|
|
Home
| Databases
| WorldLII
| Search
| Feedback
High Court of Fiji |
IN THE HIGH COURT OF FIJI AT SUVA
CIVIL JURISDICTION
CIVIL ACTION NO. HBE 03 OF 2013
IN THE MATTER OF LATU ENGINEERING WORKS LIMITED
AND
IN THE MATTER OF THE COMPANIES ACT
Counsel : Ms. B. Narayan for Petitioner
: Mr. P. Lomaloma for Respondent
Date of Hearing : 25th October, 2013
Date of Judgment : 6th March, 2014
JUDGMENT
[1] This is a winding up petition filed by Fiji National University seeking an order to wind up Latu Engineering Works Limited.
[2] The petition was presented on 30.1.13 and is being opposed by the company.
Background to the Case
[3] The company sought to be wound up is a registered company in the Republic of Fiji.
[4] Fiji National University incorporated pursuant to the Fiji National University (Amendment) Decree 2010, as the petitioner creditor has sought to windup the Respondent Company. The petition has sought to wind up the company as the respondent has failed to pay a sum of FJ$ 11, 694.17 being the total outstanding Levies due and owing for Employer ID Number T40500K.
[5] Petitioner states that notice under S221 had been served. The Respondent initially has sought time to pay the debt but once the case was filed disputed the claim on various grounds.
Petitioner's Case
[6] Petitioner stated that the Respondent is indebted in the sum of $11,694.17 together with interest at the rate of 1 % per month from the date of S221 notice was served.
Respondent's Opposition
[7] The Respondent's affidavit in opposition was filed by the Managing Director of the company. In the affidavit it was deposed among other things that there is a bar to initiate action under the limitations act and that the plaintiff should have filed the action in the Magistrate's Court without filing for winding up and finally the company has substantive assets.
[8] In their written submissions the Respondent submitted additional grounds of opposition and stated:
Petitioner's Submission
[9] By way of an affidavit in reply the petitioner among other things has submitted that they have sent a demand notice to the Respondent. However as the amount written was an oversight they had amended the amount to the correct figure of $11, 697.17.
[10] The company had replied seeking time to pay this amount till end of February 2013. Thereafter they had sought further time till June 2013 to settle the dues the correspondences are submitted to court.
[11] Petitioner further submitted that the Limitation Act will not apply as the levy payment is a statutory obligation pursuant to the Fiji National University Decree 2009 & 2010 and that payment have to be made by all the employers in Fiji that do not fall under the exception.
[12] They further submitted that under the Fiji National University Decree 2009 & 2010, the company is in debt to the petitioner and the petitioner had full rights to file a case for winding up under the Companies Act.
[13] Determination
The court will determine the matter on the documents filed and submissions made. I will first deal with the points of opposition submitted by the Respondent.
[14] The Respondent by way of written submission has stated that the "the Respondent disputes the amount owed because:-
[15] This matter has not been pleaded in the original affidavit of opposition filed by the company by way of reply to the Petitioner's application. The petitioner has vehemently objected to any new grounds being canvased which takes the petitioner by surprise. I'm inclined to accept this objection as the Respondent had ample opportunity to submit his defence in the affidavit in opposition.
[16] The respondent states that the levy is imposed under a statute but the petitioners have not complied with the statute. The respondent has submitted that the notices are issued bi annually by the Fiji University to employees notifying the assessed levies and its due debtors. The employer had never challenged the fact that they had not received the levi notices. If the respondent is unhappy about the levi notice he had ample time to appeal. This mechanism is provided in the statute itself.
[17] However since this matter has not been pleaded as a ground of appeal nor canvassed before court, but has been brought as a new ground in the written submissions, the court is not inclined to accept it.
[18] While acknowledging the receipt of the demand notice the respondent submitted that two figures had been demanded as the amount due by the respondents.
[19] It was submitted that the respondent had sent a demand notice for $15, 966.97 by letter dated 22.11.12 marked "A".
[20] The respondent has sent a reply to this letter on 11.1.13, after a considerable delay whereby time has been sought to settle the dues. This reply was marked as "B" by the respondent. As per the annexure "B" the respondent has not directly challenged the amount but has stated that Respondents are checking the amounts that are due. However there is a clear acknowledgment of the debt and sought time to pay.
[21] The petitioner has promptly replied to the annexure "B" by annexure "C" whereby they have said the amount due is only $ 11, 694. 17. Annexure C has also disallowed the request for extension of time to pay and have confirmed that legal action would be instituted.
[22] In my view Annexure "C" clearly has answered Annexure "B" and the Respondent's contention that they were awaiting a reply to annexure "B" fails.
[23] The Respondent states that as per the notice what is demanded is the outstanding levy from 2001 to July 2012. He further contends that as per the Limitation Act the notice is unenforceable.
[24] The petitioner submits that the payment of levies under the Fiji National University Decree is a statutory obligation. It further states violation of the decree by non payment is an offence. The respondent in their submission has not denied this position.
[25] When the non payment of a levy is an offence, continued non payment becomes a continuing offence. Parties are not at variance about the fact that the non-payment of the levy is an offence. Section 42A (6) of the Fiji National University (Amendment) Decree 2010, states:
Any employer who fails to pay to the council any amount payable as a levy order at the time and in the manner specified is guilty of an offence.
[26] In my view when there is a statutory obligation for payment and specially when non payment is on offence the respondent is not entitled to plead the defence of Limitation Act to get over the continuing offence of non payment.
[27] However at this point it is pertinent to refer to Annexure "B". In annexure "B" filed with the affidavit of the Managing Director of the company he has acknowledged the debt by pleading for more time to "settle all dues in full". This acknowledgement is by the letter dated 17.11.2013.
[28] The petitioner submits that as there is an acknowledgement of the debt by the Managing Director of the Company. Section 12(3) and 13(1) of the Limitation Act will operate.
[29] Section 12(3) of the Limitation Act states:
"Where any right of action has accrued to recover any debt or other liquidated pecuniary claim, or any claim to the personal estate of a deceased person or to any share or interest therein, and the person liable or accountable therefore acknowledges the claim or makes any payment in respect thereof, the right shall be deemed to have accrued on and not before the date of the acknowledgement or the last payment:
Provided that a payment of a part of the rent or interest due at any time shall not extend the period for claiming the remainder then due, but any payment of interest shall be treated as a payment in respect of the principal debt."
[30] Section 13(1) of the Limitation Act states:
Every acknowledgment referred to in section 12 shall be in writing and signed by the person making the acknowledgment.
[31] The Managing Director of the Company by his letter dated 11.1.13 has clearly stated:
"We would sincerely like to have this matter settled, by requesting your office to allow us more time up till June, 2013 to settle all dues in full, since the company is going through a restructure phase to meet its commitments."
[32] When questioned counsel for the respondent at the hearing pertaining to the acknowledgement, the only answer he could give was that the acknowledgment would have been sent without legal advice.
[33] There is an acknowledgment of debt by letter dated 11.1.13 pertaining to "all dues" in full, accordingly I hold that the objection under the Limitation Act fails.
[34] The Respondent has raised another point in opposition for the first time by way of written submission when he states "the demand for the levy is illegal because it's based on a non existent act."
[35] The court is not inclined to entertain new grounds that has not been submitted in the affidavit in opposition or at argument stage.
[36] It was submitted to court that the levies order had been made under the Fiji National University (Amendment) Decree of 2010 namely Section 42A.
[37] It was also submitted that section 46A(11) of the decree reads as that all subsidiary laws of the Training and Productivity Authority of Fiji's Act are deemed to become subsidiary laws of the Fiji National University (Amendment) Decree of 2010.
[38] Respondent alleges that the petition has based their demand on section 46A (11) of the Fiji National University (Amendment) Decree 2010. It is alleged that there is no act by the name of Training and Productivity Authority of Fiji Act. Accordingly it is submitted that the demand is based on a non-existent law.
[39] In replying to the said allegation petitioner draws the attention of the court to section 2 of the Fiji National Training (Amendment) Act of 2002. The said section states "section 1 of the principal act is amended by deleting "Fiji National Training" and substituting "Training and Productivity Authority of Fiji". The court has considered the amended section of the said act and is inclined to accept the petitioner's submissions.
[40] Now the court will ascertain whether the petitioner is entitled under the Companies Act to file for winding up and whether the respondent's opposition to winding up proceeding is based on substantial grounds.
[41] Petitioner claims the respondent is in debt to the petitioner for failing to honour a statutory obligation. There is no denial by the respondent. The petition has served a notice of demand under the Companies Act. The respondent has acknowledged the notice and replied by seeking time to settle all dues.
[42] In analysing whether the respondent was unable to pay its debt under section 220(e), Court now examines the definition of the words "unable to pay its debts" as stated in Section 221 (a) of the Companies Act it states:-
221(a) A company shall be deemed to be unable to pay its debts – 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 3 weeks thereafter, neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor; or
[43] As per the amount due the parties fall into this threshold. The receipt of Section 221 notice under the Companies Act was acknowledged by the Respondents in the submissions. The Respondent states also that they sent a reply. Even though in the reply the respondent had undertaken to repay, it had never been done. As per Pathik J in In re Pangia Constructions Pty Ltd (1995) FJHC 126. Quoting Jacobs J.A in Syd. Mannix Pty Ltd v. Leserv Constructions Pty Ltd (1971) 1 NSW 4 LR. P. 788 AT 790 stated:
"It seems to me that when the statute provides that a company shall be deemed to be unable to pay its debts if the statutory notice has been given and if the company has for twenty-one days thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor, it means what it says, and it is irrelevant to the language whether the notice expires before or after the presentation of any particular winding-up petition."
[44] It was also held in In re Casual Shoes (Fiji) Ltd [1998] FJHC 133 where Judge Pathik referred to Cornhill Insurance Plc v Improvement Services Ltd and Others (1986 1 WLR 114) which quoted Mann v Glostein (1968 1 WLR 1091 at 1096):
"When the creditor's debt is clearly established it seems to me to follow that this court would not, in general at any rate, interfere even through the company would appear to be solvent, for the creditor would as such be entitled to present a petition and the debtor would have his own remedy in paying the undisputed debt which he should pay. So, to persist in non-payment of the debt in such circumstances would itself either suggest inability to pay or that the application was an application that the court should give the debtor relief which it itself could provide, but would not provide, by paying the debt."
[45] The Respondent had not disputed the sum due in their letter dated 11.1.2013, where there is a clear admission seeking time to pay all dues, however in that it had been stated that Respondent feels that there is an error in the amount. When the reply to that was sent on 15.1.2013 by the petitioner with a reduced amount the respondent had not challenged that amount. It is submitted to court that this does not entitle him to escape from the winding up proceedings as stated in Pacific Technologies Ltd – HBE 71 of 2012 which quoted in Shoeworld (Fiji) Limited – Winding Up Action No. HBE 47 of 2007, where it was held:
"The issue for determination is relatively short, and perhaps is answered by a decision of his Lordship Plowman in Tweeds Garages Limited, 1961 CHD 406. At page 414 His Lordship said: "In my judgment where there is no doubt (and there is none here) that the petitioner is a creditor of a sum which would otherwise entitled him to a winding-up order the precise sum which is owed to him is not of itself a sufficient answer to the petition."
[46] The Respondent had contended in the affidavit in opposition that the petition should have considered proceeding under a winding up petition, as the last option to receive the money. As per Section 42(a)(4), the amount payable and a levy are deemed to be a simple contract debt and it can be recovered by the council in any court. As per the wording of the Act I think the recovery process of the unpaid debt can be filed in any court and the petitioner in this case has decided to take a very harsh approach by filing an application for winding up.
[47] The Respondent also has submitted that they have assets worth more than a million dollars and that the company is a viable company. However at this stage the court has to consider the definition given for winding up and as I have discussed earlier the case falls under that definition.
[48] In coming to this conclusion I am inclined to follow the case "In The Matter of Architectural Aluminium Limited; HBE 85/97 where it was held:
Under Section 221(a) a debt remaining unpaid by a company is, in the circumstances set out in the Section prima facie evidence that the company is unable to pay its debts."
His Lordship further at page 2 went on to say:
" It is a well established rule of law that a petitioner who can prove that the debt exceeds the statutory sum, that it remains unpaid demand having been made, and that the debtor company is insolvent is entitled to a winding up Order ex debit justitiate (Re Western of Canada Oil [1873] UKLawRpEq 160; (1873) 17 Eq. 1). On the other hand a company which bona fide disputes the existence of the debt has not "neglected to pay" within the terms of Section 221(a) (Re The Island of Anglesea Coal and Coke Co Ltd (1861) 4 LT 684). It must however be remembered that a mere dispute as to the amount of the debt is not a dispute as to its existence (see Re Tweed Garages Ltd [1962] Ch 406 and Re Steel Wing Co [1921] 1 Ch 349)
[49] As submitted by the Petitioner even if the company has assets in this instance it has acknowledged the fact that there is a debt. A statutory obligation to pay which it has not paid. No proposal has been submitted to pay the debt, despite the fact that the Respondent had in writing agreed to settle all dues. Even if the amount to be paid is disputed still I am of the view that the respondent should have taken steps to pay the amount he think was correct.
[50] In this kind of application the onus is on the respondent who is disputing the winding up proceedings to establish that there exists a substantial ground to prevent winding up. The respondent has failed in this endeavour.
Conclusion
[51] In Off-Shore Oil N. L and Investments Corporation of Fiji Limited (Civ App. 29/84 F.C.A at p. 15 of Cyclostyled judgment) Barker J.A. said:
"The law is clear that there is discretion in a Court seized of a winding-up petition, to decline to hear the petition where the debt is contested on substantial grounds."
[52] As per the material placed before me by way of affidavits, submissions and arguments I find that the respondent has failed to prove a substantial dispute for the court to use its discretion in his favour.
[53] On the other hand the petitioner had to satisfy this court that it is a creditor that there is a debt due to it from the Respondent and that respondent has failed to honour the debt. The petitioner's cause falls within the definition in the Companies Act.
[54] In Cornhill Insurance PLC –v- Improvement Services Ltd & Other (1986 1 WLR p.114) it was held:
"When the creditor's debt is clearly established it seems to me to follow that this court would not, in general at any rate, interfere even though the company would appear to be solvent, for the creditor would as such be entitled to present a petition and the debtor would have his own remedy in paying the undisputed debt which he should pay. So, to persist in non-payment of the debt in such circumstances would itself either suggest inability to pay or that the application was an application that the court should give the debtor relief which it itself could provide, but would not provide, by paying the debt."
[55] In this case the Respondent has not paid the statutory dues despite his agreeing to settle all dues by a letter. The respondent has failed to submit any proposal to settle the debt. The respondent has failed to present the arguments it has submitted in the written submissions at the time of hearing this matter, or in its affidavit in opposition. It has failed to submit a genuine dispute on substantial grounds.
[56] For the above stated reasons the Respondent's opposition to the winding up petition fails. I grant the order for winding up as prayed for. I grant a cost of FJ $1,500 in favour of the petitioner summarily assessed.
Mayadunne Corea
JUDGE
06.03.2014
PacLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.paclii.org/fj/cases/FJHC/2014/125.html