Satendra Prasad Construction Ltd v Metromix Concrete Company Ltd [2005] FJHC 507; HBF0018.2004L (2 September 2005)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

CIVIL CASE NO. HBF0018 OF 2004L

BETWEEN:

SATENDRA PRASAD CONSTRUCTION LIMITED
Applicant/Respondent

AND:

METROMIX CONCRETE COMPANY LIMITED
Respondent/Petitioner

Counsel: Mr. C.B. Young for the applicant/respondent
Mr. S. Maharaj for the respondent/petitioner

Date of Hearing: 24 August 2005
Date of Ruling: 2 September 2005

RULING

The defendant by summons filed on the 16^th May 2005 seeks to have the plaintiff’s summons filed on the 11^th April 2005 struck out and dismissed on the grounds that it is frivolous, vexatious, scandalous and an abuse of the process of the court. The application purports to be made pursuant to the inherent jurisdiction of the court, the High Court Rules and the Companies Act (Cap. 247).

The summons sought to be struck out is a summons filed on behalf of the petitioner seeking a declaration and orders pursuant to section 324 and 325 of the Companies Act.

The action was commenced by the petitioner filing a winding up petition on the 17^th June 2004.

On behalf of the respondent, it is submitted that the petitioner’s application should not have been made by way of summons but should have been made by way of writ of summons by virtue of the provisions of Order 5 Rule 2 of the High Court Rules. This submission appears to be based upon the fact that section 324 of the Companies Act and the summons filed by the petitioner relates to allegations that the named directors, Satendra Prasad and Sakuntla Prasad, defrauded creditors of the respondent company by the manner in which they carried on the business.

Sections 324 (1) (a) of the Companies Act provides:

“If, in the course of the winding up of a company, it appears that any business of the company has been carried on with intent to defraud creditors of the company or creditors of any other person or for any fraudulent purpose, the court, on the application of the official receiver, or the liquidator or any creditor or contributory of the company, may, if it thinks proper so to do, declare that any persons who were knowingly parties to the carrying on of the business in manner aforesaid shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the court may direct.” (emphasis added)

Section 325 (1) of the Companies Act provides:

“If, in the course of winding up a company, it appears that any person who has taken part in the formation or promotion of the company, or any past or present director, manager or liquidator, or any officer of the company, has misapplied or retained or become liable or accountable for any money or property of the company, or been guilty of an misfeasance or breach of trust in relation to the company, the court may, on the application of the official receiver, or of the liquidator, or of any creditor or contributory, examine into the conduct of the promoter, director, manager, liquidator or officer, and compel him to repay or restore the money or property or any part thereof respectively, with interest at such rate as the court thinks just, or to contribute such sum to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance, or breach of trust as the court thinks just.” (emphasis added)

As is apparent the sections relate to matters arising “in the course of the winding up of a company” and also refer to “application”.

The proceedings in this matters have been commenced by way of petition. The application being made by the petitioner in its summons of the 12^th April 2004 is in the nature of an application being made in the course of the winding up proceedings.

Order 5 Rule 2 of the High Court Rules provides:

“Subject to any provisions of an Act or these rules, by virtue of which any proceedings are expressly required to be begun otherwise than by writ, the following proceedings must notwithstanding anything in Rule 4 be begun by writ; that is to say, proceedings.

(a) ...
(b) In which a claim made by the plaintiff is based on an allegation of fraud; ...”

Order 5 Rule 3 provides:

“Proceedings by which an application is to be made to the High Court or a judge thereof under any Act must be begun by originating summons except whereby these rules or by or under an Act the application in question is expressly required or authorized to be made by some other means.” (emphasis added)

This rule does not apply to any application made in pending proceedings.

Order 5 Rule 2 relates to the manner of beginning civil proceedings in the High Court. The proceedings, the subject of the present action were, as stated above, begun by petition to wind up the company. The application now being made by the petitioner is an application consequent upon and in the course of the winding up proceedings. Section 324 and 325 both limit their operation to matters that arise “in the course of the winding up of a company”.

The Companies (Winding Up) Rules provide in Rule 60:

“(1) An application made to the court under any of the following provisions of the Act;

(a) Section 325;
(b)
(c) Subsection (1) or subsection (2) of section 324; ...

shall be made by motion, supported by affidavit.

(2) The notice of motion shall state the nature of the declaration or order for which application is made, and the affidavit shows that the grounds of the application, and, unless otherwise ordered, the notice of motion and the affidavit shall be served, in like manner as a summons, on every person against whom an order is sought, not less than 8 days before the day named even the notice of motion for hearing the application.”

I note that neither counsel referred the court to provisions of Rule 60 of the Companies (Winding Up) Rules.

Subject to that rule, it is apparent that the submissions made on behalf of the respondent have no merit.

Whilst the rule requires that the application be made by way of notice of motion supported by affidavit, there would appear to be no prejudice whatsoever flowing to the respondent by virtue of the proceedings having been commenced by way of summons supported by affidavit.

It would appear, from “Atkin’s Encyclopaedia of Court Forms in Civil Proceedings” that the procedure in the High Court of England is to commence an application of this type by way of summons.

Orders of the Court

1. The summons filed on behalf of Satendra Prasad Sakuntla Prasad on the 16^th May 2005 is dismissed.
   
2. Satendra Prasad and Sakuntla Prasad are to pay the applicant’s (Metromix Concrete Co. Ltd) costs assessed in the sum of Seven Hundred and Fifty Dollars ($750.00) within 14 days.
   

John Connors

JUDGE

At Lautoka

2 September 2005