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South Pacific Agriculture Development Ltd v Young Tae Kim [2004] FJCA 60; ABU0029.1999S (26 November 2004)

IN THE COURT OF APPEAL, FIJI ISLANDS
ON APPEAL FROM THE HIGH COURT OF FIJI


CIVIL APPEAL NO.ABU0029 OF 1999S
(High Court W/Up No.HBC84 of 1997)


BETWEEN:


SOUTH PACIFIC AGRICULTURE
DEVELOPMENT LIMITED
Appellant


AND:


YOUNG TAE KIM
Respondent


Coram: Ward, President
Barker, JA
Tompkins, JA


Hearing: Thursday 18th November 2004, Suva


Counsel: Ms. M. Mua for the Appellant
Mr. M. Raza for the Respondent


Date of Judgment: Friday, 26th November 2004


JUDGMENT OF THE COURT


The applicant was the unsuccessful appellant to this Court and now seeks leave to appeal to the Supreme Court and a stay of execution pending such appeal.


The relevant facts can conveniently be taken from the Judgment on the appeal in this Court.


"On [8] May 1997 the respondent presented a petition in the High Court in Suva to wind up the appellant company on the ground that a sum of $96,687.00 owed to the respondent by the appellant had not been repaid.


The appellant company contended that the amount claimed by the respondent was in fact disputed on substantial grounds. It sought a stay of the petition claiming that it was an abuse of the process of the Court. ... The sum claimed had been paid for the purchase of a piece of land but the respondent had then withdrawn from the sale negotiations.


The High Court found that the agreement to purchase the land was unlawful, of no effect and was unenforceable and therefore the petitioner was entitled to the refund of the sum claimed. The application to stay the petition was dismissed."


The company appealed on 13 July 1999 but it appears the whole matter lay dormant until July 2004 when it was heard and dismissed.


At the appeal, Mr Matawalu, who then appeared for the appellant, proceeded on only one ground:


"that the learned judge erred in law and in fact in holding that there was no dispute on substantial grounds to justify restraining the Respondent/Petitioner from presenting his winding up petition against the appellant company."


It appears that the company filed a writ for defamation against the respondent and another person in the Labasa High Court on 19 November 1997. Judgment in default of defence was entered against both defendants on 3 February 1999 with damages to be assessed. No attempt has been made to set a hearing date for the assessment of damages and, on 17 September 2004, an application was filed to set aside the default judgment and for liberty to defend. It has yet to be heard.


Clearly the defamation proceedings had been mentioned in the appeal because the judgment concludes:


"Mr Matawalu did not attempt to justify the excuse for non-payment by the appellant company in its letter of 20 February 1997 namely that the appellant had, in some unspecified and unlitigated manner been defamed by the respondent.


We agree with the trial judge that the appellant company did not advance any genuine ground for disputing the repayment of the sum claimed by the respondent."


However, the Court’s decision was based, principally, on its conclusion that the sum of money was due and payable to the respondent.


The basis of the application for leave to appeal to the Supreme Court is that, bearing in mind the likely sum of damages which the applicant suggests will be payable under the defamation judgment, the applicant has a good and sufficient cross-claim and the petition should therefore have been stayed pending the determination of such cross-claim.


Although, as we have pointed out, the Court of Appeal appears to have reached its decision principally on the nature of the respondent’s right to repayment of the sum claimed, it appears the fact of a cross-claim may have been raised also. Ms Mua suggests that was the case and that her appeal to the Supreme Court would therefore be on the same grounds as were raised then.


Clearly leave to appeal to the Supreme Court will only be granted if the question raised for determination arises from one of the grounds advanced in the Court of Appeal. We accept that the existence of the cross-claim was raised in the Court of Appeal and that it had been a basis for the suggestion that a stay of the petition was justified as stated in the ground of appeal.


The right of appeal to the Supreme Court is given by section 122(1) and (2) of the Constitution:


"122. - (1) The Supreme Court has exclusive jurisdiction, subject to such requirements as the Parliament prescribes, to hear and determine appeals from all final judgments of the Court of Appeal.


(2) An appeal may not be brought from a final judgment of the Court of Appeal unless:

The questions upon which the applicant seeks leave are detailed and repetitive. In each case counsel has cited the authorities upon which she relies. In summary, with the principal authority cited in each case, they are:


  1. Should the courts in Fiji deem any demand that overstated the amount due by a company defective and improper; Processed Sand Pty Ltd v Thiess Contractors Pty Ltd [1983] ACLR 956?
  2. Should a petitioner be allowed to proceed with a winding up petition against a company even when it is evident from the applicant’s own submissions to the court that the central goal of the winding up petition is to collect an alleged debt owed by the company to the applicant; Re Bayoil [1998] EWCA Civ 1364; [1999] 1 WLR 147; Re Lympne Investments Ltd [1972] 2 All ER 385?
  3. Should the court deem a company insolvent and deserving of the drastic winding up measure by focussing almost solely on determining whether the company has a debt to the applicant, or should such petitions with overt debt-collecting objectives be dismissed, with the existence, quantum and direction of debt to be ascertained through the more suitable and appropriate legal course of action for money had and received; Stonegate Securities Ltd v Gregory [1980] Ch 576?
  4. Is it right for the court, when presiding over winding up cases, to neglect and dismiss a company’s cross-claim for the reason that it is unlitigated or not yet fully litigated; Popely v Popely [2004] EWCA 463?
  5. Should the court summarily disregard a company’s genuine cross-claim against the applicant and order the winding up petition to proceed; Re LHF Wools Ltd [1969] 3 All ER 882?
  6. Is the High Court and the Court of Appeal correct in considering a company’s cross claim of substance as an important issue to the winding up proceedings, deliberating exclusively on the debt alleged by the applicant against the company; Malayan Plant (Pte) Ltd v Moscow Narodny Bank Ltd [1980] MLJ 53?
  7. Would the court in Fiji be correct and just in refusing to dismiss winding up petitions even in the presence of a serious and significant cross-claim against the applicant, which could potentially reverse the status of the applicant from a creditor to a debtor despite the clear and unambiguous precedents established throughout the Commonwealth as the modern practice in efficient and equitable legal systems; Re Portman Provincial Cinemas Ltd [1999] 1 WLR 157?
  8. In the case that a buyer had entered into an agreement to purchase a freehold lot under one acre in area, at a different time from entering into an agreement to purchase another larger lot, does section 6 of the Land Sales Act or any other law of Fiji, dictate the buyer is entitled to demand the refund of both the ¾ acre lot and the 2 acre lot at any time? Should the court permit the foreign buyer’s misdeed of overstating and exaggerating his claim against the seller company in a winding up petition?
  9. Is it right for the court to allow the winding up of a company with a genuine cross claim in the absence of special circumstances which absolutely necessitate the winding up measure; Re Bayoil?
  10. Given the draconian and irreversible effect of a winding up order, often being a death knell, can the court disregard a company’s genuine claim outright, divesting it of its causes of action and depriving it of its constitutional right to fair trial under section 29(2) of the Constitution; Re Bayoil?

The difficulty the applicant faces is that the propositions of law that are stated in these and a number of other authorities cited to us in support of all the questions (except 8) are not challenged. We do not set them out but the general proposition that a cross-claim may provide good reason to stay a winding up is good law. Whether it is sufficient in any particular case is a matter for the judge’s discretion. In deciding how to exercise his discretion, he will consider all the matters raised in the questions posed by the applicants.


In the present case, the learned High Court judge clearly exercised his discretion against the application to stay the winding up petition. There were substantial reasons why he should have reached that conclusion. In particular, the defamation action upon which the cross claim is founded is so defective that we cannot accept it could ever succeed in its present form. Judgment was given in default of defence but the manner in which the claim is pleaded ignores the most elementary understanding of defamation and could not and should not have achieved judgment on liability by the Registrar even in default of defence. There should have been evidence of formal proof given to a Judge. There is an application to set that judgment aside which would appear certain to succeed. Even if defamation of the nature alluded to in the statement of claim were established, the damages are grossly overstated and any sum would be far below the figure claimed. No doubt the High Court judge reached a similar conclusion when he assessed the strength of the cross-claim against the undoubted right of the respondent to have his money returned.


The general propositions of law raised in these questions are undoubtedly of significant public importance but they are settled law as the applicant accepts. There is no novel issue for the Supreme Court to decide and it would be considering no more than a further appeal on the same grounds which had already been considered and which failed in the courts below. Question 8 simply restates one of the original issues of fact and then poses a question directed at those specific issues which also fails to raise any issue of public importance.


Order


The application for leave to appeal is refused. It follows that the application for a stay pending such appeal is also refused.


The interim order granted by this Court on 16 September 2004 staying the winding up proceedings in the High Court in civil action No HBE 84 of 1997 is cancelled.


The applicant must pay the respondent’s costs which we fixed $1000 plus disbursements to be fixed by the Registrar.


Ward, President
Barker, JA
Tompkins, JA


Solicitors:
Khan & Co., 1st Floor, Suites 8 and 9 Queensland Insurance Centre
Victoria Parade, Suva for the Appellant
Mehboob Raza & Associates Barristers and Solicitors 176/184 Renwick Road, Suva,
for the Respondent


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