In re Silimaibau Sunset Express (Fiji) Ltd [1997] FJHC 28; Hbe0040j.96s (6 March 1997)

Fiji Islands - In re Silimaibau Sunset Express (Fiji) Ltd - Pacific Law Materials

IN THE HIGH COURT OF FIJI

AT SUVA

CIVIL JURISDICTION

WINDING UP ACTION NO. 40 OF 1996

IN THE MATTER of SILIMAIBAU SUNSET EXPRESS (FIJI) LIMITED

AND:

IN THE MATTER on"> of the Companies Act Section 221

Mr. S. Maharaj for Petitioning Creditoan>

Mr. M. Raza for the Company

JUDGMENT

This is an opposed winding-up Petition.

By Petition dated 2 April 1996 & J. CO. LIMITED ("the Petitioner") has petitioned to wind-up p SILIMAIBAU SUNSET EXPRESS (FIJI) LIMITED (the "company") for alleged indebtedness of the Company to the Petitioner in the sum of Y$7,339,979.00 (seven million three hundred thirty nine thousand nine hundred seventy nine yen) or F$101,944.15 (one hundred and one thousand nine hundred forty four dollars and fifteen cents). This debt is in respect of purchase of two buses whose registration numbers are CV608 and CV609.

The Company was served with a Notice under section 221 of the Companies Act Cap. 247 claiming the said sum but it has failed to pay same. The Petitioner says that the Company is insolvent and unable to pay its debts. It says that in the circumstances it is just and equitable that the Company should be wound up.

On 5 July 1996 the Company through its director JALE PESI AIBAU filed an Affidavit in opposition to the Petition.

The Petitioner in reply filed an affidavit by TAKASHI UNI, a Company Dire formerly with the Company,pany, sworn and filed on 19 July 1996.

These are the two affidavits on which I am required to decide the isefore me. The hearing took took place on 9 December 1996 and both counsel made oral submission followed by written submissions.

ny's submission

p class=MsoNormaNormal style="margin-top: 0; margin-bottom: 0"> The Company denies that it is indebted to the Petitioner. It says that it he Petitioner which is supp supposed to have paid the amount "being part of their contribution for joining" the Company.

Mr. Raza submits that there are sufficient triable issues raised and in such a situation it is 'undesirable' for the Court to decide on affidavit evidence alone. He says that the dispute is based on substantial grounds.

Petitioner's submission

The Pener submits that the Company had through the said SILIMAIBAU in the affidavit and annexuresxures filed by him admitted that the total paid up equity of the Company was $420,000.00 comprising of $300,000.00 local contribution and $120,000.00 foreign.

The local shlder was the said JALE SILIMAIBAU and foreign shareholder was the said TAKASHI UNI. Mr. Mah. Maharaj asks how can the Company claim that the foreign shareholder was to contribute $300,000.00 which is directly in contravention of the approval of Fiji Trade and Investment Board.

Mr. Maharaj submits that it was a "$2.00 company" with each shareholder holding one dollar share each. Hence no question of payment of customs duty of $38,461.93 being payable by the said UNI arises. He asks "how could a foreign shareholder holding (1) one dollar share in the company be expected to contribute $300,000" into the Company; and "this would be contrary to the approval granted by FTIB".

It is further argued by Mr. Maharaj that if the fo shareholder had really contributed by two buses worth well well over $100,000 would be relinquish his shares in the Company on payment of $1.00. He says that the dispute between the two shareholders has nothing to do with payment for both the buses.

Mr. Maharaj that exhibit 'A' (to affidavit of Takashi Uni filed 19 July 1996) which is a letter writteritten by the Secretary of the Company is a sufficient admission of debt and then the Company is asking for time to pay for the two buses. In annexure "B" (to the affidavit of UNI) the said SILIMAIBAU, the Managing Director of the Company, undertakes to pay seven million yen being the balance outstanding for the two buses.

Mr. Maharaj submits that there are no triable issues and the purported triable issues claimethe Company are issues &quo "fabricated" by the Company with no supporting documentary evidence.

Consideration of the

Now to the consideration of the issue.

Upon a careful consideration of the affidavit evidence before me and the submissions ma both counsel it is abundanundantly clear that there is no dispute on substantial grounds on the claim made by the Petitioner against the Company.

It is clear that the debt which the said SILIMAIBAU as the Managing Director of the Company is denying has actually been admitted by him as the debt owed by the Company and further he has asked for time to pay as evidenced by said annexures 'A' and 'B' referred to hereabove.

There are other aspects of this matter which have been touched upon by both counsel and I have referred to some of them hereabove. It will be sufficient for me to say that I accept the submissions of Mr. Maharaj in regard to debt and reject those put forward by Mr. Raza in that connection. I find that there are no triable issues at all.

There is the general prie that a petition for winding up with a view to enforcing payment of a disputed debt is an s an abuse of the process of the Court and should be dismissed with costs. (PALMER'S COMPANY LAW Vol 3,15.214 and cases cited therein).

In PALMER'S (ibid) isout the principles involved in considering disputes as to debt and I have borne these in miin mind in considering the matter before me. There it is stated:

p class=MsoNormal stal style="margin-left: 36.0pt; margin-top: 0; margin-bottom: 0"> "To fall within the general principle the dispute must be bona fide in both a subjective and an objective sense. Thus the reason for not paying the debt must be honestly believed to exist and must be based on substantial or reasonable grounds. "Substantial" means having substance and not frivolous, which disputes the court should ignore. There must be so much doubt and question about the liability to pay the debt that the court sees that there is a question to be decided. The onus is on the company "to bring forward a prima facie case which satisfies the court that there is something which ought to be tried either before the court itself or in an action, or by some other proceedings."

Bearing in mind the above principles I hold that the alleged dispute is based on trivial and unsubstantial grounds. The Petitioner has satisfied the Court that it is a creditor to which the amount claimed is owed. To be able to succeed in the opposition proceedings the Company has to satisfy the Court, as HARMAN J put it in IN re a Company (No 001946 of 1991) ex.p. FIN SOFT HOLDING SA (1991) BCLC 737 at 740 when he said that there were not two tests but simply one which is: 'Is there a substantial dispute as to the debt upon which the petition is allegedly founded?' Hence, it was held that where there is such a dispute then the bona fides of the Company in disputing the debt is simply irrelevant. Also if there is a dispute the Petitioner would clearly not satisfy the requirement of being a creditor for the purposes of the winding up proceedings.

ass=MsoNormal stal style="margin-top: 0; margin-bottom: 0"> Where a disputon substantial grounds turning on disputed questions of fact which require viva voce evidenvidence, but which I find is not the situation here, the dispute cannot be decided on Petition and one would bear the following passage from the judgment of MEGARRY J in IN re LYMPNE INVESTMENTS LTD (No. 00250 of 1971) 1972 1 WLR 532 at 527 in mind:

"Noit right, or in accordance with the modern practice, to stand over the petition in order ther that the disputed issues may be resolved in other proceedings. That practice, I may say, seems to stem from In re London and Paris Banking Corporation (1874) [1874] UKLawRpEq 171; L.R. 19 Eq. 444. The Companies Court must not be used as a debt- collecting agency, nor as a means of bringing improper pressure to bear on a company. The effects on a company of the presentation of a winding up petition against it are such that it would be wrong to allow the machinery designed for such petitions to be used as a means of resolving disputes which ought to be settled in ordinary litigation, or to be kept in suspense over the company's head while that litigation is fought out. Further, Mann v. Goldstein [1968] 1 W.L.R. 1091, cited with approval in the New Zealand Court of Appeal in Bateman Television Ltd. v. Coleridge Finance Co. Ltd. [1969] N.Z.L.R. 794, provides authority for saying that when a petition is based on a debt which is disputed on substantial grounds, the petitioner is not a "creditor" within section 224(1) of the Act of 1948 who has the locus standi requisite for the presentation of the petition, even if the company is in fact insolvent."

In the outcome, for the above reasons the Company fails in its opposition to the Petition.

p class=MsoNormal stal style="margin-top: 0; margin-bottom: 0"> The Petitiis therefore at liberty to proceed to wind up the company by proceeding with its Petition aion as required by the Companies Act.

The Cy is ordered to pay the costs of the opposition proceedings which is to be taxed unless agrs agreed.

Judge

At Suva

6 March 1997

Hbe0040j.96s