In re Sigatoka Electric Ltd [2011] FJHC 160; HBF43.2009 (11 March 2011)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Winding Up Action HBF 43 of 2009

IN THE MATTER of
SIGATOKA ELECTRIC LIMITED

AND

IN THE MATTER of the Companies Act, 1983

Before : Master Anare Tuilevuka
Counsel : Mr. Faiz Khan for R. Patel & Company for the Petitioner
: Mr. Naidu for Pillai Naidu & Associates for the Company

Date of Ruling : 14th of March 2011

RULING
(Interrogatories in a Winding-Up proceeding)

BACKGROUND

[1]. Before me is an application by the petitioner, Engineer Procure Construct (Fiji) Limited (“EPCFL”), to serve some interrogatories on the defendant company, Sigatoka Electric Limited (“SEL”) in this winding-up case. EPCFL alleges in its petition a very substantial debt owing to it by SEL for materials and services that EPCFL provided to the Momi Bay Project on the request of SEL. SEL however maintains that it was in a joint venture partnership with EPCFL in the Momi Bay Project. Hence – when EPCFL provided those materials and services, it did so to the developer of the Momi Bay Project (“developer”). And it did so as a partner in its joint-venture with SEL. Hence, the tab for those materials and services is for the benefit of the joint venture and for the developer to pick up.

[2]. That was the basis on which SEL managed to convince Inoke J on the 24th of November 2009 to grant ex-parte an injunction to restrain EPCFL from advertising the winding up petition until further orders. In his ruling, Inoke J observed that the material placed before him raised a serious issue as to whether the relationship between EPCFL and SEL was that of a joint venture partnership or was that of a contractor - subcontractor.

[3]. Later, at the inter-partes hearing to consider whether or not the interim injunction should continue, Inoke J maintained the above position. His ruling delivered on the 5th of October 2010 highlights that even the various emails and correspondence that EPCFL exhibited in its affidavit in opposition allude to a “joint venture” between the parties:

• (i) When I heard the ex-parte application counsel for the Respondent convinced me that the debt here arose out of a joint venture between the two companies and the Momi Bay Project developer, Matapo Limited.
• (ii) Having considered the new affidavit material I am not persuaded otherwise. The petitioner represented in its own documentation to the developer and the FEA that it was in joint venture with the Respondent for the Project. It is true that there was no written joint venture agreement but it is also true that there was no subcontract agreement. In any event it is not necessary to have such agreements in writing to be enforceable.
• (iii) The legal basis for the debt is being seriously challenged.
• (iv) The injunction should be continued
• (v) The issue should go to trial. I give leave to the parties to call oral evidence on whether the relationship between the two companies was that of a joint venture partnership or a contractor-subcontractor.
  

(my emphasis)

[4]. Some 4 weeks after the above ruling, R Patel & Company filed a summons for interrogatories on the 9th of November 2010 under Orders 24 and 26 of the High Court Rules 1988 seeking leave to issue and serve the following interrogatories.

(1) That within 14 days, the Respondent provide in an affidavit the answer to the following question and also provide the following discovery:

(a) What was the full amount of fees received by the Respondent Company from Matapo Limited for the Momi Bay Project?
(b) Copies of the invoices the Respondent Company submitted to Matapo Limited for payment and
(c) Copies of payment vouchers the Respondent Company received from Matapo Limited.

(2) Cost of this application be costs in the cause.

[5]. On the 27th of January 2011 Messrs Pillay Naidu & Associates filed a summons under Order 14 Rule 6, Order 26 Rule 8 and under Order 18 Rule 18 of the High Court Rules 1988 seeking the following orders:

• (1) that the filing of summons for interrogatories by the petitioner is contrary to the interlocutory judgment of Justice Inoke delivered on the 5th of October 2010.
• (2) that the application by the Petitioner is misconstrued and an abuse of the process.
• (3) that in light of the Petitioner’s application the petition should be dismissed and/or the Petitioner should be ordered to file a statement of claim.
• (4) that there be an order for costs in favour of the Respondent Company
  

WHETHER OR NOT INTERROGATORIES ARE APPROPRIATE IN WINDING UP PROCEEDINGS?

[6]. As a starting point, I note that Order 26 Rule 1 says nothing about interrogatories being applicable only in one particular type of cause or matter (see below):

A party to any cause or matter may apply to the Court for an order

(a) giving him leave to serve on any other party interrogatories ..........
(b) requiring that other party to answer the interrogatories ..........

[7]. I also note that Order 24 which deals with discoveries in general appears to be couched in language that presupposes that discovery of documents are only applicable in actions which are begun by writ.

[8]. I agree though with Mr. Naidu that a winding up proceeding is meant to be summary in nature. In these proceedings, the court is meant to deal only with cases where the affidavit verifying petition is prima facie proof of the debt alleged and where the debt is not disputed on substantial grounds.

[9]. I also agree with Mr. Naidu’s submission that the formal discovery-procedures which are the norm in a writ-action would be superfluous in a summary proceeding. Hence - a plaintiff who seeks a discovery order against the defendant in any summary proceeding may give the impression that she is fishing for information to cover her inability to form even a prima facie case.

[10]. At this point, I recall Inoke J’s emphasis in his rulings (see above) that, in this case, neither the debt nor the amount is being disputed. Rather what is at issue is who owes the debt and to whom (is it owed by SEL to EPCFL or it owed by the developer to the SEL-EPCFL joint-venture?). This is the issue on which leave was granted to ECFL and SEL to call viva voce evidence.

[11]. I see from accumulated caselaw material on winding up proceedings that, where the debt is disputed on substantial grounds, the court has either dismissed the petition or granted leave to parties to call viva voce evidence. Where the line is drawn between the two is not clear to me. That is for another day. Anyhow, both symbolize a judicial response to dealing with a disputed debt that can no longer be determined summarily.

[12]. In a sense, the granting of leave to call viva voce evidence in a winding up proceeding has the same effect as a court order under Order 28 Rule 9(1) in respect of an originating summons[1].

[13]. This is the position that Mr. Khan postulates. He is adamant that, since the affidavit verifying petition is being challenged on material grounds, and which led to the granting of leave to call viva voce evidence, and since the proceedings are thereby no longer summary in nature – it is perfectly proper and in accordance with principle that interrogatories be administered.

[14]. The foundation of Mr. Khan’s case theory appears to have been laid in the case of In Re Emma Silva Mining Company[2] cited by Tilakawardane, J of the Sri Lankan Court of Appeal in Colombo Engineering Enterprises (PVT) Ltd & Others v Hatton National Bank Ltd CALA NO. 197/98 D.C. COLOMBO NO. 4767/SPL September 23, 1998:

The right to cross-examine in these proceedings was also recognized in the case In Re Emma Silva Mining Company[3] where it was held that: "The petitioner had a right to the production of the Companies books, papers on the cross-examination of the secretary for the purpose of testing the evidence, but for no other purpose". (my emphasis)

...............................

Whilst no doubt the verifying affidavit is always a necessary document, in all cases it may not always be sufficient to verify the petition. In such cases the Judge clearly has a discretion to allow the testimony of witnesses and their cross-examination. It may appear to be contradictory to the statutory provisions which provide that affidavits should in ordinary circumstances be sufficient prima facie evidence of the statements of the petition, but where the verifying affidavit is not sufficient, then and only then must opportunity be afforded for the adducing of evidence and/or cross-examination of the deponent witnesses.

[15]. The reasoning in In Re Emma Silva Mining Company is attractive. If adopted, it would mean that EPCFL would have to have the right to cross examine SEL’s secretary at the hearing of the petition. And flowing from that, EPCFL would have to have the right to the production of SEL’s books and papers through SEL’s secretary - for the purpose of testing the evidence.

[16]. Now I ask, is there any reason why the above cannot be adopted in this case? The answer to that, in my view, is “No”. There is every reason to adopt the above. The right to call viva voce evidence as derived from the granting of leave must carry with it the right to cross-examine the other party’s witnesses and to extract material evidence (both oral and documentary) therefrom the said witnesses.

[17]. The following extract from Pennyquick J’s ruling in Re Travel and Holiday Clubs Ltd (1967) 2 ALL ER 602 captures the essence of the above point:

The court would not in the exercise of its discretionary jurisdiction, be satisfied with prima facie evidence but would require the petitioner to substantiate his case more fully; that in such cases it would require, where practicable, the evidence of witnesses with direct knowledge of the matters on which they were testifying, and on which they could be cross-examined, and which conformed to the ordinary rules of evidence.

[18]. Hence, if at the hearing of this petition, EPCFL is to be allowed to cross-examine SEL’s secretary under the ordinary rules of evidence, and thereby is able to extract from SEL’s secretary all of SEL’s books and papers, and given that the proceedings are now stripped of its “summary” character, there is no reason under the sun to deny EPCFL’s interrogatories – subject of course to the governing principles under Order 26 Rule 1(3)).

[19]. Hence, while I agree with Mr. Naidu that it is most inappropriate to administer interrogatories in a winding up proceeding given the intended summary nature of the said proceedings, I agree also with Mr. Khan that it is in accordance with principle that interrogatories can be administered in such a proceeding once leave is granted to parties to call viva voce evidence.

[20]. Having said that, I now turn to the particular interrogatories in question in this case.

[21]. Whether or not interrogatories will be allowed is purely a matter of discretion for the courts. In Mohammed Alam v Colonial National Bank, Queensland Insurance (Fiji) Ltd, Registrar of Titles and Mohammed Shameem Airud Khan (unreported) Civil Action No. HBC 02 of 2006 delivered on 22nd June 2007, Master Udit reiterated that interrogatories will be premature, and refused on that basis, if the application is made before discoveries are completed or have not been attended to.

[22]. In the context of this case, it can be deemed that all discoveries have been completed since all affidavits have been filed.

[23]. The interrogator had to be able to show that his interrogatories, if answered when served, would serve a clear litigious purpose by saving costs or promoting the fair and efficient conduct of the action. I now turn to each particular interrogatory sought.

What was the full amount of fees received by the Respondent Company from Matapo Limited for the Momi Bay Project?

[24]. I will allow this interrogatory. But will break it down into two portions as follows:

(i) Did the respondent company receive from Matapo Limited any fees?
(ii) If so, how much and for what work/services?

[25]. The answers to the above may tend to shed light on what sort of arrangement there was between the developer and SEL and may destroy the case of SEL. This interrogatory is also in the nature of a request for further and better particulars of SEL’s case. It is in proper form.

Copies of the invoices the Respondent Company submitted to Matapo Limited for payment.

[26]. I will not allow this interrogatory. It presumes that SEL did submit documents for payment to Matapo for payment. Also, it is in the nature of a request for evidence.

[27]. It is not permissible to request by way of an interrogatory what is mere evidence of the facts in dispute (as per Lord Esher MR in Marriott v Chamberlain). Also, interrogatories cannot seek information as to the content of documents (Herschfeld v Clarke [1856] Eng R 167; (1856) 11 Exch 712) or to the interpretation of discoverable documents (see Mohammed Alam v Colonial National Bank). EPSFL may have to apply for specific discoveries or extract these documents in the course of cross-examination.

Copies of payment vouchers the Respondent Company received from Matapo Limited.

[28]. Same as above.

CONCLUSION

[29]. In a winding up proceeding, interrogatories can be administered where leave has been granted to the parties to call viva voce evidence. In this case, I grant leave to the petitioner to serve interrogatories only in respect of the first interrogatory. This must be done within 7 days of this ruling. The respondent company must file its answer in affidavit form within 14 days thereafter. Costs in the cause. This case is adjourned to Monday 4th April 2011 for mention.

...................................
Anare Tuilevuka
Master

At Lautoka
14th March 2011.

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^[1] i.e. the petition, after the granting of such leave, is henceforth to be treated as if begun by writ with the affidavits to stand as pleadings.
^[2] 1875 Chan A 1994.
^[3] 1875 Chan A 1994.