In re Northern Projects Fiji Ltd [2011] FJHC 136; HBE 108.2009 (28 January 2011)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. HBE 108 of 2009

IN THE MATTER of NORTHERN PROJECTS FIJI LIMITED

AND

IN THE MATTER of Companies Act

Appearances: Mr N. Lajendra for the Petitioning Creditor
Ms I.Ratuvuku for the Company sought to be wound up
Mr Faktaufon for Marine Industrial Structural Engineering Limited
Date and Place of Hearing: 9 January, 2011
Date and Place of Judgment: 28 January, 2011

Judgment of: Justice A.L.B. Brito-Mutunayagam

JUDGMENT OF THE COURT

1. On 21 September,2009,Matrix Environmental Solutions Limited, filed application to wind up Northern Projects Fiji Limited (the Company sought to be wound up) on the basis that it is indebted to Matrix Environmental Solutions Limited, is insolvent and unable to pay its debts.
   
2. The following companies filed Notice of Intention to appear and support the

Petition:

1. Kasabias Limited
2. CR Engineering Limited

100. DHL Global Forwarding (Fiji) Limited

4. Kooline Refrigeration Limited
5. Top Energy(Fiji) Limited
6. Marine Industrial Structural Engineering Limited
7. Williams & Goslings Limited
8. Motibhai & Company Limited
   

3. Northern Projects Fiji Limited (the Company sought to be wound up ) filed Affidavit in Opposition to the winding up application of Matrix Environmental Solutions Limited.
   

On 14th April,2010, the winding up petition filed by Matrix Environmental Solutions Limited was withdrawn and substituted by a winding up petition by Kasbias Limited.

4. On 4th August,2010, the winding up petition filed by Kasabias Limited was withdrawn and substituted by a winding up petition filed on 19th August,2010, by Kooline Refrigeration Limited (the Petitioning Creditor);this winding up petition is now before this Court.
   

Northern Projects Fiji Limited (the Company) have not filed Affidavit in Opposition to the winding up application of by Kooline Refrigeration Limited.

5. On 9 December, 2010, the day fixed for the adjourned hearing of the petition for winding up, Counsel for the Company sought to be wound up moved for time to file Affidavit in Opposition. Counsel for the Petitioning Creditor objected to this application on the ground that it was mandatory in terms of Rule 31(1) of the Companies (Winding Up) Rules (Cap. 247 Rev 1985 ) (Subsidiary Legislation) that the Affidavit in opposition be filed within 7 days of the date on which the Affidavit verifying the Petition for winding up was filed. The Affidavit verifying the Petition for winding up was filed on 23rd August,2010.I did not permit the Affidavit in Opposition to be filed since it was clearly out of time.
   
6. Counsel for the Petitioning Creditor submitted a Memorandum of Due Compliance with the Companies (Winding Up) Rules (Cap. 247 Rev 1985 (Subsidiary Legislation).

The Memorandum of Due Compliance contains the statutory demand dated 22nd October, 2009, made pursuant to Section 221(a) of the Companies Act(Cap 247 Rev 1985). Affidavits of service of the said statutory demand and service of the substituted winding up Petition on the Company sought to be wound up have been filed. The advertisement in Fiji Times of 12 November, 2010, and the publication in the Government Gazette have also been filed.

At the hearing, Counsel for the Company sought to be wound up did not raise any objection with respect to the filing and service of the aforesaid documents .

7. This action for winding up has been filed on the basis that the Company sought to be wound up is insolvent and unable to pay its debts, and in the circumstances that it is just and equitable that the Company be wound up. The Petitioning Creditor states in its Petition that it served on the Company sought to be wound up, a statutory notice pursuant to Section 221 of the Act Companies Act to make payment of a sum of $29,176.62, and the amount has not been paid for over three weeks since then .
   
8. Section 220 of the Companies Act provides the circumstances in which a company may be wound up by the court. One such ground set out therein is-
   

" if- (e) the company is unable to pay its debts".

Section 221 of the Companies Act provides three instances when a company "shall be deemed to be unable to pay its debts". The relevant provision is contained in sub- section (a) of Section 221and reads as follows;

"if a creditor by assignment or otherwise, to whom the company is indebted in a sum exceeding more than $100 then due has served on the company, by leaving it at the registered office of the company, a demand under his hand requiring the company to pay the sum so due and the company has, for 3 weeks thereafter, neglected to pay the sum or secure or compound for it to the reasonable satisfaction of the creditor."

9. In terms of the aforesaid deeming provision, a company is deemed unable to pay its debts, if it is established that;
   
   1. the company is indebted to a creditor in a sum exceeding $100;
      
   2. the creditor has served a demand on the company requiring the company to pay the sum due; and
      
   100. for 3 weeks thereafter, the company has neglected to pay the sum demanded.
        

Lord Radcliffe in St Aubyn v AG [1951] UKHL 3; (1952) AC 15 at pg 53 stated;

"The word 'deemed is used a great deal in modern legislation. Sometimes it is used to impose for the purposes of a sometimes statute an artificial construction of a word or phrase that would not otherwise prevail. Sometimes it is used to put beyond doubt a particular construction that might otherwise be uncertain. Sometimes it is used to give a comprehensive description that includes what is obvious, what is uncertain and what is, in the ordinary sense, impossible."

10. It is settled law that the court will not exercise its discretion to make a winding up order when the debt is bona fide disputed.
    

Megarry J in Re Lympne Investments ltd 1972(2) AER 385 at pg 389 stated;.

"when a petition is based on a debt which is disputed on substantial grounds, the petitioner is not a 'creditor' within (the meaning of the Companies Act) who has the locus standi requisite for the presentation of the petition, even if the company is in fact insolvent."-

In Mann & Anr –v- Goldstein & Anr (1968) 2 All E.R. 769 at 775,Ungoed-Thomas J said of the Court's jurisdiction to make an order to wind up a company;

"For my part, I would prefer to rest the jurisdiction directly on the comparatively simple propositions that a creditor's petition can only be presented by a creditor, that the winding up jurisdiction is not for the purpose of deciding a disputed debt(that is disputed on substantial and not insubstantial grounds) since, until a creditor is established as a creditor he is not entitled to present the petition the petition and has no locus standi in the Companies Court; and that, therefore, to involve the winding up jurisdiction when the debt is disputed that is, on substantial grounds) or after it has become clear that it is so disputed is an abuse of the process of the court".

11. In this case, the Company sought to be wound did not file Affidavit in Opposition to the winding up application. The debt is therefore undisputed. I conclude that the Petitioning Creditor has satisfied this Court that the debt demanded is due and that the Company sought to be wound has failed to pay the debt. I hold that Northern Projects Fiji Limited is "unable to pay its debts" within the meaning of Section 220(e) read with Section 221(a) of the Companies Act and hence should be wound up.
    
12. I declare the Northern Projects Fiji Limited is insolvent and order the winding up as prayed for in the Petition of the Petitioning Creditor and that the Official Receiver be appointed Provisional Liquidator of the Company. Northern Projects Fiji Limited is ordered to pay costs of $750.00 within 21 days hereof.
    

A.L.B.Brito-Mutunayagam
JUDGE

28 January 2011