Samoa Coconut Oil Production Ltd v Oil Seed Products NZ Ltd [2000] WSCA 5; 03 2000 (18 August 2000)

IN THE COURT OF APPEAL OF SAMOA
HELD AT APIA

C.A. 3/2000

IN THE MATTER of The Companies Act 1955 (N.Z.)

SAMOA COCONUT OIL PRODUCTION LIMITED
a duly incorporated company having its head office at Vaitele
Appellant

AND.

OIL SEED PRODUCTS NZ LIMITED
a duly incorporated company having its head office at
Auckland, New Zealand
Respondent

Coram: The Rt Hon. The Lord Cooke of Thorndon, President
The Rt Hon. Sir Maurice Casey
The Rt Hon. Sir Gordon Bisson

Hearing: 16 August 2000

Counsel: W. Akel and T.K. Enari for Appellant
Ruby Drake for Respondent

Judgment: 18 August 2000

JUDGMENT OF THE COURT DELIVERED BY
LORD COOKE OF THORNDON

On 28 June 2000 Sapolu C.J. ordered that Samoa Coconut Oil Production Limited be wound up on the petition of Oilseed Products NZ Limited. He found that debts totalling over $500,000 were owed by the former company to the latter and were not genuinely disputed on any substantial ground, and that the debtor appeared to be insolvent and was no longer trading or operating. A demand under section 218(a) of the Companies Act 1955 had not been complied with. Subsequently the Chief Justice refused leave to appeal.

The debtor company now applies to this Court for leave to appeal under section 51 (b) of the Judicature Ordinance 1961, if necessary, and also for leave to adduce further evidence. This Court has had the benefit of a carefully prepared and presented supporting argument from Mr Akel and has taken into account the further affidavit evidence, but we are satisfied that the winding up order should stand.

There is no doubt that the debtor company is heavily indebted to the petitioning company, but winding up is resisted on the ground that there is alleged to exist a joint venture agreement whereunder a subsidiary of the petitioning company would take over the management of the copra mill at Vaitele and the debts would be discharged out of the debtor company's share of the joint venture profits.

Equally it is undoubted that a joint venture was proposed and was agreed to in principle and that the mill was, at least for a period of months, managed by a creditor company or its subsidiary in contemplation of a concluded joint venture agreement. The insuperable difficulty in the way of the argument for the debtor company, however, is that no joint venture agreement was ever concluded.

In the Supreme Court the contention for the debtor company was, as asserted in the affidavits by a director, Mr T.F. Wendt, that the joint venture agreement had been entered into in May 1999 in terms set out in a letter dated 20 May 1999 from its chairman, the late Mr Kamu, and bearing the signature dated 21 May 1999 of Mr Jim Dunlop, confirming and agreeing to the terms as duly authorised agent of the creditor company. Annexed to that letter was a joint venture deed. The letter stated that the terms and conditions contained in the deed were agreed to, but subject to six conditions, which were set out. The deed itself was never executed and the conditions were not satisfied. The Chief Justice rightly held that on the case as presented to him the alleged joint venture agreement was not concluded.

In this Court a new argument was advanced. It was said that a joint venture agreement was created or was to be implied by the conduct of the parties and was evidenced by various letters and documents which came into existence or were in existence during the period from 18 to 21 May 1999 and by the subsequent conduct of the parties. Mr Akel took us through all the material said to be relevant. It became apparent that the bricks required to construct the argument do not exist. What the correspondence and the conduct evidence is a considerable phase of negotiations on details, which failed to culminate in agreement. It is not uncommon in commercial dealings for parties to act in the expectation of reaching agreement but ultimately to fail to do so. This is just such a case.

We add that the debtor company is seriously insolvent and that the interim report of the liquidator, Mr D.R. Petterson of Wellington, Chartered Accountant, contains matters of concern which underline the desirability of a winding up. Moreover the parties appear to be deadlocked. There is no way in which this Court can or should attempt to bring about an arbitration as suggested by Mr Akel.

It was argued that an appeal lies as of right. In order to dispose of the case without complication on this point, we grant leave to appeal and to adduce the further evidence. The appeal has been in substance fully argued and is dismissed.

For costs of the appeal the debtor company is ordered to pay the creditor company $500 and disbursements for court fees.

Solicitors:
Kruse, Enari & Barlow, Apia, for Appellant
Drake & Co., Apia, for Respondent