In re Metal Works and Joinery Ltd [2012] FJHC 20; HBF013.2011 (20 January 2012)

IN THE HIGH COURT OF FIJI AT LAUTOKA
CIVIL JURISDICTION

Companies (Winding Up) Proceedings
No. HBF No. 013 of 2011.

IN THE MATTER of METAL WORKS & JOINERY LTD a limited liability company having its registered office at C/o Faiz Khan Lawyers, Level 2, 131 Vitogo Parade, Lautoka.

AND

IN THE MATTER of the COMPANIES ACT (Cap 247).

Before: Anare Tuilevuka

Counsel Appearing : Mr. Suresh Maharaj for the Petitioner.
: Mr. Faiz Khan for the Respondent.
: Mr. Pickering for Jamnadas & Associates - for Ullrich Aluminum Company Limited – a Supporting Creditor.
No Appearance for Pacific Glass & Aluminum Ltd – other Supporting Creditor.

Date of Ruling : Friday 20 January 2012.

RULING

[1]. Rohit Deo trading as Hardware Wholesalers Fiji presented a petition to this Court on 21 June 2011 to wind up Metalworks & Joinery Limited ("MJL"). The petition is premised on the allegation that MJL is indebted to Deo in the sum of $9,002-00 (Nine Thousand and Two Dollars). A statutory demand notice pursuant to section 221 of the Companies Act (Cap 247) was served on MJL on 07 February 2011. The notice gave MJL 21 days to settle the sum at the office of Messrs Suresh Maharaj & Associates at Lautoka. MJL has not settled the sum. The Affidavit Verifying Petition was filed on 24 June 2011. The Memorandum of Due Compliance was filed on 27 June 2011 pursuant to Rule 28(1) of the Companies (Winding Up) Rules 1983. It verified that the petition was duly advertised in the Fiji Sun on 14 July 2011 and in the Fiji Government Gazette No. 74 on Friday 22 July 2011.

[2]. On 26 July 2011, Ullrich Aluminum Company Limited, a New Zealand Company, filed through Messrs. Jamnadas & Associates a Notice of Intention to Support Winding Up Petition on the allegation that MJL is indebted to it in the sum of $NZ 85,627.75 for goods sold and delivered for the FIRCA Fitout Project at Nasese in Suva from 29 April to 30 June 2009.

[3]. A similar Notice was filed by Pacific Glass & Aluminum Limited ("PCGAL") and R.C Manubhai & Company Limited respectively by Nands Law and Samuel K. Ram on 03 August 2011 and 09 August 2011. PCGAL alleges that MJL is indebted to it in the sum of $11,916.25 while RC Manubhai alleges a debt of $11,414.05.

[4]. The Affidavit of Sanjina Devi, an Accountant with MJL, was filed in Opposition to the Winding Up Petition on 10 August 2011 deposes that the amount of the debt alleged is disputed. By Devi's calculation, MJL is indebted to Deo in the sum of $2,612.30 only and not $9,002.00. According to Devi, MJL did settle this amount on 17 July 2011 (i.e. almost three weeks after the petition was presented).

[5]. Hence – this is no longer a dispute on quantum – but a dispute over the entire balance due. According to Mr. Khan, the balance alleged has two components. First is the amount of $3,598.40 which was raised in a cash sale docket. Second is the amount of $2,694.30 which is the interest claimed by Deo.

[6]. Mr. Khan submitted that the cash sale docket which raised the amount of $3,598.40 was rather unusual. A cash sale docket is usually only given if there is in fact a cash sale. Otherwise, an invoice is usually given.

[7]. I do not find anything in section 6(1) of the Sale of Goods Act[1] to support what Mr. Khan is saying. Although – by that argument, he does raise an issue of credibility. According to Mr. Khan, the debt of $3,598.40 that is alleged by Deo was purportedly incurred on 21 July 2010. However, this sum was not accounted for in any of the monthly statements issued by Deo to MJL.

[8]. A company may be wound-up if it is unable to pay its debt and if the circumstances are such that it is just and equitable to wind-up the company[2]. And a company is unable to pay its debt if:-

• (a) it is indebted for a sum in excess of $100.00.
  
• (b) s. 221 notice was duly served to the Company.
  

(c) within three weeks of the service of the said demand notice the company neglected to pay the debt.

[9]. A debt alleged in a petition is prima–facie proved when the Affidavit Verifying the Petition is filed.

[10]. It is then open to a Company (e.g. MJL) to refute the debt alleged which it must do so on substantial grounds as opposed to a mere frivolous assertion (see Offshore Oil NL and Investment Corporation of Fiji Limited; Civil Appeal No: 29/84; cf. Avery v. Worldwide Testing Services Pty Ltd. (1990) 2 ACSR 844, at 841).

[11]. The Courts are normally inclined to penalise in costs a creditor who uses the winding up proceedings to enforce a debt which is disputed on substantial grounds and which has not been pursued through normal litigation channels (see Re Lympne Investments [1972] 2 All ER 385). Once the Court is satisfied that the debt is disputed on substantial grounds, the onus reverts to the petitioner to prove its debt. In In Re Tweeds Garages Limited [1962] I Ch 402 at 408, it was held that a dispute must be as to the existence and not necessarily the quantum of debt. In this case, I consider that there was in fact a debt in existence at the time the petition was filed. Part of that debt has since been settled. The remaining part is disputed. And nearly 50% of the remaining part actually consists of interest. The dispute about the debt is genuine. However, rather than dismiss the petition, and seeing that there are two supporting creditors, I will adjourn this case to 06 February 2011 for mention to see whether or not either of the supporting creditors is interested in filing an application to be substituted pursuant to Order 32 of the Companies (Winding Up Rules). Otherwise, I will dismiss the petition then and assess costs.

................................
Anare Tuilevuka
Master
At Lautoka.
20 January 2012.

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^[1] Section 6(1) states as follows:

6.-(1) A sale of goods on credit or an agreement to sell goods on credit in the course of trade shall not be enforceable by action at the suit of the seller, unless-

(a) at the time of the sale or agreement to sell, an invoice or docket, serially numbered, be made in writing in duplicate, both original and duplicate containing-

(i) the serial number;

(ii) the date of the transaction;

(iii) the name of the buyer;

(iv) the nature and, except in the case of goods exempted from this provision by order of the Minister, the quantity of the goods, in the English language and in figures; and

(v) the price in English words or figures; and

(b) at the time of delivery of the goods, the original or duplicate of the invoice or docket be delivered to the buyer or to some person to whom the goods may properly be delivered on his behalf:

Provided that the provisions of this section shall not apply to an agreement to sell, over a period of time, goods of nature such as are commonly delivered at regular intervals, such as newspapers, bread or milk, or to any sale in pursuance of such agreement, where a written order signed by the buyer or his agent in that behalf is given to the seller at the time of the agreement to sell.
(2) In this section-

"docket" includes a packing note, delivery note or other printed form customarily used for recording the particulars of a sale;

"sale or agreement to sell in the course of trade" means a sale or an agreement to sell to a person by or on behalf of a person who carries on the business of selling goods.

^[2] see section 220 (e)) of the Companies Act 1983