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Extreme Business Solutions (Fiji) Ltd v Formscaff (Fiji) Ltd [2016] FJHC 159; HBE30.2013 (9 March 2016)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION


CIVIL APPEAL NO: HBE 30 of 2013
[Appealing the Master's Judgment dated 27 October 2015 in Winding Up Action No. HBE 30 of 2013]


BETWEEN :


EXTREME BUSINESS SOLUTIONS (FIJI) LIMITED a limited liability company having its registered office at 34 Knolly Street, Suva, Fiji.
Appellant/respondent company


AND :


FORMSCAFF (FIJI) LIMITED a limited liability company having its registered office at Lot 4, Autocity Place, Off Grantham Road, Raiwaqa, Suva.
Respondent/PETITIONER


COUNSEL : Ms. L. Jackson for the Appellant
Ms. M. Vasiti for the Respondent
Mr. S. Nandan for Supporting Creditor


Date of Hearing : 12 February 2016
Date of Ruling : 9 March 2016


RULING

Introduction and Background


[1]. This is an application made by the Appellant in terms of the provisions of Order 59 Rule 10(1) of the High Court Rules 1988, for leave to appeal out of time and for enlargement of time to file and serve the Notice of Appeal.
[2]. The application for leave to appeal out of time is against the Judgment made by the Acting Master of the High Court on 27 October 2015.
[3]. The original proceedings before the Master was an application for winding up of the Appellant Company, Extreme Business Solutions (Fiji) Limited. The initial winding up proceedings were brought by UB Freight (Fiji) Limited against the Appellant Company. Subsequently, Formscaff (Fiji) Limited, the Respondent, was granted leave by the Court to file and serve a substituted winding up petition.
[4]. The case was taken up for hearing before the Acting Master of the High Court, on 26 August 2015, where all parties were represented by counsel.
[5]. On 27 October 2015, the Acting Master of the High Court made order that the substituted winding up petition filed by Formscaff (Fiji) Limited, the Respondent, be granted. Order was also made that the Official Receiver be constituted as the Provisional Liquidator of the Appellant Company in terms of the procedures provided for within the Companies law. A summarily assessed costs in the sum of $750 was also awarded to the Respondent.
[6]. This is the order against which the Appellant is now seeking leave to appeal out of time.
[7]. It is material to state that, on 17 November 2015, the Appellant filed a Summons for Leave to Appeal the Master's Judgment, together with an Affidavit in support, sworn by Yogendra Ravinesh Sharma, its Managing Director, seeking the following Orders:
[8]. When this matter was called before me for the first time, on 26 November 2015, Counsel for the Respondent took up a preliminary objection that pursuant to Order 59 Rule 8(1) of the High Court Rules 1988, Leave to Appeal the Master's Judgment, dated 27 October 2015, is not required, and that the Appellant does not have the necessary locus to apply for leave nor does the Court have the necessary jurisdiction to deal with the Appellant's application.
[9]. Court directed that the Appellant and the Respondent file their respective submissions regarding the preliminary objection raised by the Respondent, by 3 December 2015, and adjourned the matter to 9 December 2015 for Ruling.
[10]. However, court was informed that after a brief discussion held between the solicitors of the Appellant and the Respondent, on 2 December 2015, the Counsel for the Appellant has agreed to concede to the Respondent's submission made on 26 November 2015 that Leave to Appeal the Judgment of the Master, dated 27 October 2015, is not required.
[11]. Therefore, a Ruling on the preliminary objection became no longer necessary and the date assigned for Ruling was converted into a mention date to allow the parties to make their respective applications to Court.
[12]. Thus when the matter was called before me on 9 December 2015, the Counsel for the Appellant moved for time to file Amended Summons for enlargement of time to file and serve the Appellant's Notice of Appeal. Court granted the Appellant time until 18 January 2016 to file the said Amended Summons. The Respondent was granted time until 1 February 2016 to file papers in opposition and the Appellant time until 8 February 2016 to file a reply.
[13]. On 16 December 2015, the Appellant filed Amended Summons for enlargement of time to file and serve the Appellant's Notice of Appeal, together with a further Affidavit in Support of the Amended Summons, sworn by Yogendra Ravinesh Sharma, its Managing Director. Faiyaz Saheb, Director of the Respondent, filed an Affidavit in Opposition on 29 January 2016, and Yogendra Ravinesh Sharma filed an Affidavit in Reply on 8 February 2016.
[14]. This matter was taken up for hearing before me on 9 February 2016. Both counsel for Appellant and Respondent were heard. The two counsel also filed detailed written submissions, and also referred to several case authorities, which I have had the benefit of perusing. Mr. S. Nandan who appeared for a Supporting Creditor, Merchant Finance & Investment Company Limited, did not make any oral submissions or file written submissions. He informed that the Supporting Creditor would abide by any ruling made by this court.

The Affidavit filed by Yogendra Ravinesh Sharma


[15]. The main issues that have been raised by the Appellant are found in the Affidavit in support filed by Yogendra Ravinesh Sharma, on 17 November 2015. Those issues can be broadly outlined as follows:
1. On 6 June 2014, the Petitioning Creditor (hereinafter; "the Respondent") issued a Notice pursuant to Section 221 of the Companies Act (Cap 247) to the Company claiming rent allegedly owed by the Company in the sum of $44,850.00.
2. On 17 June 2014, the Respondent filed its Substituted Winding Up Petition seeking that the Company be wound up and that the Official Receiver be appointed as the Provisional Liquidator of the Company. Annexed and marked "YS1" is a copy of the Respondent's Substituted Winding Up Petition filed on 17 June 2014 enclosing a reproduction of the Notice issued to the company pursuant to Section 221 of the Companies Act (Cap 247) dated 21 February 2014.
3. The Company disputed the Respondent's claim that the sum of $44,850.00 was a debt owed to the Respondent by the Company. As such, the deponent swore an Affidavit in Opposition to the Respondent's Petition, on 14 July 2014, and it was filed on the same date. Annexed and marked "YS2" is a copy of the said Affidavit in Opposition sworn on 14 July 2014.
4. The substantial grounds upon which the Company disputes the Respondent's claim for the sum of $44,850.00 is contained in the Affidavit in Opposition sworn on 14 July 2014 and the deponent seeks the leave of Court to rely on the same at the hearing of this application.
5. In summary, the grounds upon which he is disputing the alleged debt owed by the Company as stated by the Responded are as follows:
6. The Respondent filed its Affidavit in Reply sworn by Faiyaz Saheb, on 4 December 2014, deposing that the Respondent has paid the Company the total sum of $690,000.00 in full and that the Sale and Purchase of the Property is a separate and distinct matter having no relevance to the Respondent's claim for outstanding rent. Annexed and marked "YS3" is a copy of the Respondent's Affidavit in Support sworn by Faiyaz Saheb on 4 December 2014.
7. On 27 October 2015, the Master of the Suva High Court delivered his Judgment. The Master of Suva High Court ordered the Winding Up of the Company. Annexed and marked "YS4" is a copy of the Master's Judgment dated 27 October 2015.
8. When this matter was before the Master, the Company was represented by Messrs Diven Prasad Lawyers. Messrs Diven Prasad Lawyers informed the Company that they had conflict of interest and as such the Company appointed Messrs Saumatua Bale & Faktaufon Lawyers to represent its interests in this matter. This Court may appreciate that the handover of documents from the Company's original solicitors took some time. Moreover, he had to brief his current solicitors on the facts of this matter. The handover of documents and instructing the Company's current solicitors took time.
9. Furthermore, he had been advised by his solicitors that in order for the Company's new solicitors to act on behalf of the Company and appeal of the Master's Judgment dated 27 October 2015, they first needed the consent of the Official Receiver. His solicitors had initially tried to meet with the Official Receiver on the 10 November 2015 and 12 November 2015. However, the Official Receiver was said to be on leave. The Official Receiver's consent was granted only on 13 November 2015. Annexed and marked 'YS5" is a copy of his solicitor's letter to the Official Receiver dated 13 November 2015 and the Official Receiver's response on even date.
10. The proposed grounds upon which the Company intends to appeal are annexed and marked as "YS6" hereto.
11. In addition to the above, if this Court were to refer to paragraph 34 of the Master's Judgment dated 27 October 2015, it will read that the Master had come to the conclusion that the Respondent had fully accounted for the payments of the $690,000.00 being the purchase price of the Property. Annexure D of the Respondent's Affidavit in Reply, sworn on 4 December 2014, is a letter dated 6 October 2014 from Autocare (Fiji) Limited. The Letter from Autocare (Fiji) Limited clearly states that the payment of the Company's debt in Autocare (Fiji) Limited will be paid for by the Respondent by first paying the sum of $10,000.00 followed by monthly instalments of $5,000.00. There is a notable absence of any evidence in Autocare (Fiji) Limited's letter that the whole of the $120,000.00 has been paid by the Respondent and as such the full consideration of the purchase price of the Property has not been settled. There is also a notable absence in Autocare (Fiji) Limited's letter which confirms that the Company is no longer liable for the $120,000.00.
12. Furthermore at paragraph 35 of the Master's Judgment dated 27 October 2015, this Court will note that the Master held that the law required the Company to pay the sum of $44,850.00 and that the Company had 3 weeks to do the same. The Master further held that the Company had "neglected" to pay the sum of $44,850.00 to the Respondent. He respectfully submits that the law does not require the Company to pay the sum of $44,850.00 to the Respondent within 3 weeks after service of the Respondent's statutory demand. The Company disputed owing the Respondent any money and in light of this, was not required by law to pay the Respondent's claim for $44,850.00 within 3 weeks of the statutory demand. It then follows that since the Company disputed owing any money to the Respondent, the Company did not neglect to pay the $44,850.00 as held by the Master at paragraph 35 of his Judgment dated 27 October 2015.
13. The Master further held at paragraph 39 of his Judgment dated 27 October 2015, that the Company has failed to satisfy the Court that there is something which ought to be tried either before the Master himself or in a separate action. He refers Court to paragraph 4(iv) of his Affidavit in Opposition sworn on 14 July 2014, it will read that the Company clearly deposed that the payment of any rent to the Respondent will only be triggered upon settlement of the sale and purchase of the Property and that the agreed rental was $3,500.00 per month for the first 3 months. The Company further states that in the event the Company continues to occupy the Property, the Respondent and the Company will enter into a Tenancy Agreement. The Respondent, however, in its Affidavit in Reply sworn on 4 December 2014 alleged that the rent owed to the Company was in the sum of $4,025.00 for the first 2 months and that rent increased to $4,600.00 for the following 8 months. There is a marked discrepancy in the amount of rent allegedly payable to the Respondent Company (if any) as well a difference in the terms of what was actually agreed between the parties. Given that the Company's and the Respondent's position differ in terms of what the actual amount of rent is per month and for how long the Company was to remain in occupation of the Property, it follows that the actual amount of rent allegedly owed by the Company ought to have been tried in a separate mater as the same is beyond the scope of winding up proceedings.
14. Further to the above, the Court will note that at paragraph 40 of the Master's Judgment dated 27 October 2015, the Master had concluded that the evidence clearly indicated that a debt is owed by the Company to the Petitioner. This is clearly erroneous. If this Court, were to refer to the Respondent's Affidavit in Reply sworn on 4 December 2014, it will clearly see that there was no evidence in the form of a written agreement put before the Court by the Respondent to show that the Company did in fact agree to pay the Respondent the alleged rent of $4,025.00 for the first two months and $4,600.00 per month thereafter. Also, any such agreement would have been put in writing and there is a clear absence of any evidence that the Company had agreed to pay the Respondent the alleged monthly rent. Neither does the Respondent's Affidavit in Reply sworn on 4 December 2014 state that the alleged amount of rent payable per month was even agreed to between the parties. Therefore, this Court can clearly determine that the evidence did not indicate that there was a debt owed by the Company to the Respondent and as such the liability of the Company to the same ought to have been established in a separate action prior to initiating winding up proceedings against the Company.
[16]. A further Affidavit in Support of the Amended Summons for enlargement of time to file and serve the Appellant's Notice of Appeal, was sworn by the said Yogendra Ravinesh Sharma, and filed on 16 December 2015. Therein, he craves for the leave of Court to rely on the facts he had deposed to in his Affidavit filed on 17 November 2015.

The Affidavit in Opposition filed by Faiyaz Saheb

[17]. The Respondent addressed the above issues by way of an Affidavit in Opposition, filed by Faiyaz Saheb, on 29 January 2016. Paragraph 20 of the said Affidavit is a detailed response to paragraph 7 of the Affidavit in support filed by Yogendra Ravinesh Sharma, on 17 November 2015, and in my view is material to refer to in its entirety.
"4. That the Petitioner owes money to my company and is in debt which the Petitioner is well aware of and I state as follows:
(b) The Court will note in sub paragraphs (iv) to (vii) above the Appellant's Managing Director deposed it has not received the remaining $160,000.00;
(c) In paragraph 7(c) of the said Affidavit the Appellant states:
"c. The total consideration of the purchase price of the Property was supposed to be paid by the Respondent in the following manner:
(d) If it is pertinent to note the Appellant deposes in the Affidavit in Opposition the remaining payment of $160,000.00 has not been made. Then the Appellant changes its position in the Submission once it peruses the documents annexed by the Respondent confirm the payment arrangement. The Respondent is once again attempting to mislead the Court as to the information deposed in its Affidavit in Opposition filed on 14 July 2014;
(e) Further, the Appellant failed to provide any documentary evidence to support its claim it will remain at the subject property and will start paying rent after the Petitioner clears the sum of $690,000.00; and
(f) Also it is the Respondent's position the $120,000.00 was a debt the Appellant had owed to Autocare (Fiji) Limited and as part of the arrangement that the Appellant and Respondent had that the debt of the Appellant was to be taken over by the Respondent i.e. the Respondent would owe $120,000.00 to Autocare (Fiji) Limited and there is no outstanding monies to be paid to the Appellant.

Legal Provisions

[18]. Order 59 Rule 8(1) of the High Court Rules 1988 provides as follows:

An appeal shall lie from a final order or judgment of the Master to a single judge of the High Court.

[19]. The time period within which such an appeal should be made is stipulated in Order 59 Rule 9 of the Rules as follows:
An appeal from an order or judgment of the Master shall be filed and served within the following period-
[20]. Order 59 Rule 10(1) of the Rules states:
An application to enlarge the time period for filing and serving a notice of appeal or cross-appeal may be made to the Master before the expiration of that period and to a single judge after the expiration of that period.
[21]. Therefore, it is clear that the granting of leave to appeal out of time is clearly a discretionary power of this Court.
[22]. In the case of George Niumataiwalu v. Ian Patrick Ng and Dale Ng [2012] Fiji High Court Civil Action No. HBC 131/2008 (7 December 2012), His Lordship Justice Brito-Mutunayagam made reference to an important passage of the Privy Council decision in Ratnam v. Cumaraswamy (1964) 3 All ER 933 at page 955:
"The rules of court must, prima facie, be obeyed, and, in order to justify a court in extending the time during which some step in procedure requires to be taken, there must be some material on which the court can exercise its discretion. If the law were otherwise, a party in breach would have an unqualified right to an extension of time which would defeat the purpose of the rules which is to provide a time table for the conduct of litigation".
[23]. In the case of A Mitchell Gay and Allan C Beall v. Resolution Trust Corporation, The Cadle Company, Leinani Bortles and Larry Lynel Bortles Civil Appeal No. HBA 1 of 2009, Court made reference to a Judgement of Her Lordship Shameem JA in Ports Authority of Fiji v. G.T. Marketing Limited (unreported) Civil Appeal No. 4 of 2001 (22 February 2001) and stated as follows:
"The Rules in Part II of Order 59 have imposed a strict timetable for the filing and serving of documents at the Registry and on the Respondents. The purpose of the Rules was obviously to avoid delay at the interlocutory stage of civil proceedings and to make such appeals more efficient. The provision in Rule 17 (3) that failure to follow Rules 17(1) and 17(2) leads to an automatic abandonment of the appeal is intended to operate as a deterrence in respect of delay."
[24]. In the case of Norwich and Peterborough Building Society v. Steed [1991] 2 All ER 880 CA, it was held that the court has unfettered discretion in the grant or refusal of leave. The factors which are normally taken into consideration in deciding whether to grant an extension of time have been set out as:
[25]. It has now been well established that these are the factors (which are indeed non exhaustive) that Court needs to take into consideration when dealing with such applications.
[26]. This position has been followed in Fiji since the case of Ist Deo Maharaj v. Burns Philip (South Sea) Co. Limited Civil Appeal No. ABU 51/1994S.
[27]. This position has been further affirmed by His Lordship Justice Priyantha Fernando in the case of Herbert Construction Company (Fiji) Ltd v. Fiji National Provident Fund [2010] FJCA 3, Fiji Court of Appeal Miscellaneous Case No. 20/2009 (3 February 2010); His Lordship Justice Kamal Kumar in the case of Atunaisa Lacabuka Rasoki v. The Attorney-General of Fiji or States or Governor; Lands Minister or Chief Surveyor or Registrar; Native Reserve Commission, Native Lands Trust Board, Fiji Museum; and Salesi Temo [2014] Fiji High Court Civil Action No. HBC 107/2009 (24 June 2014); His Lordship Justice Deepthi Amaratunga in the case of Mohammed Wahid Khan v. Mohammed Yasad Ali [2015] FJHC 433, Fiji High Court Civil Action No. HBC 21/2013 (11 June 2015); and His Lordship Justice Mohamed Ajmeer in the case of Wali Mohammed v. Mohammed Shamsher Azaad Khan [2015] Fiji High Court Civil Action No. HBC 67/2014 (2 October 2015).
[28]. In the case of Charan v. Wati [2014] FJSC 19, Fiji Supreme Court Special Leave to Appeal Civil Appeal No. CBV 0007/2014 (17 December 2014), His Lordship the Chief Justice Anthony Gates has elaborated on the principles to be applied by the appellate courts when exercising its discretion in applications for leave to appeal out of time:

Analysis


[29]. In the present application the Acting Master of the High Court made his Ruling on 27 October 2015. The 21 day period for filing and serving of an appeal lapsed on 17 November 2015. The application for leave to appeal out of time/for enlargement of time to file and serve the Notice of Appeal (the Amended Summons and supporting Affidavit), was filed in court only on the 16 December 2015, which was 29 days after the due date for the filing of the appeal. It is the opinion of this Court that the extent of the delay in the circumstances of this case was substantial.
[30]. The Appellant has offered a detailed explanation as to the reasons for the delay. When this matter was before the Master, the Company was represented by Messrs Diven Prasad Lawyers. Messrs Diven Prasad Lawyers had informed the Company that they had conflict of interest and as such the Company appointed Messrs Saumatua Bale & Faktaufon Lawyers to represent its interests in this matter. It is stated that the handover of documents from the Company's original solicitors had taken time. Further, the new solicitors had to be briefed on the facts of this matter.
[31]. Furthermore, the Appellant had been advised by their new solicitors that in order for them to act on behalf of the Company and appeal the Master's Judgment dated 27 October 2015, they first needed the consent of the Official Receiver. The solicitors had initially tried to meet with the Official Receiver on the 10 November 2015 and 12 November 2015. However, the Official Receiver was said to be on leave. The Official Receiver's consent was received only on 13 November 2015.
[32]. It is pertinent to note that on 17 November 2015, the Appellant filed a Summons for Leave to Appeal the Master's Judgment, together with an Affidavit in support, sworn by Yogendra Ravinesh Sharma. 17 November 2015, was the final date for filing and serving of an appeal. However, on that day, the Appellant had filed a Summons for Leave to Appeal instead of filing and serving of an Appeal.
[33]. The counsel for the Appellant stated that the unnecessary papers were filed due to an ambiguity in Order 59 Rule 8 of the High Court Rules 1988. This court sees no ambiguity in the said Rule. It is clear from the Rule that Leave to Appeal is required only from an interlocutory order or judgment of the Master. If it is a final order there is clearly a right of appeal.
[34]. This said, the counsel for the Appellant took full responsibility for filing of the unnecessary papers. It is also important for court to make reference to the conduct of the counsel following the filing of these papers. Following a brief discussion held between the solicitors of the Appellant and the Respondent, on 2 December 2015, the Counsel for the Appellant agreed to concede to the Respondent's preliminary objection, taken up on 26 November 2015, that Leave to Appeal the Judgment of the Master was not required. Thereafter, on the 16 December 2015, the Amended Summons and supporting Affidavit for leave to appeal out of time/for enlargement of time to file and serve the Notice of Appeal, were filed in court.
[35]. Taking the above factors into consideration, court is of the opinion that the reasons for the failure to file the Appeal within the stipulated time period have been satisfactorily explained. In any event, as has been set out in the case of Mohammed Wahid Khan v. Mohammed Yasad Ali [2015] FJHC 433, Fiji High Court Civil Action No. HBC 21/2013 (11 June 2015):
"...The lawyer's mistake in classification (of interlocutory decision as a final decision) should not be held against the Plaintiff if there are merits in the proposed grounds of appeal and his appeal rights should not solely depend (sic) on the mistake of law made by his counsel."
[36]. Therefore, I now wish to go into the merits of this case. In determining whether there is a chance of the appeal succeeding if the time for appeal is extended, Court has to necessarily examine the merits of the application for leave to appeal (to determine whether there is a ground of appeal that will probably succeed). For this purpose it is important to go through the Grounds of Appeal. Following are the Grounds of Appeal which the Appellant will be relying upon in this case:

(1). That the Learned Master erred in fact and law in holding that the Respondent/Petitioner had fully accounted for the payments of the purchase price of $690,000.00 VIP for the Property contained in Certificate of Title No. 8199 on Lot 47 on Deposited Plan No. 1944 situated at 47 Howell Road, Suva to the Appellant/Respondent Company.


(2). That the Learned Master erred in fact and law by failing to hold that the sum of $44,850.00 was disputed by the Appellant/Respondent Company on substantial and/or reasonable grounds which therefore ought to have been tried and/or dealt with in a separate action.


(3). That the learned Master erred in law in holding that the law required the Appellant/Respondent Company to pay the sum $44,850.00 within three (3) weeks of the Respondent's /Petitioning Creditor's statutory demand.


(4). The Learned Master erred in fact in holding that the Appellant/Respondent Company "neglected" to pay the sum $44,850.00 to the Respondent/Petitioning Creditor within three(3) weeks of the Respondent's /Petitioning Creditor's statutory demand.


(5). The Learned Master erred in fact in concluding that the evidence clearly indicated that the Appellant/Respondent Company owed a debt to the Respondent/Petitioning Creditor.


(6). That the Learned Master erred in law in holding that due to the Appellant/Respondent Company failing to pay the Respondent's Petitioning Creditor's statutory demand notice within three (3) weeks, the Appellant/Respondent Company is insolvent and unable to pay its debts.


[37]. have carefully perused the Judgment made by the Acting Master of the High Court. I have also perused the several affidavits filed in this case and the Grounds of Appeal enumerated above. Taking all factors into consideration, I am of the view, that there are grounds of merit in this case justifying the appellate court's further consideration.
[38]. As to the issue of prejudice, it must be conceded that some prejudice will be caused to the Respondent if the application for leave to appeal out of time is granted. However, conversely, it is the opinion of this court, that if leave to appeal out of time is refused, greater prejudice would be caused to the Appellant in this application.

Conclusion


[39]. For all the aforesaid reasons, this Court is of the view that this is an appropriate case for the granting of leave to appeal out of time and for permitting the enlargement of time to file and serve the Notice of Appeal. Accordingly the application for the enlargement of time to file and serve the Notice of Appeal is allowed.
[40]. Accordingly, I make the following Orders:

ORDERS

1. The application made by the Appellant for the enlargement of time to file and serve the Notice of Appeal is allowed.
2. The Appellant is hereby granted 7 days (seven days) from today to file and serve the Notice of Appeal.
3. Costs of the application shall be costs in the Appeal.


Dated this 9th day of March 2016, at Suva.


Riyaz Hamza
JUDGE
HIGH COURT OF FIJI


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