BW Holdings v Graham Eden & Associates Ltd [2000] FJHC 3; Hba0023.1999s (10 January 2000)

Fiji Islands - BW Holdings v Graham Eden & Associates Ltd - Pacific Law Materials

IN THE HIGH COURT OF FIJI

(AT SUVA)

CIVIL APPEAL NO. HBA 23 OF 1999Sn>

(Suva Magistrates Court Action No. MBC 903 of 1998S)

ass=MsoBodyText Text align=center style="text-align: center; margin-top: 1; margin-bottom: 1"> BETWEEN:

B.W. HOLDINGS

Appellant

(Original Defendant)

and

GRAHAM EDEN & ASSOCIATES LIMITED

Respondent

(Original Plaintiff)

S. Parshotam for the Appellant

M. Sakiti for the Respondent

JUDGMENT

On 6 October 1998 the Respondent (Edommenced proceedings against the Appellant (the Company) iny) in the Suva Magistrates Court. Edaimed the sum of $10,8100,810.97 plus interest and costs which sum it said represented bank changes, details of which were annexed to the writ, which had been ied by Eden after it had established a letter of credit on b on behalf of the Company following the purchase by the Company of tiles and fabric from Eden. Accorto an affidavit of serf service of Seru Batidradra dated 22 October 1998 the writ was served both on the Company and its Secretary by being posted by registered post on 13 October 1998 to P.O. Box 2449 Government Buildings Suva. According to a second affidavit of service of David Whippy dated 12 April 1999 the letter of 13 October 1998 which had contained the writ was returned by the postmaster on 8 January 1999 stamped “Final Notice”, “Second Notice” and “Unclaimed”.

As also appears from Mr. Whippy’s affidavit a search on behalf of Eden took place at thet the office of the Registrar of Companies in July 1998. This searchaled a Notice oice of Situation Form 201 (see Companies Act – Cap 247 – the Act – S-168) filed on 14 May 1997 and the Company’s Annual Return for 1996 filed on the same date, both of which gave P.O. Box 2449 as the Company’s address. In January 1999 the O of t of the Registrar of Companies was again searched with the same result and additionally, in the same month, both the Company’s receptionist Ms.Pande and the Post Master confirmed that P.O. Box 2449 was held by the Company.

Paragraphs 13 to 17 of tfidavit of the Company’s Managing Director Uday Narayan sworn on 22 February 1999 are entitentitled “Background as to service of Writ of Summons”. Mr. Narayan not dispute thte the evidence either of Seru Batidradra or of David Whippy. In paragraph 11 he that what while P.O. Box 2449 is “my Company’s postal address it is not my Company’s registered postal address” but what his Co’s registered postal address in fact is, he does not reveal. Hees that his CompaCompanympany “was not served with any writ of summons” but offers no explanation as to how the writ, which he does not deny was sent to P.O. Box 2449 was not uplifted on behalthe Company. He annexannexes a 201 date dated 5 May 1997 which discloses no registered postal address of the Company at all and only contains a residential address at Vishnu Deo Road, Nakasi which does not have a street number. Despite not denying the ctntents of the annual return filed on 14 May 1997 (a copy of which is Exhibit C to an affidavit filed by Graham Ross Eden&nsworn7 April 1999 – the relevant part of which reads:

“Situation and Postal Address of the registered office of the Company are asows: Vishnu Deo Road Nakasiakasi P.O. Box 2449, Government Buildings, Suva”)

he states, with breathtaking disingenuousness that:

“At no time was P.O. Box 2449 regid with the Registrar of Companies as my Company’s registerestered postal address.”

On 5 November 1998 the Suva Magistrates Court awarded Eden Judgment in De of appearance and defence (Exhibit C to David Whippy’s affs affidavit) in the amount of $11,011.92 plus interest accruing.

On 2 February 1999 the Company ad, under the provisions of Order XXX Rule 5 of the Magistrates’ Courts Rules for the Judgmeudgment to be set aside and for the Company to be given leave to defend. The first ground for this application was that:

“Judgment was obtained without proper service of tit of summons being effected on the Defendant”.

<

The aption was heard by Ms. Gws. Gwen Phillips RM on 26 April 1999. Iition to hearing el Ms. PMs. Phillips also had thad the affidavits above referred to before her. On 23 June 1999 she delivered a ruling rejecting the applon. is an appeal against that that ruling.

>

Both Counsel have filed comprehensive and helpful written submissions. Althoughe are 6 grounds ofds of appeal the two basic arguments advanced by Mr. Parshotam are:

(i)&nbbsp; &nbsp &nbbp;&nnbp;& &nbbsp; &nbp; that thement went was not entered regularly and that therefore the Company is entitled as of right to have it set aside; and in the alternative

(ii) &nbs; &nbbsp;  p;&nsp; &nbp; &&nbp;;&nbpp; the Rehe Resident Magistrate should have exercised her discretion to set aside the Judgment in fact entered on the ground that the Company has “ an arguable case which carrome d of ction” (see Dayu>Day v. R v. RAC Motoring Services Ltd [1999] 1 All ER 1007.

The crux of Mr. Parshotam’s argument on the first point is Section 110 ofCompanies Act which reads as follows:

“Notification of Situation of Registered Office and Change of Therein

110 – (1) Notice of the Situation of tgistered Office and the Rege Registered Postal Address, and of any change therein, shall be given within 14 days after the date of incorporation of the Company or of the Change, as the case maybe, to the Registrar for registration.

(2)  p;&nbbsp;&nsp;&nbp;&nbp; ;&nbssp; The incl inclusion in the annual return of a company of a statement as to the situation of its registered office or as to its registered postal address shall n takesatise obligations imps imposed osed by this section.

(3) ;&nbssp; &nsp; &nbs; &nbbp;&nIf default iult is made in complying with this section the ny anry of of tmpany who is in default shall be liable to a default fine.”span>

<

Mr. Parshotam points to Section 100and says that since Eden reen relies on the Company’s Annual Return filed on 14 May for the P.O. Box 2449 address that is not a valid reliance and accordingly service on the Company was bad. I do not agree.

In my view Section 110 (2) is directed at removing from a company the possibiof offering as an excuse for failing to comply with Sectionction 110 (1) the fact that it had included its address in its annual return. It is designed to tighhe rthe registration of companies not to provide a shield to a company which has not complied with the requirements of the section.

The service provisions in the Companies Act are contained in Section 391 which reads:

“391-(1) A document may be served on a company by sendinending it by post to the registered postal address of the Company in Fiji or by leaving it at the registered office of the Company.

(2) &nbssp; &nsp; &nbbp;&nA document ment may be served on the registrar by leaving it at, or sending it by post to, his officepan> 0pt">&nbsp The relevant provision in the Magistrates Courts Rules der VII Rule 8 (3) which reads:

“(3) Service on a company shall be effected in accordance with the provision of the Companies Act.”

In Fiji’s circumstances wthere is a notoriously high failure to comply with a detailed requirements of the Companiesanies Act and where prosecutions for such failures are virtually unknown, I am firmly of the opinion that these provisions of the Companies Act should be read permissively. The purpose of these provisions is to provide the way in which service should ordinarily be effected on Companies. Where, as here, the Company has not fully complied with Section 110(1) the fundamental question is whether the service, as in fact effected, will have reached the Company’s Management. Wheis not the correct appr approach than there could never be substituted service upon a company. here compliance with the sthe service provisions of the Act is impossible or extremely diff the Court has not hesitateitated to allow another form of service to take place. Thus, for example,e a comp company no longer had an office at all, service was properly effected when the former Chairman and Secretary of a company were served (see Gaskell vmbers (No. 1) (1858) Ch. 26 Beav. 252). In the prhe present it is t is not disputed that the Company’s postal address was in fact P.O. Box 2449 and neither is it disputed that the address (Vishnu Deo Road Nakasi) is defective. In these circumstaI am fieisfied that the Rese Resident Magistrate was correct in concluding that the Company had been properly served with the writ ant therefore Eden was entitled to Judgment in Default of Appearance or Defence.

The neestion is whether the Resident Magistrate correctly declineclined to set the Judgment aside. Asady seen, Mr. Parshotam otam admitted that the Company had “an arguable case carrying some degree of conviction” and that therefore the Company was entitled to its case heard.

As may be seen from the draft Statement of Defence (page 141 of the record) the Company denies defaulting upon any of its payments by installment to Eden, says that if in fact Eden incurred any additional costs as a result of the payments by installments then those costs were to be borne by Eden and suggests that any installment agreement between the parties was void and unenforceable. Tmpany does however admit dmit a handwritten letter dated 13 August 1997 which is endorsed on a letter from Eden to the Company d12 August 1997 (page 68 of the record) and which forms the crux of Eden’s case.

<

Examination of this exhibit shows that Uday Narayan, the Company’s ManaDirector, accepted that Eden had incurred additional bank cank charges and that these would be passed on to the Company and paid for by the Company. The only pal rejected by N by Narayan was that the Company be penalised for each default. Such a penalty escribed byed by Narayan as "in law unenforceable, harsh and unconsionable, hence void". Narayan was doubtless correctescribing the general effect of penalties in these legal terms but I cannot accept that thet they have any bearing on this case. As stressed by Mr. Sakiti and accepted by Mr. Parshotam the proposal to penalise the Company for default was dropped and such penalties form no part at all of Eden’s claim which is entirely confined to bank charges incurred by the line of credit arranged by Eden on behalf of the Company.

ass=MsoNormal stal style="margin-top: 1; margin-bottom: 1"> The granting of leave to come in and defend an action is discretionary. At the end of a e careful eful examination of the arguments advanced by Counsel for the parties the Resident Magistrate came to the conclusion that the Company was not advancinona fide defence giving rise to triable issues. I agrI agree:&nas I see itee it this is a simple case of a Company borrowing money to pay for purchases and then refusing to pay the costs of the borrowing. The appeal fails s dismisssmissed.

M.D. S/span>

Judge

10 January 2000

HBA23.99S