Fosroc Kenya Limited v Lakes Construction Support Limited (Company Cause 27 of 2024)
Observed later treatment
No later-treatment classification is recorded for this judgment.
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Holding
Held that a winding-up petition is not an appropriate remedy to enforce payment of a debt that is bona fide disputed on substantial grounds. Where the debtor contests the quality of goods supplied and thereby disputes the debt, the debt is not an ascertained debt under the Insolvency Act. The creditor must first establish the claim in an action before resorting to winding-up proceedings. Petition dismissed.
Outcome
Petition for winding up dismissed; Petitioner to establish debt claim through separate action
Facts
On 14 August 2019, the Petitioner extended a credit facility of Kshs 10,000,000 to the Respondent for 45 days, later increased to USD 100,000 for 90 days on 24 February 2023. The Petitioner supplied construction materials worth USD 62,423.50 pursuant to purchase orders. On 6 June 2024, the Petitioner served a statutory demand for USD 62,423.50, which remained unpaid. The Respondent contested the quality of goods supplied, stating that Hardware World complained about the products, and requested test results which were not provided. The Respondent maintained it was able and willing to pay once the supplies were tested and confirmed to be of merchantable quality.
Issues
- Whether the Respondent is unable to pay its debts
Orders
- Petition dismissed.
- Costs awarded to the Respondent.
Rules and key headnotes
Legislation cited (9)
Cases cited (7)
- In the matter of Fravolt Technical Services Limited (In Liquidation) (Company Cause No. 3 of 2023)
- Mann v Goldstein [1968] 1 WLR 1091
- Cadiz Waterworks Company v Barnett (1874) LR 19 Eq 182
- Re Welsh Brick Industries Ltd [1946] 2 All ER 197
- Parmalat Capital Finance Ltd v Food Holdings Ltd (in liquidation) [2008] BCC 371
- Founder Group (Hong Kong) Ltd (in liquidation) v Singapore JHC Co Pte Ltd [2023] SGHC 159
- Joselyn Kalembe v Buildnet Construction Materials and Hardware (Insolvency Petition No. 7 of 2022)
Full judgment
The original judgment as reported. Read the original PDF before relying on any passage.