In re Western Customs Brokers (Airport) Ltd [2011] FJHC 693; HBF41.2010 (2 November 2011)

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IN THE MATTER OF WESTERN CUSTOMS BROKERS (AIRPORT) LTD a limited liability company having its registered office at Nadi Airport.

Before: Anare Tuilevuka
Counsel Appearing: Mr. Faiz Khan of Faiz Khan Lawyers for the Petitioner & for Kooline Refrigeration (Lautoka) Ltd – a Supporting Creditor.
: Mr. A.K Narayan for Tubemakers & Roofmart (SP) Ltd – a Supporting Creditor.
: Mr. F. Koya on instructions of Iqbal Khan & Associates for the Respondent Company.

Date of Hearing: Tuesday 25 October 2011.
Date of Ruling: Thursday 27 October 2011.
(Written Ruling circulated on 02 November 2011)

A creditor whose debt is undisputed and who cannot obtain payment is entitled ex debito justitiae [as a matter of right] to a winding up order.

(a) if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding $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 some 3 weeks thereafter, neglected to pay the sum so due and the company has, for 3 weeks thereafter, neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor;

RE: OUTSTANDING DUTY LIABILITY

.....................................
FIRCA investigations have revealed that the above duty liability may have already been paid by your Company to your Customs agent however; this payment has either not reached the Customs or the cheque payment by your Agent has been subsequently dishonored by the relevant Bank.

Consequently, your attention is drawn to the provisions of Section 153 and 154 of the Customs Act 1986 which provides that the importer of the goods is not relieved of any liability contained in the Customs laws which includes the payment of any duty levied on the goods. Any arrangement which may have existed as between your Company and the Customs Agent is a private matter between yourselves however, duties due and owing to the State is ultimately your responsibility as importer of the said good(s).

Therefore, please TAKE NOTICE that your Company is now given fourteen (14) days from the date of this letter to settle the outstanding dues which is a debt due to the State. A failure to do so may result in the enforcement of certain provisions of the Customs Act which includes the imposition of a lien against all goods that come under Customs control.

4. ..I informed my Principal about the matter which he advised me that Mr. Faiyaz Koya is handling the matter and not to worry much about it. He further informed me that Mr. Koya will appear on the matter on 2nd September 2011.

5. ..on the morning of 2nd September 2011, I called Mr. Koya and was assured by him that he was on his way to Lautoka High Court to appear in the above matter.

6. ..I did come to Court on 2nd September 2011 to look for Mr. Koya to make sure he appears as he would be well versed with the matter. Also I would not be a better position to comment on the case though on record.

....Due to the downfall in our business and the major reason Licence being revoked it has taken a great impact on our business which we do not see in any way to honor the Courts agreed amount until and unless we get the Customs Licence back which we are doing our best to get it back.

As we have mentioned during our meeting that our company can only afford to pay $2000 maximum on the due dates and this figure we promise will increase once we get the Customs Licence back.

Sir, Winding up of our business will not solve the issue but to consider our proposal and allow us time to pay. (my emphasis)

3.	..the amount of $54,593.34 received from Messrs Bakels Fiji Ltd was for the payment of goods to FIRCA for clearance of the Petitioner's goods that arrived from overseas.
4.	..my Company cleared the said goods and was delivered to the Petitioner's premises which was acknowledged by the Petitioner.
5.	..the responsibility of paying the amount to FIRCA was for the Respondent Company to pay and not the Petitioner.
6.	..I did inform the Revenue Manager, Lautoka of the progress of our Loan dated 3rd May, 2010 and pay the outstanding amount to FIRCA. Annexed hereto and marked with letter "SP1" is a copy of the said letter.
7.	..the said goods of two containers for which the Petitioner paid the amount of $54,593.35 had been delivered to them on the 21st day of September and 18th day of December, 2009 respectively. A copy of the said Delivery Docket is annexed hereto and marked "SP2".
8.	..attached is the Pre-release copy of the .......by FIRCA upon payment of Pre-Release fee $25.00 per container.
9.	..I did write to the Manager of the Petitioner by Letter dated 27th August, 2010 informing him of the progress towards our Loan with the Bank. A copy of the said letter is annexed hereto and marked "SP3".
10.	..on the 1st day of July, 2010, I email to Chief Executive Officer of FIRCA based at Headquarters, Suva in regards to appointment to see him as soon as I received a copy of letter from the Manager Mr. Henry Hawkins of the Petitioner. Annexed hereto and marked with letter "SP4" is a copy of the said letter.
11.	..I have not been informed of the outstanding amount in correspondence from the Manager of FIRCA, Lautoka nor the Chief Executive Officer Headquarters, Suva.
12.	..I wrote to the Chief Executive Officer of FIRCA on 9th July, 2010 explaining the reason for non-payment and possible appointment with him to discuss about our financial situation. A copy of the said letter is annexed hereto and marked with letter "SP5".
13.	..I wrote again to the Chief Executive Officer of FIRCA on the 2nd day of November, 2010 in regards to the proposal and a possible appointment to discuss further on the outstanding amount but did not receive any response.
14.	..on the 22nd day of November 2010, I wrote again to the Chief Executive Officer of FIRCA explaining in detail the reason for non-payment and a possible appointment.
15.	..the payments made by the Petitioner were deposited into the account of the Petitioner and not personally used for other purpose other than meeting of some cheques paid for other client which made it impossible to pay duty etc for the Petitioner at that particular time. Annexed hereto and marked with letter "SP6" is a copy of the Bank Statement.
16.	..the Company has been facing financial difficulties due to some prominent customers not honouring their arrangement of payment and this has resulted in the above situation of not my company paying some duties for other clients who had supported the notice together with the Petitioner of Winging (sic) Up of my Company.
17.	..the Company is not insolvent and has capability of paying the duty as I have made application for loan by putting my vacant free lot valued at $40,000, my three bedroom house located at Balawa Estate valued at $320,000 and the Company Vehicles as a security.
18.	...my Company has been in shipping business for the last twenty-five years (25) years and has employed fifteen (15) staffs and in this difficult situation, I have not made any staff redundant.

1.-(1) Where, in beginning or purporting to begin any proceedings or at any stage in the course of or in connection with any proceedings, there has, by reason of anything done or left undone, been a failure to comply with the requirements of these Rules, whether in respect of time, place, manner, form or content or in any other respect, the failure shall be treated as an irregularity and shall not nullify the proceedings, any step taken in the proceedings, or any document, judgment or order therein.

(2) Subject to paragraph (3), the Court may, on the ground that there has been such a failure as is mentioned in paragraph (1), and on such terms as to costs or otherwise as it thinks just, set aside either wholly or in part the proceedings in which the failure occurred, any step taken in those proceedings or any document, judgment or order therein or exercise its powers under these Rules to allow such amendments (if any) to be made and to make such order (if any) dealing with the proceedings generally as it thinks fit.

.....A company may be at the same time insolvent and wealthy. It may have wealth locked up in investments not presently realizable; but although this be so, yet if it have not assets available to meet its current liabilities it is commercially insolvent and may be wound up."

252.-(1) The court may, at any time after an order for winding-up, on the application either of the liquidator or the official receiver or any creditor or contributory, and on proof to the satisfaction of the court that all proceedings in relation to the winding-up ought to be stayed, make an order staying the proceedings, either altogether or for a limited time, on such terms and conditions as the court thinks fit.

(2) On any application under this section, the court may, before making an order, require the official receiver to furnish to the court a report with respect to any facts or matters which are in his opinion relevant to the application.

(3) A copy of every order made under this section shall forthwith be forwarded by the company, or otherwise as may be prescribed, to the registrar for registration.

After discussion with other judges of the Companies Court, I have the following further statement to make with regard to applications to discharge winding up orders: see Practice Note (Winding up Order: Rescission) [1971] 1. W.L.R. 4. Applications to rescind winding up orders will henceforward only be entertained if made (a) by a creditor, or (b) by a contributory, or (c) by the company jointly with a creditor or with a contributory. In the case of an unsuccessful application the costs of the petitioning creditor and of the supporting creditors will normally be ordered to be paid by the creditor or the contributory making or joining in the application. The reason for this direction is that if the costs of an unsuccessful application are made payable by the company, they fall unfairly on the general body of creditors. (my emphasis)

In recent years, applications to rescind a winding up order before it has been drawn up have become increasingly common. Owing to the great increase in the number of such orders it often happens that some time elapses before the order can be drawn up. The making of the order, however, affects all creditors of the company, and gives the Official Receiver authority to act forthwith; and in the circumstances the inherent power of the court to revoke or vary an order at any time before it is perfected is one that ought to be exercised with great caution. Accordingly, although the matter is one for the discretion of the court in each case, application to rescind a winding up order will not normally be entertained by the court unless it is made within three or four days of the order, and is supported by an affidavit of assets and liabilities. If an application is made later than this, the affidavit should also establish the exceptional circumstances relied upon as justifying the application.

Cases in which the making of the order has not been opposed owing to some matter such as an error or misunderstanding in instructing counsel may, if the application is made promptly, still be dealt with on a statement by counsel of the circumstances; but apart from such cases, the court will normally require any application to be supported by affidavit.

In making this statement, I am speaking after consultation with the other judges of the Companies Court.

^[2] This is stated in a letter dated 21 April 2011 by Shalendra Prasad to the Manager, Bakels Fiji Limited – which is exhibited and marked “C” to the affidavit of Qisa Vokanavanua.
^[3] Consignment C14508.
^[4] Consignment C19833.
^[5] "entry" is defined under section 2 of the Customs Act to mean a prescribed form of declaration (with or without additional documents as require under this Act) and with the automatically generated unique registration number c such form and registered by means of an electronic message transmitted to the custom computer system but the duty has not yet been paid and receipted.
^[6] in accordance with the Terms of Settlement.
^[7] to inform them that the case would be called in court on 01 September 2011.
^[8] As per Singh J in NBF Asset Management Bank v Taveuni Estates Limited [2009] HBC 245/08S 13 January 2009 at [8].
^[9] [1926] VLR 283.
^[10] [1876] UKLawRpCh 66; (1876) 2 Ch D 116 as per Jessel MR.
^[11] See Re Ba Provincial Holdings Ltd [2011] FJHC 459; HBF 32.2009 & HBE02.2010 (19 August 2011).
^[12] Re National Funds Assurance Co. (1876), 24 W.R. 1066; 10 Digest 1080 and Re European Life Assurance Society (1869), L. R. [1869] UKLawRpEq 195; 9 Eq. 122; 10 Digest 819, 5335 are authority that a company (other than a life assurance company) may be wound up on the ground of inability to pay its debt when it is commercially insolvent, namely, unable to pay its debts as they become due, although its assets when realized, including uncalled capital, exceed its liabilities.
^[13] Letter dated 1 November 2010 and 8 November 2010.

High Court of Fiji

In re Western Customs Brokers (Airport) Ltd [2011] FJHC 693; HBF41.2010 (2 November 2011)