Fiji Bandag v Vunimoli Sawmills Ltd [2003] FJHC 87; HBE0003J.2002B (13 February 2003)

IN THE HIGH COURT OF FIJI
AT LABASA
CIVIL JURISDICTION

WINDING UP ACTION NO. HBE0003 OF 2002

Between:

FIJI BANDAG
Petitioner

and

VUNIMOLI SAWMILLS LIMITED
Respondent

Ms. R. Lal for Petitioning Creditor
Mr. A. Kohli for the Debtor Company

JUDGMENT

This is an opposed winding-up Petition.

By Petition dated 28 June 2002 Fiji Bandag (the “Petitioner”) has petitioned the Court to wind up Vunimoli Sawmills Limited (the “Company”) for the debt in the sum of $11,890.91 being balance monies outstanding and owing by the Company in respect of goods sold and services rendered at its request.

The Petitioner filed Memorandum of Due Compliance on 1 August 2002 and the hearing of the Petition was set down for 26 August at High Court at Labasa. On 26 August Mr. Kohli opposed the Petition by filing an affidavit. The Petitioner was ordered to file Affidavit in Reply within 21 days but it was filed late on 26 September.

By consent argument was presented by way of written submissions. The Petitioner filed its submissions on 30 September but the Company’s Solicitors failed to file theirs despite a reminder on 23 October.

Company’s contention

In the absence of any written legal submissions from counsel for the Company, the gist of the Company’s reason for opposing the Petition is as set out in its affidavit in opposition in that it does not owe the Petitioner the sum claimed on any sum at all. It further states in its affidavit that while it had dealings with the Petitioner, the latter has failed to furnish further and better particulars of the claim and that it was merely supplied with statements giving a summary of invoices without copies of invoices. It further states that certain defective goods were supplied and these were returned but no credit had been given to the Company. Therefore, the Company says that the ‘whole amount is in dispute’. It says that it is able to pay debts if due and hence no winding-up order should be made.

Petitioner’s reply to Company’s contention

In the affidavit of Vinesh Kumar Maharaj, the Financial Controller of the Petitioner, sworn 25 September 2002, is contained the response to the Company’s contention.

Mr. Maharaj says that the Company still owes the debt and sets out in his affidavit how the debt came to be about. He says that full particulars have been supplied and he has also attached them to his said affidavit as annexures.

Consideration of the issue

The issue for the Court’s determination is whether the Company has a bona fide dispute to prevent the Petitioner from obtaining a winding-up order.

I have carefully considered the affidavits filed herein. The Petitioner has responded to the Company’s affidavit and has given details of how the amount owing is made up. The Company has failed to respond to the said Reply either by filing an affidavit or by its counsel filing a written submission although it was ordered to do so.

In Palmer’s Company Law Vol 3 15.214 is set out the principles involved in considering disputes as to debt and I have borne these in mind in considering the matter before me. There it is stated:

“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.”

The Court has a discretion when seized of a winding-up petition. In Bateman Television (In Liquidation) and Another v Coleridge Finance Company Limited [1971] UKPC 8; [1971] NZLR 929 the Judicial Committee stated:

The general rule is that an order for winding up will not be made on disputed debt but a Judge has discretion to make a winding up order on disputed debts which is not reviewable unless exercised on a wrong principle or the Judge included or omitted consideration of a relevant fact or was wholly wrong”.

All that is required for a Petition to be struck out is that there is a dispute on ‘substantial grounds’. The question therefore is ‘Is there a substantial dispute as to the debt upon which the petition is allegedly found?’ [Herman J in Re a Company (No. 60 1946 of 1991) ex p Fin Soft Holding SA (1991) BILL 737 at 740].

On the totality of the evidence I find that neither are there any triable issues nor is the dispute based on substantial grounds. In fact I am convinced that the alleged balance debt is owed to the Petitioner.

For these reasons, on the affidavit evidence before me, in the exercise of my discretion I refuse the opposition application with costs against the Company in the sum of $500 to be paid within 7 days.

It is ordered that conditional upon the Company paying the alleged balance debt in full within 7 days from the date of this judgment, the Company is hereby Ordered to be wound up.

D. Pathik
Judge

At Suva
13 February 2003