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Stanbic Bank Limited v Jonah Investments Limited & Another (Miscellaneous Application 8 of 2017) [2024] UGCommC 228 (6 June 2024)
- Citation
- [2024] UGCommC 228
- Status
- Judgment
- Jurisdiction
- Uganda
- Court
- Commercial Court of Uganda
- Panel
- Stephen Mubiru, J
- Case number
- Miscellaneous Application 8 of 2017
- Language
- English
More details
- Court
- Commercial Court of Uganda
- Panel
- Stephen Mubiru, J
- Case number
- Miscellaneous Application 8 of 2017
- Language
- English
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The court found that the applicant had obtained a judgment against the 1st respondent and had served a statutory demand, which was acknowledged but not complied with. Under section 3(2)(a) of The Insolvency Act, 2011 and Regulation 85(2)(a) of The Insolvency Regulations, 2013, failure to comply with a statutory demand creates a presumption of insolvency. The court further held that a creditor of an undisputed debt is entitled to present a winding up petition, regardless of the company's actual ability to pay, provided the statutory demand is not satisfied and the amount exceeds the statutory minimum. As the 1st respondent failed to pay the decretal sum and did not oppose the application, the court concluded that the requirements for a winding up order were met. The application was allowed, the 1st respondent was declared insolvent, and a winding up order was issued with the Official Receiver appointed as Provisional Liquidator.
Court disposition
application allowed; winding up order issued
Orders
- Declaration that Jonah Investments Limited failed to comply with the statutory demand and is deemed unable to pay its debts.
- Order for the winding up/liquidation of Jonah Investments Limited.
- The Official Receiver is appointed as Provisional Liquidator of Jonah Investments Limited.
- Costs of the applicant to be met from the proceeds of the winding-up/liquidation process.
02
Material facts
Parties
Stanbic Bank Limited
Applicant Counsel: M/s H & G AdvocatesJonah Investments Limited
RespondentThe Official Receiver
Respondent03
Procedural history
Posture
Miscellaneous Application / Ruling on Application for Winding Up Order
04
Questions and positions
Legal issues
- 01
Whether the 1st respondent's failure to comply with a statutory demand establishes insolvency under the Insolvency Act, 2011.
- 02
Whether the applicant is entitled to a winding up order against the 1st respondent based on non-payment of an undisputed judgment debt.
Party arguments
- Applicant
- The applicant argued that a judgment was entered in its favour against the 1st respondent, and a statutory demand was duly served and acknowledged. Despite this, the 1st respondent failed to pay the decretal amount. The applicant contended that this non-compliance with the statutory demand is sufficient to presume insolvency under the Insolvency Act, 2011, and entitles the applicant to a winding up order.
- Respondent
- The respondent did not file or present any arguments in opposition to the application.
05
Court’s reasoning
Legal principles
- 01
Section 3(2)(a) of The Insolvency Act, 2011; Regulation 85(2)(a) of The Insolvency Regulations, 2013
A debtor is presumed unable to pay its debts if it fails to comply with a statutory demand, unless the contrary is proved.
- 02
BNY Corporate Trustees Services Ltd v. Neuberger Berman Europe Ltd [2011] EWCA Civ 227; Mann v. Goldstein [1968] 2 ALLER 769; Cornhill Insurance plc v. Improvement Services Ltd [1986] BCLC 26; Jomayi Consultants Limited v. NC Bank Uganda Limited, H.C. Company Cause No. 5 of 2020
A creditor of an undisputed debt is entitled to present a petition for winding up.
- 03
Section 4(2)(a) of The Insolvency Act, 2011
The amount claimed in the statutory demand must exceed the statutory minimum for insolvency proceedings to be triggered.
06
Ratio, limits and disposition
Ratio decidendi
The court found that the applicant had obtained a judgment against the 1st respondent and had served a statutory demand, which was acknowledged but not complied with. Under section 3(2)(a) of The Insolvency Act, 2011 and Regulation 85(2)(a) of The Insolvency Regulations, 2013, failure to comply with a statutory demand creates a presumption of insolvency. The court further held that a creditor of an undisputed debt is entitled to present a winding up petition, regardless of the company's actual ability to pay, provided the statutory demand is not satisfied and the amount exceeds the statutory minimum. As the 1st respondent failed to pay the decretal sum and did not oppose the application, the court concluded that the requirements for a winding up order were met. The application was allowed, the 1st respondent was declared insolvent, and a winding up order was issued with the Official Receiver appointed as Provisional Liquidator.
Obiter and limits
- A company's non-compliance with a statutory demand, or non-satisfaction of execution of a judgment debt, if proved, establishes the court's jurisdiction to make a winding up order, even if the company is in fact well able to pay its debts.
- A creditor (including a judgment creditor) of an undisputed debt is entitled to present a petition for winding up.
Court disposition
application allowed; winding up order issued
- Declaration that Jonah Investments Limited failed to comply with the statutory demand and is deemed unable to pay its debts.
- Order for the winding up/liquidation of Jonah Investments Limited.
- The Official Receiver is appointed as Provisional Liquidator of Jonah Investments Limited.
- Costs of the applicant to be met from the proceeds of the winding-up/liquidation process.
Source and reliance status
Commercial Court of Uganda
This page organises the available record for research. Confirm quotations, current status, and subsequent treatment against the official source before relying on the case.
Judgment reading view
Judgment text
The complete available source text.
Commercial Court of Uganda
Judgment
IN THE HIGH COURT OF UGANDA SITTING AT KAMPALA
(COMMERCIAL DIVISION)
Reportable Misc. Civil Application No. 0008 OF 2017
In the matter between
STANBIC BANK LIMITED APPLLICANT
And
1. JONAH INVESTMENTS LIMITED RESPONDENTS
2. THE OFFICIAL RECEIVER
Heard: 31 May, 2024. Delivered: 6 June, 2024.
*Insolvency—Section 3 (2) (a) of The Insolvency Act, 2011 and Regulation 85 (2) (a) of The Insolvency Regulations, 2013. — A company's non-compliance with a statutory demand, or non-satisfaction of execution of a judgment debt, if proved, establishes the court's jurisdiction to make a winding up order, even if the company is in fact well able to pay its debts. —A creditor (including a judgment creditor) of an undisputed debt is entitled to present a petition for winding up petition.*
RULING \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
STEPHEN MUBIRU, J.
Introduction:
[1] Judgment was on 12th September, 2005 entered in favour of the applicant against the 1st respondent. A statutory demand was duly served on the 1st respondent on 14th June, 2017 and service acknowledged by the 1st respondent. The statutory demand gave the 1st respondent ample time from the date of service to make payment of the decretal amount due to the applicant. Despite receipt of service of the statutory demand, the 1st respondent has failed to pay the decretal amount specified in the statutory demand.
The application;
[2] The application is made under the provisions of section 3 (2) (a) of *The Insolvency Act, 2011* and Regulation 85 (2) (a) of *The Insolvency Regulations, 2013.* The applicant seeks an order winding-up the 1st respondent. It is contended that 1st respondent is saddled with a huge debt burden and is unable to pay its debt obligations as and when they fall due.
Submissions of counsel for the applicants;
[3] M/s H & G Advocates on behalf of the applicants submitted that the 1st respondent should be placed under liquidation. The grounds are that the petitioner has a decretal sum awarded against it on 12th September, 2005. The respondent lodged a notice of appeal which was struck out by the Court of Appeal on 19th June, 2015. The petitioner issued a statutory demand on 14th June, 2017 and there is proof of service of the demand. It was not complied with.
The decision.
[4] Under section 3 (2) (a) of The Insolvency Act, 2011 and Regulation 85 (2) (a) of The Insolvency Regulations, 2013 unless the contrary is proved, a debtor is presumed to be unable to pay the debtor's debt if the debtor has failed to comply with a statutory demand. A company's non-compliance with a statutory demand, or non-satisfaction of execution of a judgment debt, if proved, establishes the court's jurisdiction to make a winding up order, even if the company is in fact well able to pay its debts (see *BNY Corporate Trustees Services Ltd and others v. Neuberger Berman Europe Ltd and others; BNY Corporate Trustees Services Ltd* *and others v. Eurosail-IK 2007-3BL plc [2011] EWCA Civ 227; Mann v. Goldstein [1968] 2 ALLER 769; Cornhill Insurance plc v. Improvement Services Ltd and others [1986] BCLC 26 and Jomayi Consultants Limited v. NC Bank Uganda Limited, H. C. Company Cause No. 5 of 2020; H. C. Miscellaneous Cause No. 43 of 2020). A creditor (including a judgment creditor)* of an undisputed debt is entitled to present a petition for winding up petition.
[5] The amount claimed in the statutory demand exceeds the minimum of one million shillings required by section 4 (2) (a) of *The Insolvency Act, 2011*. Consequently, a Declaration is hereby made that the 1st respondent, M/s Jonah Investments Limited failed to comply with the statutory demand by which fact it is deemed unable to pay its debts, and is thus insolvent. For that reason, the application is allowed and an order to wind-up/liquidate M/s Jonah Investments Limited is hereby issued. In accordance with Regulation 97 (a) of *The Insolvency Regulations, 2013* the 2nd respondent is hereby appointed its Provisional Liquidator. The costs of the applicant will be met from the proceeds of the winding-up/liquidation process.
Delivered electronically this 6th day of June, 2024 ……Stephen Mubiru…………... Stephen Mubiru Judge, 6th June, 2024.
Appearances
For the applicants : M/s H & G Advocates For the respondent :
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