondent Company is at liberty to prove that the Company is “solvent”.
28. Therefore, this Court must give an opportunity to the Respondent Company to adduce Affidavit Evidence and demonstrate that if the debt exists then the Company will be “insolvent” and if the debt does not exist, then the Company will be solvent. The impending issue must be decided by the Court on merits.
29. Further, the Respondent Company’s ground raised that the “Statutory Demand” dated 27^th July 2021 appears to be signed by the Financial Controller of the Applicant and not by any Officer of the Company, is at the current prima facie evidence only and has to be proved at the Hearing.
30. In light of above rationale, I accede to the Respondent Company’s Notice of Motion filed in Support of an Affidavit and accordingly grant Leave to the Company to oppose the Applicant’s application and file and serve its Affidavit accordingly.

Costs

31. The matter proceeded to Hearing with parties to the proceedings filing application and making oral submissions. It is only fair and appropriate that I grant a summarily assessed costs of $500 to be paid by the Applicant to the Respondent Company, Pacific Building Solutions Pte Limited.
32. I proceed to make the following Orders.
    

ORDERS

1. The Respondent Company is granted Leave to Oppose the Application and at liberty to file and serve its Affidavit Evidence within fourteen days timeframe.
2. There will be an Order for summarily assessed costs of $500 to be paid by the Applicant to the Respondent Company, Pacific Building Solutions Pte Limited.
3. The substantive matter to take its normal cause of action and a date to be assigned accordingly.
   

Dated at Suva this 16^th Day of February, 2022.

..............................................
Vishwa Datt Sharma
Judge

cc: Messrs O’Driscoll & Co., Suva.
Parshotam Lawyers, Suva.