Suva Container Park Limited v Island Container Sale and Leasing Ltd [2006] FJHC 95; HBC 444D.2005S (17 February 2006)

IN THE HIGH COURT Of FIJI AT SUVA

CIVIL JURISDICTION

CIVIL ACTION NO. HBC 444D OF 2005s

BETWEEN

SUVA CONTAINER PARK LIMITED
PLAINTIFF

AND

ISLAND CONTAINER SALE AND LEASING LIMITED
DEFENDANT

Council for the Plaintiff: A.Tikaram: Tikaram & Associates
Counsel for the Defendant: S. Valenitabua: Valenitabua S.R.Esqi

Date of Decision: 17 February, 2006
Time of Decision: 9.30 a.m.

DECISION

In this interlocutory proceedings, the Plaintiff is applying to the court for the Defendant to be restrained from taking any action to present a petition for the winding-up of the Plaintiff Company following the publication of its Notice.

Both parties are in the container storage, leasing, and sale business. The Plaintiff owns the container park and pursuant to an agreement between the Plaintiff and the Defendant as tenant, of 30 July 2003, they share the same storage facilities located at the Rokobili Terminal on the Suva Waterfront. Following suspicions of illegal activities on the part of its facilities manager, the Plaintiff upon investigation and audit, found Defendant's containers stored without incurring charges. The Manager was subsequently dismissed and the Plaintiff demanded that the Defendant pay the sum of $11,450.34 as outstanding charges for its containers. There appears to be some confusion whether the Defendant had in fact paid a portion of the money demanded, but there is no doubt that by its letter of 28 October, 2004 the Defendant concedes to its existence. On the other hand the Defendant is now alleging that the Plaintiff owed it a substantial amount of money resulting from losses and/or illegal sales of its own containers by the Plaintiff and/or its employees. And it is the amount of $128,518.12 contained in its demand notice of 22 July 2005, together with further claims that the Defendant is bringing to his proceedings to win up the Plaintiff.

The Plaintiff's grounds for opposing the Winding-Up action are that there is a substantial dispute as to the debt, that the Company is not insolvent, and that in any case the Defendant's proper recourse is by Writ action.

The grounds for Winding-Up by the Court are many and well understood. They are set out and fully discussed in paragraph 996 of Halsbury's Laws of England 14^th Ed. These grounds are enacted into our statutes and specifically under S.220 of the Companies. Of relevance to this proceedings are sub-paragraphs (e) and (f) which states that a Company may be wound up by the Court:

"(5) if the Company is unable to pay its debts;

(6) if the Court is of the opinion that it is just and equitable that the Company should be wound up;....."

As to what constitutes "inability to pay one's debt" that is defined in section 221 of the Act. The meaning of "just and equitable" is set out at paragraphs 1000 and 1001 of Halbury's.

For sub-paragraph (5) to be met the Court must be satisfied that there in fact exists a debt which cannot be disputed and that the Company is unable to pay its debts within the meaning of section 221.

In this case, the Plaintiff asserts that the debt is not only disputed but the amount is not liquidated in that there is no existing agreement between the parties for the payment of any amount demanded by the Defendant. The amount of $128, 518.12 that was originally demanded under the Defendant's S.221 (a) notice, has no basis but conjured out of thin air by the Defendant. In any case, the amount of alleged debt has subsequently increased from additional fees raised from new invoices.

The Defendant on the other hand submitted that the mere fact that the Plaintiff had demanded storage charges from the Defendant is not only evidence that the storage of the Defendant's containers in the Plaintiff's yard with the latter's authority, but there must be a presumption of the evidence of an agreement.

I am satisfied on the evidence before me that the Plaintiff has met the threshold of proof before this Court of the existence of a dispute on the debt which the Defendant claims is owned to him by the Plaintiff. The fact that the Defendant had been invoicing the Plaintiff for services rendered do not of itself in any way suggest the existence of a debt nor if it does, is there no dispute as to the amount. On the other hand the evidence show clearly the existence of a debt and which is conceded to by the Defendant which the Defendant owes to the Plaintiff, and which the Plaintiff, in the affidavit of Mr Harry Chand of 25 October say is currently the subject of Magistrate's Courts proceedings.

The components of the alleged debt includes the sum of $2, 705, 66 representing "payment of loss of business." While the other components represent ascertainable losses based on standard figures and charges of sale and maintenance of containers, there are no details as to how the loss of business was incurred by the Defendant.

This claim is challenged by the Plaintiff questioning how the Defendant arrived at the figure. This alone clearly would represent a disputed portion of the alleged debt,which as the Plaintiff rightly pointed out, can only be quantified after evidence is advanced.

The law on disputed debt in winding-up proceedings is well established. The Privy Council in Bateman -v- Coleridge Finance Co. Ltd [1971] UKPC 8; [1971] NZLR 929 at p.932 said:

"It was argued as the debts in question were disputed debts no winding-up order should have been made, and for this purpose their Lordships are prepared to assume that the debts were genuinely disputed debts......In such cases the general rule is no doubt, that no order will be made on a petition founded on such debris."

This statement of law was adopted by our Fiji Court of Appeal in Offshore Oil -v- Investment Corporation Ltd [1984] 30 FLR 90 stating at p.101:

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

As I have already stated there is enough before the Court to conclude that there is a genuine dispute as to the debt and the Plaintiff has raised substantial grounds in support of its claim.

The Defendant's main contention is that the Plaintiff has failed to establish the existence of a legal right which is a pre-requisite to the grant of an injunction. Counsel argued that the Plaintiff's Indorsement of Claim does not show any course of action and consequently the Plaintiff has not raised and created any legal right to support its application for injunction. In support the Defendant referred to Lord Diplock's Statement of the law in this area in Siskina -v- Distos [1979] AC 210. His Lordship said at p.256:

"A right to obtain an interlocutory injunction is not a cause of action. It cannot stand on its own. It is dependant upon their being a pre-existing cause of action against the Defendant arising out of an invasion, actual or threatened by him, of a legal or equitable right of the Plaintiff for the enforcement of which the Defendant is amenable to the jurisdiction of the Court."

In the instance, the Defendant pointed to the Indorsement of Claim in which the Plaintiff merely sought an order restraining the Defendant from petitioning for the Winding Up of the Plaintiff company as the Defendant had threatened in its notice of 22 July 2005. The Indorsement of itself does not show any cause of action and without any cause of action the Defendant argued the Court is left without a serious question to be tried nor is there sufficient precise actual evidence to satisfy the Court of a real prospect of the claim succeeding at the trial see: Re Cable (Lord) (deced) Garrat -v- Wates [1977] 1WLR 7.

The Plaintiffs response is that the threat of Winding-Up and given that the debt is disputed are sufficient grounds for the Plaintiff to apply for injunction. The cause of action flows from the threat.

The law generally on injunction is as summarised by Counsel for the Defendant, in his written submission. The general rule is that the Plaintiff must have established his right at law before he could be entitled to an injunction. There however are exceptions to the general rule. For example, an injunction may be granted before the right is established at law, "if the result of the Defendant's conduct would be to inflict irreparable injury on the Plaintiff" Halbury's Laws of England 14^th Edn. Vol. 16 paragraph 1276.

The Plaintiff claims that the threat of Winding-Up and the actual publication of the petition will cause irreparable harm or injury to it name and business. The Plaintiff is a major player in container business and claims a $9000,000,00 annual turnover. I am satisfied that Plaintiff stands to suffer irreparable injury if the Defendant were allowed to proceed with its petition. The fact that the Plaintiff may have a right to recover damages, does not prevent the Court exercising its discretion to grant the injunction sought.

Clearly this case is an exception to the general rule. The irreparable injury the Plaintiff stands to suffer from the Defendant proceeding with its Winding Up petition is sufficient ground for the exercise of the jurisdiction of injunction by the Court.

On the Defendant's submission of the absence of serious question to be tried this no longer arise following the Court's finding on jurisdiction above. In any case, the mere fact that there is doubt to the existence at the right which the Plaintiff is asserting is not sufficient to prevent the Court from granting an interlocutory injunction (see Halsbury's Law of England 4^th Edn. Vol. 24 para. 955.

Finally the Defendant argued that dispute as to the debt can be addressed during the hearing of the petition itself. This in the Defendant's submission, is the proper procedure for the Plaintiff to adopt. This argument however does not take into consideration the issue of irreparable injury which the Plaintiff is claiming will result from the processes leading up to the hearing of the petition.

In the end I am satisfied that there is merit in the Plaintif's application.

Order is made granting an injunction preventing the Defendant from presenting Winding-Up proceedings against the Plaintiff until further orders.

Leave is given to the Plaintiff to file its Statement of Claim within 21 days.

Costs be in the cause.

F. Jitoko
JUDGE

At Suva
17 February 2006