Professionals West Reality (Fiji) Ltd v Facciola [2014] FJHC 148; Civil Action 28.2013 (12 March 2014)

IN THE HIGH COURT OF FIJI
[WESTERN DIVISION] AT LAUTOKA
Civil Action no. 28 of 2013

BETWEEN:

PROFESSIONALS WEST REALTY (FIJI) LTD
situated at 10 Denarau Road, RD 47, Denarau, Fiji Islands and having its registered office at 18 CAAFI Compound, Newtown, P.O.Box 10974, Nadi Airport to Suite 3, Port Denarau, Denarau Island, P.O.Box 47, Port Denarau, Nadi.
PLAINTIFF

AND:

ROBERT MAURICE FACCIOLA AS TRUSTEE OF THE ROBERT MAURICE FACCIOLA TRUST
of 1965 Portola Road, Woodside, CA94062, as Trustee
DEFENDANT

Appearances: Q Vokanavanua for the Plaintiff
Lowing & Associates
City Agent Young

Meri Muir for the Defendant

Judgement

1] By an Ex-Parte Notice of Motion supported by an affidavit filed on the 27th of February 2013 the Plaintiff has sought the following restraining orders against the defendants:

(i) An injunction restraining the defendant to and/or their servants and/or agents from taking any further action in presenting any winding up petition against the Plaintiff pursuant to the winding up notice dated 7 February 2013 against the plaintiff (the Notice);

(ii) An injunction restraining the defendant and/or their servants and their agents from in a manner whatsoever advertising or publishing (including but not limited to any advertisement in the daily newspaper and the Fiji Gazette) any winding-up proceedings that may have been filed in the High Court;

2] The Plaintiff has filed a writ of summons with a statement of claim in instituting this action and a supplementary affidavit sworn on 28th February 2013 in support of the Notice of Motion.

3] When this matter was taken up for hearing before the Honourable Master injunctions have been granted as prayed for in the Ex Parte notice of Motion restraining the defendant from taking any further action in presenting any winding up petition against the Plaintiff Company and advertising any winding up proceeding that may have been filed in the High Court.

4] The defendant has filed a statement of defence to the statement of claim of the plaintiff on 23rd April 2013 and the Plaintiff a reply to defence on 3rd June 2013.

5] On 15th November 2013 Defendant has filed summons to set aside and discharge Ex-Parte injunction order supported by an affidavit sworn by the defendant.

6] An affidavit in opposition to this application sworn by a Managing director of the Plaintiffs company has been filed on 13th December 2013.

7] When the matter was taken up for hearing on 19th February 2014 Legal submissions were presented by both parties, written submission being filed earlier.

The background facts
8] The defendant had obtained judgement against the plaintiff at the Lautoka High Court in Civil Action No. 64 of 2010 and the plaintiff in this action had appealed that judgement to the Fiji Court of Appeal in Civil Action No. ABU 0017 of 2011.

9] The Court of Appeal gave its judgement on 30th November 2012 in which it varied the High Court Judgement by substituting 8% interest rate for 10% interest.

10] The defendant through his solicitor caused Winding up Notice pursuant to Section 221 of the Companies Act to be served on the plaintiff demanding payment of the sum of $94,000.00 being interest of 8% per annum for 15 months in respect of the principal sum of $940,000.00 as ordered by the Court of Appeal.

11. Plaintiffs Solicitors have responded to the said Winding up Notice by a letter dated 13th February 2013, and stated therein that the Winding up Notice is defective and therefore they intend to apply for an injunction to restrain the defendant from winding up the company based on the defective notice unless unequivocal undertaking is given to withdraw the said Notice.

12. In his Statement of Claim the plaintiff has stated that the amended interest awarded by the Court of Appeal judgement is 8% interest on $940,000.00 for 15 months and the amount due to the defendant on the judgement is only $75200.00.

13. The Plaintiff has instituted these legal proceedings alleging the winding up notice was sent maliciously without reasonable and probable cause and unlawfully and on breach of inter alia, the Companies Act 1983.

Particulars

i) The defendant has sent it knowing that there is a dispute concerning his entitlement to the new interest.

ii) The winding up notice was further improperly served and in breach of Section 221 and Rule 24 of the Companies Act as the first plaintiffs registered office is 18 CAAFI Compound, Nadi and not Denarau Rd, Nadi.

iii) The Winding up Notice is being issued to oppress and pressure the first plaintiff to pay a sum of money that is being denied and/or disputed on genuine grounds.

iv) The defendant is well aware that the first plaintiff is able to pay all its lawful and justified debts.

Law and Analysis
14. From the facts stated by the plaintiff in his affidavit and statement of claim it appears that he is challenging the Winding up Notice on three grounds:

a) That the Winding up Notice was not served on the Plaintiffs registers office.

b) That there is a dispute as to the quantum of the debt.

c) That the Plaintiff is able to pay all its lawful and justified debts.

15. The first issue to be considered is whether the winding up notice is defective as to service. The Solicitors for the defendant have referred to the Affidavit in opposition of summons to set aside and discharge Ex Parte injunction order sworn by Caroline Jane West on 12th December, Annexure CJW-1, in this regard. The annexure CJW-1 constitutes a copy of the company search relied upon by the plaintiff in asserting the registered office of the company. It is clearly stated in Annexure CJW-1 that the situation of Registered office is 18 CAFF1, Near Town, Nadi, P O Box 10947, Nadi Airport to Suite 3, Port Denarau, Denarau Island, P O Box 47, Port Denarau, Nadi

16. In the written submission filed by the Plaintiffs Solicitors it is stated that it has come to their attention that the service was served on the correct registered office and therefore they will be making an application later to amend their Statement of Claim.

17. I am of the view that the plaintiff has cynically misrepresented to Court that the address where the Winding up Notice was served was not the Plaintiffs registered address when the Plaintiffs own company search includes that address as part of the Plaintiffs registered address.

18. Though the Plaintiff has a right of amending the Statement of Claim at a later stage he has misrepresented facts relating to the service of the Notice of Winding up in obtaining the injunction which warrants its dissolution.

19. The next issue to be considered is whether the Winding up Notice is defective as the quantum of the debt is in dispute.

20. In re Tweeds Garage Ltd 1962 1 Ch 407
It was held;

"that the only qualification required of the petitioner was that it was a creditor and that where there was no doubt (and there was none here) that the petitioner was a creditor for a sum which would otherwise entitle it to a winding-up order, a dispute as to the precise sum owed was not a sufficient answer to the petition"

21. In Fiji Court of Appeal case of B W Holdings v Sinclair Knight Merz Fiji Ltd (2008) FJCA 24, ABU 0066. 2007S (2 July 2008) the Court of Appeal relevantly states at clause 13 of the Judgement:

"The judge focused his decision on the fact that there was no dispute as to the existence of the debt but only as to quantum. This is picked up in grounds 3 and 5 of the grounds of appeal put forward on behalf of the Appellant. The argument of the Appellant before the Court of Appeal was that the judge failed to take into proper consideration that the amount claimed by the Respondent was strongly disputed by the Appellant and such dispute did not give a right to the Respondent to proceed with the winding up proceedings. This proposition is, with great respect to counsel, misconceived in law. That is precisely the right that is given to the Respondent. That right would have been taken away if the Appellant had paid the $5,303.29 to the Respondent. In that event, the Respondent would have been left with a right to proceed to recover the balance of the amount owing in civil proceedings."

22. In this action the Plaintiff is not disputing the debt. In his statement of claim it is admitted that the amount he owes to the defendant is $75,200.00 and not $94,000.00 as stated in the Winding up Notice.

23. As such it is very clear that the Plaintiff has admitted the debt but disputing its quantum.

24. The mere fact that the quantum of the debt is disputed does not prevent the defendant from proceeding with the Winding up application. As decided by the Court of Appeal in BW Holdings Ltd V Sinclair Knight Merz Fiji Ltd that right will be taken away if the Plaintiff had paid $75,200.00 to the defendant.

25. Therefore, I am of the view that the dispute on the quantum of the debt is not a valid reason to restrain the defendant from taking steps to wind up the Plaintiff company.

26. In considering the solvency of the Company to pay the debts I draw my attention to the affidavit filed in support of the Application for injunction, sworn by its Managing Director Caroline Jane West on 16th February 2013.

27. In paragraph 22 of the affidavit Caroline Jane West has deposed that the Company is a well established company and is able to pay its legal, proper and lawful debts as they fall due.

28. In paragraph 24 of the affidavit she has deposed that she is annexing marked as CJW-7 the Plaintiffs statement of Profit and Loss and Tax returns which forms part of the audited accounts and Balance Sheet dated 2011.

29. However plaintiff has failed to pay the defendant even the undisputed amount of the debt since the Court of Appeal pronounced the judgement on 30th November 2012.

30. Therefore, I am of the view the non payment of the undisputed amount of the debt could be considered as evidence of plaintiffs inability to pay its lawful debts.

31. Furthermore, Plaintiffs statement of Profit and Loss and Tax returns does not form part of an audited accounts and balance sheet (annexe CJW-7).

32. In the financial statements of the company which form part of document CJW-7 on page 7 the Accounting firm clearly states that they have not carried out an audit on the financial statements. In page 6 to 17 of the financial statement it is stated that the statements are unaudited.

33. Therefore the financial statements annexed as CJW-7 does not reflect the solvency of the plaintiff company.

34. By deposing in her affidavit that she is annexing marked as CJW-7 audited accounts and Balance Sheet dated 2011 the Managing Director of the company has mislead the Court by misrepresenting a material fact.

Conclusion
35. Injunctive Relief
In determining whether to exercise its discretion to grant an injunction or not Courts are guided by the principles laid down in the case of American Cyanamid Company v Ethicon Limited [1975] I All ER 504

36. The principals are as follows:

i) Is there a serious question to be tried?

ii) Are damages an adequate remedy?

iii) Where does the balance of Convenience lie?

37. In the matter before me there is an admitted debt but quantum disputed. I do not consider it as a serious question to be tried. Dispute in respect of the application of the 8% interest could be resolved by seeking a clarification from the Court of Appeal.

38. If the Plaintiff company delays to pay at least the undisputed amount of the debt and become insolvent defendant will suffer irreparable loss. Therefore I find that the balance of convenience is in favour of the defendant.

39. The court also has to consider whether the Plaintiff who is seeking an injunction has given adequate undertaking as to damages.

40. In this matter the Plaintiff company has only submitted unaudited Accounts for 2011. But misrepresented that fact to Court by stating that they are producing audited accounts. Therefore, I hold that the plaintiffs undertaking as to damages is unacceptable.

41. In conclusion, I am of the view that the Plaintiff has thus failed to satisfy the principles laid down in American Cyanamid case for injunctive relief.

Final Orders

i) The Ex parte Injunction orders granted on 28th February 2013 are hereby discharged, dissolved and set aside with immediate effect.

ii) The Plaintiff is ordered to pay summarily assessed costs of $3,500.00 to the defendant.

L.S. Abeygunaratne
Judge

12/03/2014