In re Estate Management Services Ltd [1996] FJHC 120; Hbe0051j.1995s (18 June 1996)

IN THE HIGH COURT OF FIJI
(AT SUVA)
COMPANIES JURISDICTION

ACTION NO. HBE0051 OF 1995

IN THE MATTER OF ESTATE MANAGEMENT SERVICES LIMITED

AND

IN THE MATTER OF THE COMPANIES ACT 1983

M.B. Patel for Petitioner
P. Knight for Respondent

Dates of Hearing: 29th November 1995 and 30th May 1996
Date of Judgment: 18th June 1996

JUDGMENT

By a petition dated 25th April 1995 the Petitioner has applied for an order that the Respondent, Estate Management Services Limited (hereinafter called "the Company") be wound up. The application is made under Section 220 (f) of the Companies Act Cap. 247 which allows the Court to wind up a Company if it is of opinion that it is just and equitable to do so.

The Petitioner is a Director of the Company. He claims that by an Agreement dated 24th December 1990 made with one Joe Lee (a Director and shareholder of the Company) he is entitled to 40 percent of the shares in the Company. However no shares are registered in his name. It appears that the Petitioner claims the right to seek the winding up of the Company as a purported contributory although the petition does not state this.

Paragraph 4 of the petition alleges that the Petitioner is the shareholder of 40 percent shares pursuant to the Agreement of 24th December 1990. However the uncontradicted evidence is that the Petitioner is not a shareholder (see paragraph 6 of an affidavit by the Petitioner dated 23rd June 1995 and paragraph 3 of an answering affidavit by Joe Edward Lee sworn on 28th June 1995).

To be able to issue a petition as a contributory the Petitioner must hold shares in the Company and for that reason alone I find myself able to dismiss the petition.

Even if I were wrong in that however it would not end the matter for the Petitioner.

In Palmer's Company Law 23rd Edition Volume 1 Paragraph 85-17 the author states that as a general rule the Court will not make a winding up order on the petition of a contributory whose shares are fully paid unless he shows on the face of his petition a prima facie probability that the Company is solvent and that there will be a substantial surplus of assets available for distribution among the shareholders; otherwise he has no tangible interest in the winding-up. The learned author then quotes numerous cases to support this proposition. The Petitioner clearly fails to satisfy this test.

It appears that the petition is based on a claim of mismanagement by Joe Edward Lee and the other Director of the Company, Vinod Singh. But these allegations are denied by both Mr. Lee and Mr. Singh.

Unfortunately the Petitioner has not complied with an order I made on 29th of November 1995 that the Petitioner file written submissions by the 6th of December and the Company by the 13th of December. The Court has recently received written submissions on behalf of the Company and I have found these very helpful.

To date the Petitioner has taken no steps to obtain specific performance of the Agreement of 24th December 1990 which in my view would be the most appropriate course for him to take on the present material.

It is desirable that this matter be now resolved and I accordingly hold that the Petitioner's petition of 25th April 1995 be dismissed. The Petitioner must pay the Company's costs.

JOHN E. BYRNE
J U D G E

Legislation and authority referred to in Judgment:

Companies Act Cap 247.
Palmer's Company Law 23rd Edition Volume 1.

The following additional authority was cited in argument:

Unreported judgment of Pain J. of 29th June 1995 - In the Matter of Estate Management Services Limited - Companies Action No. HBE0051 of 1995.

HBE0051J.95S