Matapo Ltd v Downer Construction (Fiji) Ltd [2007] FJHC 114; HBE 111.2006 (16 April 2007)

IN THE HIGH COURT OF FIJI
AT SUVA
COMPANIES JURISDICTION

WINDING UP ACTION NO. HBE 111 OF 2006

BETWEEN

MATAPO LIMITED
Applicant/ Company

AND

DOWNER CONSTRUCTION (FIJI) LIMITED
Respondent/ Petitioner

Mr I. Roche with Ms J.S. Raniga for the Petitioner
Mr K. Muaror for the Company

Date of Hearing: 3.4.07
Date of Decision: 16.4.07

DECISION

The Petitioner Downer Construction (Fiji) Limited (the 'Petitioner') filed a Petition to wind up Matapo Limited (the "Company") on 20 December 2006.

Pursuant to ex-parte motion dated 22 December 2006, an order was made that day granting "an interim injunction restraining the Respondent and/or its agents and/or its servants from advertising in any local or international newspapers, Gazette, media or any other method or form of advertisement until further Order of this Court".

The motion was made returnable for 22 January 2007. The parties appeared before me on that day with their counsel. As ordered, Affidavit in Response was filed on 24 January 2007. This was followed by an Affidavit in Reply by the Company on 9 February 2007.

The learned counsel for the Petitioner handed in his written submission on 19 February and Mr Muaror for the Company filed his on 20 March.

The application was heard on 26 March. After the hearing both counsels agreed to have a meeting with their respective clients and the matter was adjourned to 3 April 2007. There was no solution found to the issues, so the court was asked to give its Decision on the application for the injunction be dissolved and the Petitioner be allowed to advertise and to proceed with the Petition to wind up the Company.

Consideration of the Application

The facts on which the Petition is based are very simple. The alleged debt is the sum total of two 'Progress Payment Certificates' issued to the Company's Architect for work done by Downer (the 'Petitioner') at the Momi Bay construction site.

The Company accepted these certificates and agreed to pay the amount claimed totalling $4,520,218.00. There is no dispute as to the amount. Even Mr Muaror for the Company did not dispute that this amount is due and owing except that he relies upon certain interpretation which he gives to clause 26 of the contract between the parties. Hence, he submits, injunction should remain.

The law is quiet clear that before an injunction will be granted that is, the Court has to be satisfied that there is a serious question to be tried and that the plaintiff has to show that there is a real prospect of succeeding in his/its claim for a permanent injunction at the trial (American Cyanamid Co. -v- Ethicon Ltd. [1975] AC 369).

In this case these requirements have not been fulfilled as in view of the admission of debt there is no serious question to be tried.

The principle where the Company admitted the existence of a debt to the Petitioner but disputed the amount of the debt alleged in the Petitioner, it was held, and it is apt:

"that the only qualification required of the Petitioner was that it was a creditor; and that, there was no doubt (and there was none here) that the petitioner was a creditor for a sum which would otherwise entitle it to a winding-up Order, a dispute as to the precise sum owned was not sufficient answer to the petition". (In re Tweeds Garages Ltd. [1962] 1 Ch. 407)

In the present case the Company has not produced any good reason to prevent the Petitioner from proceeding with the Petition. It appears that the Company is unable to pay its debt. Hence the Petitioner having established the debt and that there being no dispute on substantial grounds, the correct test in approaching these matters is as Harman J. said in Cornhill (supra) quoting from Ungoed - Thomas J. in Mann -v- Goldstein (1968) 1 WLR 1091 at 1096 where he 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 his own remedy in paying the undisputed debt which he 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".

This I find is a case where the Company has chosen not to pay the debt to which the following statement of Harman J in Cornhill (supra) is applicable:

"In my view in such circumstances the creditor was entitled to (a) threaten to and (b) in fact if it chose to present a winding up petition...".

The Company whilst admitting that the money is due and owing still submits that the debt is contested on substantial grounds after giving an interpretation to Clause 26(2) of the Construction Contract of February 2005 ("Construction Agreement") which the Company executed. Counsel submits that by virtue of the Respondent's determination of the contract under Clause 26(1)(a), the application of Clause 26(2) of the Contract was activated to both the Company and the Respondent as to their respective rights and liabilities.

I see no merit in the Counsel's submission as above for the purposes of the present application to dissolve the injunction.

On the Company's own admission the debt is admitted and I see no justification to allow the interim injunction to continue.

In his submission in opposition to the continuation of Interim Injunction, Mr Roche raised an issue that there was no undertaking as to damages at the time of obtaining interim injunction ex-parte.

This omission he says is fatal and therefore the injunction must be dissolved. However, he says there was a belated undertaking but it is too late and inadequate. Also he says that there is no evidence to satisfy the requirement that the Company is on a firm financial footing, with this I agree.

In view of the grounds on which I propose to decide this application, the question of undertaking as to damages and its adequacy is not of any significant importance in all the circumstances of this case. But in passing suffice is to say, as Byrne J said in David Gilmour & Others -v- Janusz Kubs (HBC 0655 of 1998):

"However there is nothing in the cases so far as I can ascertain which says the undertaking must be given at the time the injunction is granted. In my judgment it can be given at any time before the judgment is pronounced."

In the outcome, for the aforesaid reasons the said interim injunction of 22 December 2006 is dissolved. The Petitioner is at liberty to proceed with the legal procedural requirement to wind up the Company. The Company is ordered to pay to Counsel for the Petitioner costs of this application the sum of $400.00 to be paid within 7 days.

D. Pathik
Judge

At Suva
16^th April 2007