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Blake v Erakor Island Resort [2008] VUSC 49; Company Case 01 of 2007 (27 June 2008)

IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU
(Company Division)

Company Case No. 01 of 2007

IN THE MATTER OF:

GARRY BLAKE, NIGEL MORRISON & EDWARD NALYAL
Petitioners

AND:

ERAKOR ISLAND RESORT
Respondent

Coram: Justice C.N. Tuohy

Counsel: Mr. Nalyal for Claimant
Mr. Malcolm for Defendant
Mr. Rosewarne

Date of Hearing: 27 June 2008
Date of Decision 27 June 2008

RULING

1. This is an application to strike out a petition for the winding up of Erakor Island Resort Limited. The petition was filed by an unsecured creditor of the company which has a judgment for its debt. The debt is recorded in the petition at AUD$164,299.91. The grounds for the application for strike out are that there have been multiple and vital failures to comply with the procedural requirements for a winding up petition.
   
2. Mr. Nalyal appeared for the petitioner and sought an adjournment. I refused that application. The grounds for it were that he had not been able to obtain instructions from the real client who is the insurer of the petitioners. That client operates from Hong Kong.
   
3. I refused the application for adjournment because the petitioner has had ample time to prepare for this strike out application. It was filed as long ago as the 2nd April. It was the subject of a conference during May before Justice Bulu who previously had carriage of this case. He said the strike out application was to be heard on 9th June. It was not heard on 9th June because in the interim Justice Bulu resigned. The grounds for the strike out application clearly set out in the application itself, the petitioner and the insurer have had more than enough time to prepare to meet the application.
   
4. As far as the strike out application itself is concerned I consider that it is unanswerable. The facts are that this petition was presented to the Court on 7th February 2007. Nothing appears to have been done about it for months but it went off the rails immediately because it is apparent that sealed copies of the petition were released by the Court for service without the Registrar writing on the petition and the sealed copies the notice of the time and place appointed for the hearing. That was in breach of R. 21 of the Company’s Winding up Rules. The necessity for a date and time for the hearing of the petition to be fixed at the outset before service and before advertisement is integral to the whole scheme of the Companies Winding up Rules.
   
5. The petition was then served without a date of hearing on 26th February 2007, although an affidavit verifying that was not sworn and filed until well over a year later, in June 2008. The advertisement was not advertised until February 2008. Even then it was advertised without a date of hearing. The advertisement simply said the petition will be heard within two months from the date of this advertisement. That advertisement was published in the Daily Post of 7th February 2008. The advertisement was not published in the Gazette which is required by R. 22. In fact of course the petition was not heard on a date within two months of the advertisement in the Daily Post and has still not been heard.
   
6. On 22nd April 2008 Westpac applied to strike out. Westpac has appointed receivers. Westpac has a charge over the whole of the undertaking and assets of the company. In my view the petition cannot survive. An important issue is the fact that if a winding up order was made on this petition it would relate back to 7th February 2007 when it was presented. This could put at risk transactions made after that date between parties who had no idea that a winding up petition had been presented and no ability to do anything about it or to modify their conduct in that knowledge. Furthermore I cannot see that it is possible now ever to recover the position. Really there is no alternative if the petitioner wishes to proceed but to file another petition and comply with the rules. This petition will be struck out.
   
7. Mr. Rosewarne has made an application for costs against the petitioner. I think the application is justified. The strike out application was filed as long ago as 2nd April 2008. It has been open to the petitioner to recognize the reality of the vital procedural defects in the petition and withdraw the petition of its own accord. They have had ample time to do so. They have not done so and therefore must bear the costs of the creditor, Westpac, in having to make and bring to conclusion by Court hearing this strike out application.
   
8. I have heard brief submissions as to the amount of a costs order. I intend to make a costs order on the standard basis. There is no ground for indemnity costs or anything of that nature. It is necessarily a rough estimate based upon the papers filed and advice from counsel. I fix costs at VT75,000.
   

Dated at Port Vila, this 27th day of June 2008

BY THE COURT

C.N. TUOHY
Judge