In re Hinterland (Fiji) Ltd [2005] FJHC 655; HBF0047.2004L (9 May 2005)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

CIVIL ACTION NO. HBF0047 of 2004L

BETWEEN:

IN THE MATTER OF HINTERLAND AND (FIJI) LIMITED
a limited liability company having its registered office at
Level 7 Ra Marama House, 91 Gordon Street, Suva

AND IN THE MATTER of the Companies Act

Counsel for the Petitioner: Mr. K. Kumar
Counsel for the Respondent: Mr. H. Lateef

Date of Hearing & Ruling: 9 May 2005

EXTEMPORE RULING

There is before the court in this matter, a Summons filed on behalf of the petitioning creditor which seeks that the orders granted on the 12^th January 2005 be dissolved, that a hearing date be assigned for the Winding Up petition; that the petitioning creditor be at liberty to advertise the petition and an order for costs.

Also before the court is a Summons filed on behalf of the respondent company seeking an order that the Winding Up petition against it be struck out on the ground that it is an abuse of the process of the court.

I had the benefit of written submissions on behalf of the petitioning creditor together with oral submissions and oral submissions on behalf of the respondent company. The issue between the petitioning creditor and the respondent company arises out of a building contract entered into between the parties on the 19^th December 2001 for the construction of an office building at Gordon Street Suva for a contract price of $7,596,000.00. The petitioning creditor is the contractor in that contract and the respondent company is the employer.

The contract is described as being the Fiji Standard Form of Building Contract – Public Works Edition 1978. It is apparent from the material filed and the submission that the construction of the building proceeded to completion but that practical completion took place at a date later than that envisaged by the contract. It is submitted on behalf of the petitioning creditor that extensions of time were granted by the architect on behalf of the employer and that practical completion ultimately took place prior to the expiration of the last of those extensions of time.

The employer/respondent company has withheld payment of a sum of money. The petitioning creditor says that that sum is $391, 069.16. The respondent company by letter dated 10^th January 2005 from Messrs Lateef & Lateef to Messrs Young & Associates sets forth a break up of monies withheld for payment to subcontractors, a retention amount and amount of $137,000.00 retained by the respondent company as liquidated damages.

It is submitted on behalf of the petitioning creditor that there is indeed no dispute that the construction of the building reach practical completion within the extensions of time granted on behalf of the employer/respondent.

The employer/respondent however by virtue of the correspondence annexed to the affidavit filed on behalf of the petitioning creditor clearly disputes that this is so.

The contract contains Clause 33 which is an Arbitration Clause. It is an Arbitration Clause drafted in very wide terms. It provides that any dispute or difference that shall arise between the parties either during the process or after the completion or abandonment of the works, as to the construction of the contract or as to any matter or thing of whatever nature arising thereunder or in connection therewith is to be determined by arbitration.

It is submitted on behalf of the respondent that this clause deprives the court of jurisdiction to entertain the petitioner’s Winding Up petition.

Counsel for the Petitioner submits that the Arbitration Clause is in breach of the principle in Scott v Avery [1843-60] All E.R. 1, as against public policy as it ousts the jurisdiction of the court. I reject that submission made on behalf of the petitioner.

In Mann v Goldstein [1968] 1 WLR 1091 at 1096, it was said:

“When the creditor’s debt is clearly established it seems to me to follow that this court would not, in general at any rate, interfere even though the company would appear to be solvent, for the creditor would, as such, be entitled to present a petition and the debtor would have its own remedy in paying the undisputed debt which it should pay. So, to persist in non-payment of the debt in such circumstances would itself either suggest inability to pay or that the application was an application that the court should give the debtor relief which it itself could provide, but would not provide, by paying the debt.”

In Offshore Oil N.L. v Investment Corporation of Fiji Ltd 30 FLR 90 at 101 Barker JA said:

“The law is clear that there is a discretion in a Court seized of a winding up petition, to decline to hear the petition where the debt is contested on substantial grounds.”

In this matter, I am satisfied that there is a genuine dispute between the parties with respect to the monies allegedly owing. I am also of the opinion that the contract entered into by the parties requires that any dispute including the current dispute be referred to Arbitration. I do not accept the submission made on behalf of the petitioner that there is indeed no dispute between the parties. It is clear from the documents annexed to the affidavit filed on behalf of the petitioner that there is in fact a dispute. There being a dispute, that dispute is required to be determined by Arbitration and until such time as that occurs then this court has not jurisdiction to deal with the matter or any other dispute arising out of the contract entered into between the parties.

Accordingly, the Orders of the Court will be:

1. The petitioner’s Summons filed on the 22^nd April 2005 is dismissed.

2. I make order in terms of the respondent’s Summons of the 4^th May 2005 and strike out the Winding Up Petition.
   
3. I order the petitioner to pay the respondent’s costs of both Summonses which I note have been dealt with together and I assess those costs in the sum of Seven Hundred and Fifty Dollars ($750.00).
   

JOHN CONNORS
JUDGE

At Lautoka
9 May 2005