In re Amanuca Resort Management Ltd [2012] FJHC 1090; HBE9.2012 (16 May 2012)

IN THE HIGH COURT OF FIJI
AT SUVA

Companies (Winding Up) No. HBE 09 of 2012

IN THE MATTER of AMUNUCA RESORT MANAGEMENT LIMITED

AND

IN THE MATTER of THE COMPANIES ACT (CAP 247)

BEFORE : Master Deepthi Amaratunga
COUNSEL : Mr. Krishna R for the Petitioner.
Ms. Natasha Khan for the Respondent Company.

Date of Hearing : 8th May, 2012
Date of Ruling : 16th May, 2012

RULING

1. INTRODUCTION
   

1. The Petitioner, Pacific Energy (South West Pacific) Limited filed a Winding –up petition against the Company, Amunuca Resort Management Limited (Respondent Company) on 21 February 2012.
   
2. On 27 March 2012 (Respondent Company) filed a Notice of Motion seeking orders that:
   
   • (a) The Petition be struck out on the grounds that it has been filed in the wrong jurisdiction and
     
   • (b) Alternately the Petition be transferred to Lautoka High Court.
     
3. So, as a preliminary point the said issues were argued and the main contention of the Respondent is that the alleged debt on which the winding up was based on was performed in western division, hence outside the territorial jurisdiction of this court. The matter before the court is a petition for winding up of Respondent Company. The notice to pay the alleged debt has been served to the registered office of the Respondent Company located at Suva. When the registered office refused or did not comply with the demand notice in terms of Section 221 of Companies Act the cause of action for winding up in terms of Section 220 (e) arose in Suva, within the territorial jurisdiction of this court. The jurisdiction for winding up can be clearly distinguishable from the jurisdiction to institute a writ action based on the alleged breach of contract. The cause of action for winding up has arisen in the territorial jurisdiction of this court as it has arisen from the failure to comply with the demand notice that was served to the registered office located at Suva. When the Respondent Company located its registered office in Suva, it has amply submitted to the territorial jurisdiction of this court.
   

2. FACTS
   

4. On or about 12 January 2012, Pacific Energy served on Respondent Company a notice under section 221 of the Companies Act at its registered office at Parshotam & Co., Level 2, Mid City, Corner of Cumming Street and Waimanu Road, Suva.
   
5. The Notice demanded payment of $120,575.02 as the amount allegedly due and owing by Respondent Company to Pacific Energy for supply of fuel and fuel products by Pacific Energy to Respondent Company.
   
6. Admittedly the Respondent Company failed and or refused to pay the sum demanded to Pacific Energy (the Petitioner) Pacific energy filed the Petition against Respondent on bout 21 February 2012. An affidavit verifying the Petition was filed on 23 February 2012.
   
7. On 28 February 2012 the Petition was served on the Respondent Company at its registered office at Parshotam & Co., Level 2, Mid City, Corner of Cumming Street and Waimanu Road, Suva. The Petition was advertised in The Fiji Times on 10 March 2012 and in the Government Gazette on 16 March.
   
8. On or about 27 March 2012 Respondent Company filed the Motion seeking strike out of the matter and, alternatively seeking transfer of the matter on the ground of latent lack of jurisdiction. The Respondent admits that in pursuant to the interpretation given in the Sections 2 and 219 of the Companies Act the High Court has obtained the jurisdiction to determine the Winding Up of companies, including the matter before me.
   
9. The Motion is made pursuant to Order 4, rule 1(4) of the High court Rules, 1988. Respondent Company relies on the affidavit of John Stavrou sworn on 24 March 2012 and filed herein in support the Motion.
   

100. ANALYSIS
     

10. Affidavit in support lists the following reasons for the application for the Petition to be transferred to Lautoka:
    
    • (a) Respondent operates its business from the Western Division
      
    • (b) It would be inconvenient and expensive for Respondent and its counsel to travel to Suva from Lautoka
      
    • (c) Respondent is incurring and will incur in future additional disbursement if the Petition is heard and determined in Suva
      
    • (d) The Resort at which Pacific Energy supplied fuel, from which this purported claim arises, is located in the Western Division.
      
11. The Respondent seeks through its Motion for Pacific Energy's Petition to be struck out. The Motion does not state under what provision this order is sought. The only ground on which the Respondent is relying on is that the Petition is filed in the wrong jurisdiction or objection to the territorial jurisdiction and this cannot by any stretch of imagination be extended to strike out. I need not waste time to labour on this issue of strike out as it is totally misconceived without understanding the distinction between the patent lack of jurisdiction and the latent lack of jurisdiction and where a party is relying on the latter it cannot seek strike out.
    

High Court's jurisdiction

12. There is only one High Court of Fiji established by the Administration of Justice Decree 2009.
    

Section 219 of the Companies Act states:

219. The Supreme Court [now the High Court] shall have jurisdiction to wind up any company registered in Fiji.

The Fiji High Court Rules, 1988

13. The Fiji High Court Rules, 1988 state the following:
    

Venue (O.4, r.1)

(1) Proceedings must ordinarily be commenced in the High Court registry located in the Division in which the cause of action arises
(2) ..........
(3) ..........
(4) Any action commenced in the High Court may be transferred by the Court from one High Court registry to another or to a Magistrate's Court. (emphasis is added)

What has to be determined is the place where the cause of action arise in an action for winding up.

14. The Companies Act (Cap 247) and the Winding-Up rules deals with the jurisdiction and cause of action relating to a winding –up.
    

1. Section 220 of the Companies Act states:
   

220. A company may be wound up by the court, if - .......

(e) the company is unable to pay its debts;

2. Section 221 of the Companies Act states:
   

221. A company shall be deemed to be unable to pay its debts –

(a) if a creditor ..... 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 or to secure or compound for it to the reasonable satisfaction of the creditor; or ............. [emphasis added]

15. The notice in terms of the said provision has to be served by leaving it at the registered office of the Respondent Company, which is situated in Suva. The company has a choice of locating its office and once that is done it cannot allege unnecessary expenses in the jurisdiction it selected to locate its registered office.
    

Rule 22(1) of the Winding –up Rules states:

22. – (1) A petition shall be presented at the office of the registrar, who shall appoint the time and place at which the petition is to be heard."

1. Section 24 (1) of the Winding – up Rules states:
   

24. – (1) Every petition shall, unless presented by the company, be served upon the company at its registered office, if any, and, if there is no registered office, at the principal or last known principal place of business thereof, by leaving a copy of the petition ...

The Company has by its choice located its registered office in Suva and as per the rules and the provisions in the Companies Act the demand notice in winding up is served to the registered office, by leaving a copy of notice at the said registered office. A company is deemed insolvent when the demand is for a sum over $100 and when the company fails to meet the demand in 3 weeks.

16. The Master of the Rolls, Lord Esher defined 'cause of action" in Read v Brown[1888] UKLawRpKQB 186; (1888) 22 QBD 128 (at 131) as:
    

...every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to a judgment of the court.

17. In Reads v Brown the plaintiff brought an action for a debt that was assigned to the plaintiff. The original debt was incurred outside of London. The debt however was assigned in London. The question was whether London's Mayor Court had jurisdiction over the action. The Court of Appeal held that the plaintiff had to prove the assignment of the debt in order to succeed in the action. Therefore part of the cause of action arose in London. The Court held that London's Mayor's Court had jurisdiction over the action.
    

Lopes LJ at 133 said:

I agree with the definition given by the Master of the Rolls of a cause of action, and that it includes every fact which it would be necessary to prove, if traversed, in order to enable a plaintiff to sustain his action. In the present case the plaintiff to succeed without proving the assignment; it would be useless for him to prove the mere delivery of the goods. The assignment was therefore part of his cause of action, and that part of the cause of action arose within the City.

18. Read v Brown was applied by Gates J (as his lordship then was ) in State v President [2000] 1 FLR 241
    

Gates J (now the Chief Justice) in State v President said at page 250:

This case [Read v Brown] was followed in Bennett v. White [1910] UKLawRpKQB 116; [1910] 2 KB, 643. Stroud's Judicial Dictionary 4th Edit. Defines cause of action as 'the entire set of facts that gives rise to an enforceable claim." Action is to be considered less wide than cause of action. Cause of action "is that which forms or relates to its basis."

Further at page 254, Gates J said:

Every fact does not have to occur within a particular jurisdiction. So long as the plaintiff relies on facts which are the basis of his claim, some of which occur in the jurisdiction where he seeks to commence his action, he can rightfully file action within that jurisdiction. He may of course face an application from the litigants he sues. For a transfer to another jurisdiction. I find therefore that there are proper circumstances permitting the Applicant to commence his action at the Lautoka High Court Registry.

19. The winding – up is sought in terms of the provisions of the Companies Act and the 'cause of action' created by the same Companies Act. The event that entitled Pacific Energy to file the Petition is Respondent' is the insolvency, as interpreted in the deeming provision contained in the Section 221 of Companies Act. The said provision that the service of the notice should be on the registered office of the Respondent company which is situated in Suva and this was done by the Petitioner and when Respondent provided its registered address to the company registry it has submitted to this jurisdiction for the purpose of winding up, and now it cannot allege that extra expense will be incurred if the matter is heard in Suva. The Respondent Company is having its registered office in Suva by its own choice and if that is so the most convenient place to institute winding up should also be Suva. The Respondent cannot say that institution of the action will inconvenience them, as they have submitted to the jurisdiction when it located its registered office in Suva.
    
20. The case that was referred to me by the counsel for the Respondent Company cannot be applied to the issue before me John Beater Enterprises Pty Ltd v Gounder [2003] FJHC 101 is a case where the Magistrate Court rules were interpreted in appeal by the High Court. This is not a case where the cause of action in winding up was determined. The distinction of a writ action and winding up matter has to be made clear when it relates to the place where the cause of action has arisen.
    
21. Pacific Energy, as the Respondent Company's trade creditor would expect payments to be received at its head office. Pacific Energy's registered office and its head office are in Suva and it is known principle that a debtor should seek the creditor.
    
22. Section 31(1) of the Winding-up Rules requires any affidavits in opposition to a winding-up petition to be filed within seven days of the date on which the affidavit verifying the petition is filed. The Petition was served on Respondent Company on 28 February 2012. The Respondent should have filed the Motion within the 7 days required for filing of any opposition. However it was filed on 27 March 2012, a month later. Considering the circumstances of this case I will grant leave to the Respondent a further 14 days to file their objections if they desire to do so.
    

4. CONCLUSION
   

23. It is clear that when there is no patent lack of jurisdiction an action or matter cannot be struck off on the basis of jurisdiction. In this matter the cause of action for winding up has arisen upon the failure to comply with the demand. The Demand as per the companies winding up rules cannot be made to any place other than its registered office, and in this instance the registered office is located in Suva and the demand was made to the said registered office in Suva. So, the cause of action for winding up arose when the demand was not complied with in the stipulated time period and this was in Suva and the jurisdiction for winding up has arisen in Suva. The application to transfer this matter is accordingly struck off and dismissed. When this motion was filed by the Respondent, the time for the opposition of winding up petition has lapsed, but considering the circumstances of the case I will grant a further 14 days from today for the Respondent Company to file and serve an affidavit in opposition if they so wish. Considering the nature and belateness in application I will also grant a cost of $750 in favor of Petitioner.
    

5. FINAL ORDERS
   
   1. The Preliminary issues raised by the Respondent Company are over ruled.
   2. The Respondent is ordered to pay a cost of $750 as the cost of this motion, assessed summarily, within 14 days to the Petitioner.
   100. The Respondent is granted leave to file an affidavit in opposition within 14 days if they wish to oppose the winding up petition if not the matter is deemed unopposed and will proceed to hearing.
        

Dated at Suva this 16th day of May, 2012.

.................................................
Master Deepthi Amaratunga
High Court, Suva