Kartika Construction Plumbing Services Pte Ltd v The Fiji National University [2023] FJHC 372; HBC99.2023 (9 June 2023)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No: HBC 99 of 2023

BETWEEN : KARTIKA CONSTRUCTION PLUMBING SERVICES PTE LIMITED a limited liability company duly incorporated under the Companies Act and having its registered office situated at Lot 4, Carpenters Street, Raiwai, Suva, Fiji (a Company in Liquidation)

PLAINTIFF

AND : THE FIJI NATIONAL UNIVERSITY a University and a body corporate under the “The Fiji National University Act”

DEFENDANT

Counsel: Plaintiff: Mr. Prakash R and Ms Prasad P
Defendant: Mr. Prasad R
Date of Hearing: 30.05.2023
Date of Judgment: 9.06.2023

JUDGMENT

INTRODUCTION

1. This is an action filed on behalf of a Company in liquidation by a firm of solicitors upon a request for “Permission to Conduct matters on behalf of Company in liquidation” (dated 24.10.2022) and consent obtained from Official Receiver who is the liquidator for the said Company in liquidation. Said letter to the liquidator does not state under which provision of Companies Act 2015 such “permission” to institute an action, was sought. The Official Receiver in its letter of 31.10.2022 had referred to letter of 24.10.2022 of the firm of solicitors and again without reference to any provision under Companies Act 2015, stated “we consent to appoint” them. Winding up of a company and liquidation are regulated Companies Act 2015 and Companies Winding Up Rules 2015. Without an express power to grant consent to institute an action the purported consent of liquidator is invalid in law.
   
2. Upon presentation of this letter of purported consent of liquidator on an ex parte application the Company in liquidation obtained the leave of the court.
   
3. Defendant objected to the said leave granted on paper on ex parte basis. Any ex parte order obtained can be set aside in terms of Order 32 rule 6 of High Court Rules 1988 by the same court, after inter partes hearing. Accordingly Defendant filed summons seeking setting aside of the leave granted by the court on ex parte and also dismissal of the action. This objection was heard inter partes and both parties made oral as well as written submission.

ANALYSIS

4. This is an action filed on behalf of a Company in liquidation. At the time of institution of action by way of originating summons a simultaneous ex parte application was filed seeking leave of the court.
   
5. Said ex parte application was made in terms of Section 543 of Companies Act 2015. Upon perusal of papers leave was granted ex parte to institute this action
   
6. Defendants are objecting to the said leave granted ex parte and seeking to set aside the leave and it is inevitable that such setting aside will result in striking out of this action as the Company in liquidation has no separate existence to remain as Plaintiff if the leave to institute action is set aside.
   
7. Both Plaintiff and Defendant relied on Section 543 of Companies Act 2015.
   
8. Section 543 of Companies Act 2015 reads;

“Powers of liquidator

543.—(1)Subject to this section, the liquidator in a winding up by the Court must have power, with the sanction either of the Court or of the committee of inspection—

(a) to bring or defend any action or other legal proceeding in the name and on behalf of the Company;

(b) to carry on the business of the Company, so far as may be necessary for the beneficial winding up of the Company;

(c) to appoint a barrister and solicitor to assist the liquidator in the performance of his or her duties;

(d) to pay any class of creditors in full;

(e) to make any compromise, or arrangement with creditors, or persons claiming to be creditors, or having or alleging themselves to have any claim, present or future, certain or contingent, ascertained or sounding only in damages against the Company, or whereby the Company may be rendered liable;

(f) to compromise all calls and liabilities to calls, debts and liabilities capable of resulting in debts, and all claims, present or future, certain or contingent, ascertained or sounding only in damages, subsisting or supposed to subsist between the Company and contributory or alleged contributory or other debtor or person apprehending liability to the Company, and all questions in any way relating to or affecting the assets or the winding up of the Company, on such terms as may be agreed, and take any security for the discharge of any such call, debt, liability or claim and give a complete discharge.

(2)Subject to this section, the liquidator in a winding up by the Court must have power—

(a) to sell the real and personal Property and things in action of the Company by public auction or private contract, with power to transfer the whole Property to any person or Company or to sell the same in parcels;

(b) to do all acts and to execute, in the name and on behalf of the Company, all deeds, receipts and other documents;

(c) to prove, rank and claim in the bankruptcy, Insolvency or sequestration of any contributory for any balance against his or her estate, and to receive dividends in the bankruptcy, Insolvency or sequestration in respect of that balance, as a separate debt due from the bankrupt or Insolvent, and rateably with the other separate creditors;

(d) to draw, accept, make and endorse any bill of exchange or promissory note in the name and on behalf of the Company, with the same effect with respect to the liability of the Company as if the bill or note had been drawn, accepted, made or endorsed by or on behalf of the Company in the course of its business;

(e) to raise, on the security of the assets of the Company, any money requisite;

(f) to take out, in his or her official name, letters of administration for any deceased contributory, and to do, in his or her official name, any other act necessary for obtaining payment of any money due from a contributory or his or her estate which cannot be conveniently done in the name of the Company and, in all such cases, the money due must, for the purpose of enabling the liquidator to take out the letters of administration or recover the money, be deemed to be due to the liquidator, provided that nothing in this paragraph must be deemed to affect the rights, duties and privileges of the Public Trustee;

(g) to appoint an agent to do any business which the liquidator is unable to do;

(h) to do all such other things as may be necessary for winding up the Affairs of the Company and distributing its assets.

(3)The exercise by a liquidator in a winding up by the Court of the powers conferred by this section must be subject to the control of the Court, and any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of any of those powers.

(4)Except with the approval of the Court, the committee of inspection or a resolution of the majority of creditors, a liquidator must not enter into an agreement on the Company's behalf (for example, but without limitation, a lease or a Charge) if—

(a) without limiting paragraph (b), the term of the agreement may end; or

(b) obligations of a party to the agreement may, according to the terms of the agreement, be discharged by performance;

(c) more than 3 months after the agreement is entered into, even if the term may end, or the obligations may be discharged, within those 3 months.” (emphasis added)

9. In terms of said provision it is the liquidator who can institute “any action” on behalf of a company in liquidation, with the sanction of court or with “committee of inspection.”
   
10. There is no provision to institute an action by any person other than the liquidator in terms of Section 543 of Companies Act 2015 with the sanction of the court.
    
11. Section 543(1) (c) of Companies Act 2015 allows the liquidator “to appoint a barrister and solicitor to assist the liquidator in the performance of his or her duties”. This cannot be expanded to delegate the power granted exclusively to liquidator for institution of an action on behalf of the Company in liquidation.
    
12. The above provision allows a liquidator to obtain assistance from any solicitor to perform in order to perform the duties of the liquidator, but the legislature did not grant power to institute an action on behalf of a company in liquidation.
    
13. In UK House of Lords decision Inland Revenue Commissioners v Hinchy, [1960] 1 All ER 505 at 512 held,
    

“...But we can only take the intention of Parliament from the words which they have used in the Act and, therefore, the question is whether these words are capable of a more limited construction. If not, then we must apply them as they stand, however unreasonable or unjust the consequences and however strongly we may suspect that this was not the real intention of Parliament.”(emphasis added)

14. The power to institute any action on behalf of a company in liquidation lies fairly and squarely with the liquidator and cannot be delegated to law firm, and there is no provision in Companies Act 2005, to grant consent to institute action on behalf of company in liquidation to a law firm, by the liquidator.

CONCLUSION

15. So in my mind an action on behalf of a Company in liquidation, can be instituted only by the liquidator subjected to the leave of the court or committee of inspection in terms of section 543 of Companies Act 2015. Hence the leave granted ex parte based on the purported consent of the liquidator, is set aside. There is on provision for a firm of solicitors to institute an action in terms of Section 543 with the consent of the liquidator who is in this case the official receive. It is inevitable that this action, is struck off. Considering circumstances no costs awarded.

FINAL ORDER

1. Ex parte leave granted for institution of this action is set aside.
2. The action is struck off.

100. No costs.
     

DATED this 9^th day of June 2023.

.....................................
Justice Deepthi Amaratunga
Judge High Court, Suva