In re Khan's Shopping Company Ltd [2005] FJHC 455; HBE0039.2004 (23 September 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
APPELLANT

AND:

IN THE MATTER OF THE COMPANIES ACT
PETITIONER/RESPONDENT

Ms R. Singh for the Appellant
Mr. I. Fa for the Petitioner/Respondent

RULING ON STAY PENDING APPEAL

On 7^th February 2005 I had ruled in favour of the petitioner creditor (respondent) but had postponed the making of winding up order for two weeks. However before the expiry of two weeks, an application for stay was filed. There was also a change of solicitors for the debtor company. In fairness to present solicitors, I must say they were not acting for the appellant during the earlier proceedings.

This ruling has been delayed as after the counsels had addressed me, I looked at Section 252 of the Companies Act and sought further submissions on them. It was not convenient to get counsels to address me on this point as Mr. Fa had gone overseas and later taken ill on a hearing date. Hence addresses on this point were delayed.

The appellant submitted that fresh evidence is now before the court which was not before the court when the original petition was heard. This evidence it says was omitted by previous solicitors by inadvertence. However it submits that the interests of justice should be considered and a stay granted. It submits that the new evidence shows there is substantial dispute of debt.

Secondly, it submitted that the annexures reveal that the appellant’s cross claims exceeds what the respondent is claiming.

Thirdly, it submits that appeal has good prospect of success and absent stay it would be rendered nugatory and appellant seriously prejudiced.

Mr. Fa submitted that the purchase of fuel is not disputed but it is alleged it was contaminated. He submits the appellant did not issue a writ for three years to sort this out. He submits that the new evidence was brought too late.

WHEN IS FRESH EVIDENCE ADMISSIBLE ON APPEAL:

The petition was served on the appellant company on 12^th March 2004 and heard on 15^th July 2005 some fifteen months later. The appellant therefore had fifteen months to prepare and present its case. It had fifteen months in which to collect its relevant documents. Whether or not fresh evidence is accepted by the Court of Appeal is not for me to comment upon. However, the principles on which new evidence is admissible on appeal were considered by the Court of Appeal in ANZ Banking Group Limited v. Merchant Bank of Fiji – 1994 40 FLR 266. It held that three conditions must be satisfied:

1. that the evidence could not have been obtained with reasonable diligence for use at the trial.
2. That the evidence must be such that it was likely to have important influence though not decisive influence on the outcome of the case.
3. It must be credible evidence.
   

The effect of the appellant’s submissions is for me to reconsider my decision. I am reluctant to do so as such approaches would only encourage a casual attitude to preparation of cases.

COMPANIES ACT – LOCUS:

As the present application deals with a stay of winding up proceedings, the provisions of Section 252 of the Companies Act 5 of 1983 also become relevant. I invited counsels to address me in this aspect. That section only gives locus to only the liquidator, or official receiver or any creditor or contributory to make an application for stay. The company itself is not one of the named entities which can apply for stay. Ms Singh submitted that an order had not been made so Section 252 had no application. Secondly, she relied on Trans Pacific Aluminium Joinery Ltd. v. B.L. Naidu & Sons – HBF0023 of 1996(L) to submit that the company has a locus to apply for stay. Mr. Fa submitted that a stay pending appeal of a winding up order falls into a very special category as the Official Receiver gets involved into collecting debts owed to the company and to protect interest of the creditors.

An application for stay of winding up orders has its own associated problems. A helpful and concise summary of difficulties faced are set out in the judgment of Justice Cullinan in In the Matter of Investment Corporation of Fiji Limited – 31 FLR 71 where he stated that the official receiver has to ascertain the assets and liabilities of the company both at the date of the making of the order and the time of presentation of the petition. Any delay caused by stay only serves to make the official receiver’s task so much more difficult as there may be intervening transactions which have taken place.

As was stated by James L J in Ex-parte Rabbgidge – [1878] UKLawRpCh 128; (1878) 8 Ch.D 367 at 372 in the context of bankruptcy but his comments are equally relevant to winding up:

“It is much to be regretted that the advertisements of adjudication are so often postponed. These delays are a source of great mischief. It may be hard on a debtor, who has been adjudged bankrupt, not to stay the advertisement of the adjudication, if he has a bona fide ground for appealing; but, on the other hand, great hardship may be done to other persons if adjudication is not advertised.”

I consider that a company after a winding up has the locus to make an application for stay pending appeal. Section 252 gives certain category of persons who may not be party to the winding up proceedings but who may nevertheless be interested in or be affected by the order to apply for stay.

The consideration of a stay application in winding up proceedings transcends the interests of the parties themselves as it involves also the public interest and the official receiver. I remain unmoved that this is a case where I ought to grant stay. Now that the stay application has been disposed off I also make an order winding up the appellant company. Application for stay is dismissed with costs which I fix in the sum of $300.00.

[ Jiten Singh ]
JUDGE

At Suva
23^rd September 2005