In re Khan's Shipping Company Ltd [2005] FJHC 20; HBE0039.2004 (7 February 2005)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO.: HBE0039 OF 2004

BETWEEN:

IN THE MATTER OF KHAN’S SHIPPING COMPANY LIMITED
PLAINTIFF

AND:

IN THE MATTER OF THE COMPANIES ACT
DEFENDANT

Mr. I. Fa for the Petitioner
Mr. N. Lajendra for the Company

JUDGMENT

This is an opposed winding up petition. The company submits that the petition is contested on substantial grounds.

The law is clear that the court seized of a winding up petition can decline to hear the petition if it is contested on substantial grounds – Offshore Oil N.L. v. Investment Corporation of Fiji Ltd. – 30 FLR 90 at page 101. Substantial means having substance and not frivolous. It is for the company to satisfy me that substantial grounds exist for disputing the debt.

FACTUAL ISSUES:

The claim is for supply of fuel for a shipping vessel. The total amount of fuel supplied is worth $57,532.90. The fuel was supplied in July 2001. The company is not disputing that the fuel was supplied nor its value. It however is alleging that it has substantial cross claim in the sum of $111,874.40 against the petitioner because the fuel supplied was contaminated. It alleges that the vessel was on its way to Kadavu and outer islands when it developed problems due to fuel contamination and it had to be towed back to Suva.

If the Company’s assertions are believed then obviously because of close nexus between its allegations and the supply of fuel, the petition ought to be dismissed. However, I find the company’s allegations have not progressed beyond mere assertions. There are no annexures to verify facts. The company says the vessel was towed back to Suva. It talks of towing charges but no invoices from the towing company are annexed. It says marine engineers revealed that fuel was contaminated. These engineers are not named nor any reports from them attached. Given the magnitude of alleged cross claims one would have expected some written complaint but no such letters have been attached.

At the end of the filing of affidavits what I have is admitted purchase of fuel by the Company against mere assertions of contamination. The court needs more than mere assertions to be satisfied that there is substantial dispute.

The Company says it is solvent but I have not been given any facts and figures to show that. Here the petitioner’s debt is clearly established and admitted by the company so the petitioner has the right to present the petition. The company has arrogated to itself the right to set off its claim which is not yet established for unliquidated damages as they have to be proved. The company should have brought a claim for those damages against the petitioner. As things stand, it must pay its undisputed debt – see Cornhill Insurance P/c v. Improvement Services Ltd. – (1986) BCLC 26.

So I am of the view that the petition has been proven. I could make the winding up order now. However, I shall postpone making the order for two weeks to enable the company to pay up the debts or make satisfactory arrangements.

[ Jiten Singh ]
JUDGE

At Suva
7th February 2005