Unisan Co Ltd, In re [2015] FJHC 393; HBE27.2014 (19 May 2015)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Companies (Winding Up) Proceedings
No. HBE 27 of 2014

IN THE MATTER of UNISAN CO. LTD,
a limited company having its registered office at Kalabu, Nasinu.

AND

IN THE MATTER of THE COMPANIES ACT (CAP 247)

APPEARANCES: Ms. Kunatuba S. for the Company
Ms. Vasiti for the Petitioning Creditor

BEFORE: Acting Master S. F. Bull

Hearing: 12 March 2015
Ruling: 19 May 2015

RULING

Background

1. On 27 March 2014, VIRS Construction Limited (hereinafter the Petitioner) filed a petition to wind up UNISAN Co. Ltd (the Company) under the provisions of the Companies Act (the CA) and to appoint the Official Receiver as provisional liquidator of the Company.
   
2. An affidavit verifying the petition was filed on 2 April 2014 and thereafter on 14 May 2014, an affidavit of service deposing service on the Company's registered office at Lot 49 Boila Circle, Kalabu Industrial, Valelevu, Nasinu.
   
3. The memorandum of due compliance, a requirement under rule 28 (1) of the Companies (Winding Up) Rules (the Rules), was filed on 21 May 2014. As required under rule 23, the petition was advertised in a newspaper (The Sun) on 13 May 2014, and in the Gazette on 16 May 2014.
   
4. The matter was called before the Master on 22 May 2014 and adjourned to 6 June 2014 for hearing. No appearance was entered by or on behalf of the Company on that date and the Court therefore granted order in terms of the petition, winding up the Company, appointing the Official Receiver as the provisional liquidator for the Company, and for the Petitioner's costs to be taxed and paid out of the Company's assets. The order was sealed on 24 June 2014.
   

The application

5. On 11 July 2014, the Company filed this application to set aside and stay the Master's orders of 6 June 2014. The application is supported by an affidavit sworn by the director of the Company and is brought pursuant to Order 86 rule 7, a position which later shifted with counsel for the Company relying on Order 19 rule 9.
   

The affidavit in support

6. The director deposes that neither he nor his solicitors had been served with the petition and that he only came to know about the winding up order after receiving a letter from the Official Receiver on 4 July 2014.
   
7. Through enquiries with the registry, he discovered that the Petitioner had served the documents at the Company's registered office at Valelevu in Kalabu. That property belonged to the Petitioner and had burnt to the ground on 30 August 2010. Since then, the Company had always used its solicitors' address as its address for service. Of this fact the Petitioner and his solicitor were well aware since they had "always" served the Company at its solicitors' address. For instance, the Petitioner's notice under section 221 of the CA was served at the Company's solicitors' address.
   
8. He accuses the Petitioner and his counsel of deliberately having the petition served at Valelevu in Kalabu so as to obtain a winding up order without representation by the Company. The deponent also refers to a number of other disputes and cases between the parties in the Magistrates Court and in the High Court.
   
9. The director deposes that the Company is solvent and able to pay its debts, adding that the Company does not owe any money to anyone. He prays for the winding up order to be set aside and stayed pending final determination of an existing High Court matter between the parties.
   

The Petitioner's answering affidavit

10. Nilesh Prasad, Project Manager/Director for the Petitioner deposes that a search of the Company's records was conducted at the office of the Registrar of Companies before the Petitioner's winding up notice pursuant to section 221 of the Companies Act was served on the Company's solicitors, on one of the directors of the Company, and at the Company's registered office.
    
11. No response was received from the Company and, following another search with the Registrar of Companies office confirming that the Company's registered office was still at Kalabu, Nasinu, the winding up petition filed on 27 March 2014 and the verifying affidavit filed on 2 April 2014 were served at the Company's registered officeas required by the rules.
    
12. There has been compliance with the requirements of the rules in respect of advertisement of the winding up petition. The memorandum of due compliance was sealed on 22 May 2014. When the petition was called on 6 June 2014, the Court granted order in terms of the Petition, being satisfied that the Petitioner had complied fully with the requirements of the rules.
    

Preliminary objection

13. The Petitioner objects to the Company bringing this application without the sanction of the Official Receiver who was appointed provisional liquidator of the Company by order of the Court on 06 June 2014. The Petitioner says this application is irregular without the consent of the Official Receiver.
    
14. Mr. Prasad confirms the existence of criminal proceedings against the Petitioner and that a plea of not guilty has been entered to the charge.
    
15. He deposes that on 29 October 2013, the Petitioner obtained judgment against the Company in the sum of $10000 with a 5% interest rate effective from 29 October 2013 for rent owed by the Company to it.That order remains in force and the amount in that judgment forms the basis of these winding up proceedings.
    
16. There are no pending proceedings in the High Court.
    
17. The Company has failed to show any meritorious dispute to the Petitioner's claim and if it deems itself solvent, then it ought to make arrangements to settle its debt with the Petitioner.
    
18. In reply, Sebastian Raihman deposes for the Company that Nilesh Prasad was well aware that that the Company was no longer operating from Kalabu Industrial Sub-division since the building where the Company was operating from there had burnt to the ground, resulting in the Company having had to find alternative premises to operate from.
    
19. Mr. Raihman deposes not having seen the advertisements in the newspapers or in the Gazette.
    
20. In reply to the preliminary objection, Mr. Raihman deposes to being advised that where the practice and procedure of the Court is not followed, the order thereby obtained can be set aside and stayed.
    
21. The proceedings in the Magistrates Court for which judgment had been given in favour of the Petitioner concern the same issues before the High Court in Civil Action 222 of 2010, awaiting determination.
    

The law

On stay of winding up order

22. Section 252 (1) of the Companies Act gives the Court power to stay a winding up order and confers standing on either the liquidator or official receiver, or any creditor or contributory of the debtor Company to make an application for stay. Where the court is satisfied that all proceedings relating to the winding up ought to be stayed, an order may be made staying the proceedings altogether or for a limited time on such terms and conditions as the court thinks fit.
    

On service

23. The general rule on service is that any document filed in court in proceedings between parties must be served on the other party or parties to the proceedings. In City Finance Co. Ltd v Matthew Harvey & Co. Ltd (1915) 21 CLR 60, the Court stated:
    

It is ordinarily a condition of the administration of justice that the person against whom relief is sought shall have an opportunity of being heard. Hence the necessity for service or notice of the writ or other originating proceeding.

24. Section 221 of the Companies Act requires that the statutory demand for payment of debt be served at the registered office of the company:
    

A company shall be deemed to be unable to pay its debts-

(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 3 weeks thereafter; neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor; or

(b) ...

(c) ...

(Emphasis mine)

25. Section 391 of the Companies Act provides for service of documents and states that:
    

A document may be served on a company by sending it by post to the registered postal address of the company in Fiji, or by leaving it at the registered office of the company.

26. In contested winding up proceedings in In re Fishinvest (Fiji) Ltd [2003] FJHC 128; HBE0011.2003S (1 September 2003), the company's objection to the propriety of service of the petition elsewhere instead of on their solicitors was dismissed, the Court holding that the Companies Act required service of documents at the company's registered office, which is where the petitioner had served the petition.
    

Analysis

27. I deal first with the Petitioner's preliminary objection on the bringing of these proceedings by the company without the sanction and consent of the official receiver who wasappointedas the liquidator of the Company by the Court on 06 June 2014. Section 242 of the CA sets out the powers of the liquidator. One of these is the power to, with the sanction of either the Court or the committee of inspection,
    

...bring or defend any action or other legal proceeding in the name and on behalf of the company... (s. 242 (1) (a))

28. It is clear from the provisions of ss. 242 (1) (a) and 252 of the CA that the Company does not have locus to bring an application to stay the winding up order made against it on 06 June 2014 in its absence. Under section 252 of the CA, such an application can only be brought by either the liquidator or the official receiver, or any creditor or contributory of the company. This being the case, I hold that the Company's application for stay has been brought without locus.
    
29. In In re Nanaso I Ra Holdings Ltd [2012] FJHC 1446; HBF005.2012 (27 November 2012), the Master held that though the company did not have locus under section 252 of the CA to bring an application for stay of a winding up order against it, it could still apply under the High Court Rules (the HCR) to have the order set aside if the company was able to show that neither the CA nor the Winding Up Rules provided for the issues in that case. In Nainaso (supra), the Court preferred the view that the winding up order against the company was similar to a default judgment entered regularly which may be set aside under the HCR if the company showed an affidavit of merits establishing a prima facie defence and an arguable defence.
    
30. In this matter, the Company says that the Petitioner had served the petition at the place where the Company used to operate its business from. The building belonged to the Petitioner and was completely burnt down and destroyed on 30 August 2010. Since then, the Company has been using their solicitors' address as their address for service.
    
31. The Petitioner counters that they had twice conducted a search with the office of the Registrar of Companies. Each time, the register showed that the Company's registered office was at Kalabu, Nasinu. After the first search, the statutory demand under s. 221 CA for payment of debt was served at the Company's registered office at Kalabu, Nasinu, and also on one of the Company directors, as well as at their solicitors' office. After three weeks lapsed without payment of the debt, the Petitioner again conducted another search with the Registrar of Companies. This search also revealed that the registered office of the Company was still at Kalabu, Nasinu. Thereafter, the Petition was filed in Court and served only at the registered office of the Company at Boila Place, Kalabu, Nasinu.
    
32. Section 110 of the Companies Act requires that notice be given to the Registrar, of the situation of the registered office of a company, and of any change therein, within 14 days of incorporation of the company, or of the change, as the case may be.
    
33. InRossvInvergordon Distillers Ltd., [1961] SC 289, the directors of a company had resolved to change the situation of its registered office to a place in another sheriffdom. Before the company gave notice of this change to the Registrar, a writ action was served at its original registered office. The Sheriff-substitute before whom the proceedings initially came found in favour of the company which had argued that the location of their registered office had changed by virtue of the decision of the directors only, without notice to the Registrar.
    
34. On appeal to the Court of Session, the Lord President Clyde (with whose decision Lord Carmont and Lord Guthrie concurred) held that an office did not become the registered office of a company until statutory notice of its situation had been given to the Registrar.
    
35. In In Re Alpina Pty. Ltd (1977) 17 SASR 528, a creditor of the company had attempted to serve a statutory demand for payment of debt owed to it by the company. Service was affected at the address registered with the Registrar of Companies. At the time, there was no such office in the building and the notice of demand was therefore left in the general mailbox in the foyer of the building. Another copy of the demand notice was also posted to the company at the same registered address. When the company failed to make payment of debt within the given period, the creditor petitioned the court for an order winding up the company. The company objected on the ground that the demand notice had not been served on it in accordance with the provisions of the Companies Act 1962 -1972.
    
36. The facts were that the company had notified the Registrar of Companies on 28 November 1972 of the location of the registered office of the company from that date onwards. On 8 August 1976, it moved to another location. In the meantime, the petitioning creditor served a notice of demand on the company at its original registered office. On 14 March 1977, the company gave notice to the Registrar that as from 8th August 1976, the registered office of the company had changed.
    
37. The Court, per Hogarth J, declined to follow Ross(supra) on the basis that under both the United Kingdom and South Australian Acts (Companies Act), it was possible for a company to have a registered office upon incorporation or shortly afterwards without notice thereof to the registrar until, in the UK, a fortnight afterwards, and in South Australia, a month afterwards.
    
38. In respect of a change to the registered office, s.112 of the South Australian Act (at the time of Re Alpina) required notice in the prescribed form to be lodged with the Registrar within a month of the date of change. "In other words, first the change takes place; and secondly, afterwards, and indeed up to one month afterwards, notice is given to the Registrar". (Re Alpina, supra)
    
39. Ultimately, Hogarth J held that service of the demand at the original registered office of the company "...was not service on the place which was then the registered office of the company..."
    
40. In Re Otway Coal Co. Ltd., [1953] Vic LawRp 74; [1953] VLR 557, a copy of the originating summons and an order of the Court was served by post at the registered office of the company as recorded with the office of the Registrar General despite the Plaintiffknowing that that office had not been used by the Company for many years. At the time of this decision, section 388 of the Companies Act 1938 (Victoria), (similar in terms to our section 391) provided that a document may be served on a company by leaving it at or sending it by post to the registered office of the company. O'Bryan J stated:
    

The Companies Act, secs. 92 and 93, which provide for the company having a registered office, do not, nor does any other part of the Act so far as I am aware, provide that once the company has given to the Registrar-General notice of the company's registered office, the company is deemed until the Register is altered to have its registered office at that address. Section 295 contains special provisions for service of notices under that section, but these provisions are indigenous to proceedings under that part. Likewise rule 18 of the Companies Rule 1943 contained special provisions as to service of a petition for winding up,and in regard to that rule Palmer's Company Law (19th ed.) p. 384, says that when it is impracticable to serve the petition, e,g., when the company's registered office is closed or pulled down, the Court will make a special order, e.g., to serve upon one or two officials connected with the company, and direct that such service should be deemed to be served on the company. These documents, in my opinion, were not left at or sent by post to the registered or any other office of the company. There can be no question of estoppel in this case. The plaintiff knew the facts about the company perfectly well. He was not misled by what appears at the Registrar-General's office. He knew that the company had no office and that when these papers were posted to the address appearing at the Registrar-General's office as that of the company's registered office, they would inevitably come back, as they did, through the dead letter office. This purported service therefore, in my opinion, did not comply with the provisions of the Companies Act, sec. 388.(My emphasis)

41. In this case, counsel for the Company says that Boila Place at Kalabu, Nasinu, is not the Company's registered office. This seems to contradict the supporting affidavit of Reginald Raihman (sworn 11 July 2014) that service by the Petitioner had been "at the registered office of the Debtor Company which was located at Valelevu in Kalabu." On the evidence before me, I am prepared to hold that the registered office of the Company said to be at Kalabu, Nasinu, in the Registrar's records, was actually situated at 49 Boila Place, Kalabu, Nasinu, in the Petitioner's building which was burnt to the groundon 30 August 2010.
    
42. The petitioning creditor was the landlord for the building at Kalabu, Nasinu, where the company's registered office was. I have no doubt whatsoever that the petitioner was therefore well aware that the company's registered office was burnt to the ground on 30 August 2010 and that that registered office no longer existed. The service of the statutory demand for payment of debt under s. 221 CA on that office, as well as on one of the Company's directors, and on the Company's solicitors as well, would appear to indicate that the Petitioner well knew that the registered office of the Company no longer existed.
    
43. I consider that the registered office as recorded with the Registrar no longer existed and had lost its identity at the time of service of the petition and verifying affidavit. In Re Third Lojebo Pty Ltd [1982] VicRp 36; [1982] VR 379 (2 November 1981), Brooking J preferred the approach adopted by the Court of Session in Ross (supra) but "made it clear, at [1982] VR 8.381, that he was dealing with a situation where the address given to the Registrar still existed in the sense that the premises had not lost their identity. (Re Gasbourne Pty Ltd [1984] VicRp 70; [1984] VR 801 (5 March 1984)
    
44. As found by O'Bryan J in Otway (supra) on the facts of that case, I similarly find that the Petitioner in this case "... knew the facts about the company perfectly well [and] ....was not misled by what appears at the Registrar-General's office." Adopting therefore the Court's approach in Otway (supra), I hold that notwithstanding there being no notice of a change in the registered office of the Company being registered with the Registrar, service of the Petition on the Company at the burnt down premises at Kalabu, Nasinu was bad, in that that place had not been the office of the Company for almost 4 years when the Petition was left there on 5 April 2014.
    
45. As a side note,I consider that there is a need for a more detailed description of the exact situation of a registered office. The records with the Registrar in respect of this Company simply state the registered office to be at Kalabu, Nasinu, a very big area indeed and, without any other details or description, would make it very difficult indeed for anyone wishing to serve a document on the Company to do so.
    
46. In In Re Alpina (supra), the registered address of the company was at 80 King William Street, Adelaide, "a multi-storey building, with a large number of tenants." Concerning service at this address, Hogarth J stated:
    

It seems to me that in such a case problems will arise unless the situation of the registered office is specified with more particularity; as for example, the room number, or the numbers of the suite of rooms, in which the office is situated. When a company merely gives notice that its registered office is at a certain street number, which identifies a multi-storey building occupied by many different tenants, the question may well arise whether service upon anybody at that building or in the case of a notice under s. 222 (2) (a) by leaving anywhere at that address is sufficient service on the company.

47. His Lordship later added:
    

The notice to the Registrar should contain the same particularity. The address both as stated in the resolution and in the notice should be sufficient to enable any person wishing to serve a document on the company to identify it exactly.

48. I agree with the Court's statement above, noting also that Parliament's attention might well be drawn to the need for a more detailed provision in respect of the address of a registered office.
    
49. I turn now to the issues arising from what I have found to be defective service of the Petition on the Company. The result of the bad service is that the Company is entitled to have the Court's winding up order of 06 June 2014 set aside as of right – ex debito justitiae, on the ground that it was obtained irregularly.
    
50. In In Re Nainaso i Ra (supra), the Court held that notwithstanding the Company's absence of locus in its stay application, the Company could still "apply under the appropriate Rules of the High Court if it can show that neither the Companies Act nor the Winding Up Rules do make provisions for the issues" arising in that case. Counsel for the Company in that case had relied on Order 1 Rule 8 of the High Court Rules, as well as Rule 203 of the Companies (Winding Up) Rules, the latter stipulating that in a situation where the Companies Act or the Winding Up Rules did not make provisions, the High Court Rules in respect of the practice, procedure and regulations shall apply.
    
51. In this case, the Company seeks a stay and setting aside of the Court's winding up order. I have held that it has no standing to apply for stay. As to setting aside, the Company relies on the Master's decision in In Re Nainaso i Raand on Order 19 rule 9 of the High Court Rules in support of its application to set aside. Apart from stay of a winding up order, neither the CA nor the Winding Up Rules provides for setting aside.
    
52. The Company not only disputes the debt in the petition, but also denies that it is insolvent. In light of my finding that the order of 06 June 2014 was irregularly entered (rendering unnecessary the filing of an affidavit of merits or showing the existence of a triable issue), I am of the opinion that the winding up order should be set aside under Order 19 rule 9 of the High Court Rules 1988.
    
53. The Company is given 14 days to file and serve an answering affidavit to the affidavit in support of the petition. Any affidavit in reply by the Petitioner is to be filed and served within 14 days thereafter.
    

55. Orders:

1. Application for stay is dismissed for want of locus standi;
   
2. Application to set aside is granted and the Court's winding up order of 06 June 2014 is accordingly set aside pursuant to Order 19 rule 9 of the High Court Rules 1988.
   
3. The Company neither paid the Petitioner's statutory demand nor indicated objection to the debt demanded, such that the Petitioner was driven to file his petition to wind up the Company. For its part, the Petitioner, having served the demand at the registered office as well as on the Company's solicitors and directors, then served the petition at the registered office of the Company knowing full well that that office was no longer in existence. In the circumstances, I will order for each party to bear their own costs.
   

S.F. Bull
Acting Master