In re Manuia Ltd [2003] FJHC 44; Hbe0041j.2002 (25 March 2003)

IN THE HIGH COURT OF FIJI
(AT SUVA)

COMPANIES (WINDING UP) CAUSE NO. HBE 41 of 2002

IN THE MATTER OF MANUIA LIMITED

N. Prasad for the Petitioning Creditor
A. Herman for the Company

JUDGMENT

This is a disputed petition for winding up of Manuia Limited brought pursuant to the provisions of Part VI of the Companies Act (Cap 247). The Petitioner is International Freight and Clearance Services. The petition was supported by Carpenters (Fiji) Limited however there was no appearance by that company when the petition was heard.

The following affidavits were filed:

(i) Willie Kwong, in opposition, 9 September 2002;
(ii) Sharif Ali Buksh, in answer, 11 October 2002;
(iii) Willie Kwong, in reply, 27 November 2002.

The Petitioner’s case is that the Company owes it $5,404.58 representing freight handling charges and that there is no defence to this claim. The Company denies owing anything.

As is well known, it is a broad general principle of law that a winding up order will not, as a matter of discretion, be made on a debt which is bona fide disputed provided that the debt is based on some substantial and reasonable ground (Bateman Television Limited v. Coleridge Finance Company Limited [1971] UKPC 8; [1971] NZLR 929). At the same time, however, a bare allegation by the company that a dispute exists will not be allowed to deprive a creditor of the remedy which statute confers.

The Petitioner, as its names suggests, is in the business of providing freight handling services. The Company is an exporter.

According to the affidavits, the Petitioner, pursuant to an oral agreement, accepted a cargo of frozen fish from the Company on Friday 19 April 2002 for shipment to Los Angeles, USA. It appears that the cargo arrived in Los Angeles at 11.19 hours, Los Angeles time on Air New Zealand Flight NZ 006. According to Exhibit C to the second affidavit, Ocean Giant International Corporation was notified of the arrival of the cargo on the same day. It seems reasonable to assume that Ocean Giant deals in frozen fish.

According to a letter from the Company dated 23 April 2002 (exhibit WW1 to the first affidavit) the cargo could not be cleared on the Friday of its arrival and was not cleared and received by “our client” (presumably, Ocean Fish) until the following Monday 21 April by which time the cargo had thawed and had begun to smell. Therefore, the Company stated:

“this brings to mind that the cargo did not arrive in good order and condition into L.A..”

Mr. Prasad’s submission was that the Petitioner’s contractual duties and duties of care began when it took possession of the cargo and ended when it delivered the cargo to the carrier, Air New Zealand. In the absence of any evidence at all to support the conclusion that the goods did not arrive in a good condition at Los Angeles the so-called defence advanced by the Company was merely a sham.

Mr. Herman saw things very differently. His submission was that the Petitioner as the company’s agent had the duty to ensure that the cargo was delivered in good condition to Ocean Giant. Since the fish had deteriorated by the time Ocean Giant took delivery the Company was not liable. Indeed, if any one had cause for grievance it was the Company. It was for this reason that the company wished to claim US$9560, the value of the lost fish, from the Petitioner (see exhibit WW1 already referred to).

As I see it, the Petitioner faces two difficulties. The first is the absence of any written contract between the Petitioner and the Company. The second is the failure to disclose the conditions of the contract under which Air New Zealand carried the cargo to Los Angeles. As has been noted the contract between the Petitioner and the Company was oral. Exhibit B to the second affidavit shows the first page of the airway bill but does not reproduce the conditions of contract set out on its reverse.

But the Company’s case is not without its own problems. In the 24^th Edition of Chitty on Contracts Vol. II Chapter 4 section (d) there is a helpful account of the general principles governing the law of carriage by air. It is clear that the usual arrangement is for the carrier, not the shipper, to give notice to the consignee of the arrival of the cargo. Generally, the consignee must accept delivery of the consignment, not at its address but at the airport of delivery. Delivery is deemed to have been effected once the carrier has given the consignee any authorisation required to enable the consignee to obtain the release of the consignment. When, these conditions having been complied with, the consignee fails to take delivery, it is the carrier, not the shipper, who, in the case of perishable goods, may take such reasonable steps as are necessary for their preservation.

I would be rather surprised if the conditions set out on the reverse of the airway bill in this case were markedly different from these usual arrangements. I think it rather unlikely that the Petitioner would have facilities or agents at Los Angeles able to arrange for the clearance, delivery and storage of the cargo pending their acceptance by Ocean Giant, who, on the Company’s case, appear to have been free of any responsibilities at all prior to the delivery of the cargo to their premises.

In the absence of firm contractual documents I do not think I would be justified in wholly shutting out the Company’s defence despite its apparent shortcomings.

There is authority for the court to order the amount of the alleged debt to be paid into court while staying the petition to enable the claim to be decided in an action in the normal manner (see Re Compagnie Generale des Asphaltes de Paris ex parte Neuchatel Asphalte Co. [1883] WN 17). I think such an order would be appropriate here also. The petition will be stayed upon payment into court within one month hereof of the sum in dispute. In default of payment in there will be a winding up order forthwith.

M.D. Scott
Judge

25 March 2003