In re Denarau Projects Construction Ltd [2011] FJHC 190; HBC36.2010 (25 March 2011)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 36 of 2010

IN THE MATTER of DENARAU PROJECTS CONSTRUCTION LIMITED
PETITIONER

AND

IN THE MATTER of The Companies Act (Cap 247)

BEFORE: Master Deepthi Amaratunga

COUNSELS: LAJENDRA LAW for the Petitioner
MUNRO LEYS for the Company

Date of Hearing: 1st March, 2011
Date of Ruling: 25th March, 2011

RULING

1. INTRODUCTION
   

1. This is a company winding up application, and the debt is not disputed. Several adjournments were granted on the basis of settlement of the amount. Not even a part payment was paid, but seeks to stay the winding up order for three months.
   

2. FACTS
   

2. The Petitioner filed this winding up action against the Debtor Company on 22nd April, 2010.
   
3. The Petitioner has filed the memorandum of due compliance on 9th June, 2010.
   
4. On 19th October, 2010 the Debtor Company sought adjournment to settle the debt and also stated that they awaits some payments from a third party and again on 9th November, 2010 another adjournment was sought by the Debtor Company on the basis that settlements are being discussed by the respective parties.
   
5. On 9th November, 2010, it was also stated that Debtor Company does not object to the amount sought in the winding up petition and also sought a final adjournment to settle the debt. It was also stated on that day that the Debtor Company is going through a restructuring process and already 97% of the restructuring is completed and would seek another adjournment and the matter was adjourned to 17thJanuary, 2011 and no progress made during this time even to pay a part payment. So the matter was adjourned to 17th January, 2011 on the basis if not settle by that time to fix the matter for the hearing and accordingly the matter was fixed for hearing on 1st March, 2011.
   
6. On the date of hearing again the Debtor Company sought an adjournment, again and that was refused and the reasons given for that refusal, and proceeded to the hearing.
   
7. Upon the hearing defendant did not object to the winding up order being granted on the material before the court, but sought a stay of winding up order for three months to settle the debt.
   

100. LAW AND ANALYSIS
     

8. Section 223 (1) of the companies act (Chap 247) states as follows:
   

"223(1) On hearing a winding –up petition, the curt may dismiss it, or adjoun the hearing conditionally or unconditionally, to make any interim order, or any other order that it thinks fit, but the court shall not refuse to make a winding-up order on the ground only that the assets of the company have been mortgaged to an amount equal to or in excess of those e assets or that the company has no assets." (emphasis is added).

9. It is clear that upon the hearing of winding up petition the court can either dismiss or to adjourn hearing conditionally or unconditionally. In this winding up application I have neither dismissed nor adjourned the hearing.
   
10. It is pertinent to note that Debtor Company has not file an affidavit in opposition and has admitted the debt. So when the court is granted discretion it has to be exercised judiciously. The types of orders that a court can issue in terms of Section 223(1) can vary depending on the circumstances of the case. In order to exercise the discretion both parties should submit materials before me. Though an opportunity was granted the Debtor Company has not done so. They have neither filed an affidavit in opposition, nor filed any materials to support the contention seeking a stay of winding up order.
    
11. The behaviour of the Defendant Company is not consistent. It is clear from the submissions made by the counsel who appeared for the Debtor Company that though they admitted the debt time was granted for settlement on 22nd July, 2010, 31st August, 2010 and 19th October, 2010, 9th November, 2010 and again on 9th December, 2010. It should be noted that on the 9th December, 2010 the counsel for the Defendant has sought a final adjournment stating that their company restructuring has completed 97% by that date and it was adjourned on the basis that if it was not settled by 17th January, 2011 that it would be fixed for hearing.
    
12. Neither full debt nor even a part payment was made by the Debtor Company, and again on the date of hearing it sought an adjournment, which I refused for the reasons given on that day, and proceeded to hearing and upon hearing it again is trying to delay the winding up order being implemented, by seeking a stay of it for three months for settlement. The behaviour of the Debtor Company cannot be considered as a bona fide debtor who wants to settle the debt. If the request of stay is granted it will amount to an abuse of process and it can be considered as another method adopted by the Debtor to delay the money due to the Plaintiff. Already 11 months have lapse and money has a depreciating quality with time, with the inflation and various other factors, unless interest is added to it. In a winding up the court cannot grant interest. Perhaps this explains the manner in which the Debtor Company behaved in this proceedings and nearly one year has lapsed and not even a part of the debt that amounts to $ 187,875.00 is being paid and now it seeks further time.
    
13. The Debtor Company has submitted the ruling delivered on 21st September, 2010 in the matter of Denarau International Ltd HBE 19 of 2010 and the circumstances in that case differ from this case. I do not have any affidavit material even to consider the application to stay, and the behavior of the Debtor Company will not warrant such a stay.
    
14. It is clear that almost one year has lapsed and no genuine effort was made by even a part payment by the Debtor Company. They have admitted the debt of $187,875.00 as far back in 22nd July, 2010. The amount is substantial and three months staying of winding up order to settle will add to the already delayed sum which has depreciated with time.
    

4. ORDER
   

15. An order is issued to wind up the Debtor Company, and the application to stay the winding up order is rejected and dismissed.
    
16. The cost of this application is assessed at $1,500 assessed summarily.
    

Dated at Suva this 25th day of March, 2011

Mr. Deepthi Amaratunga
Acting Master of the High Court

Suva