Inherent jurisdiction to prevent abuse of process: admit but stay winding up petition where debt is bona fide disputed.

Court may, at presentation of a winding-up petition, exercise inherent jurisdiction to refuse admission or to admit and adjourn the petition (including restraining advertisement or directing service of notice) where the debt is bona fide disputed or the petition otherwise amounts to an abuse of process; the court should not make a winding-up order on a bona fide disputed debt. On the facts the petition was admitted but kept on file and adjourned sine die without being advertised; petitioners were ordered to pay hearing costs and substantive determination awaits final resolution of the pending suit.

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Issues: Whether, on presentation of a petition for winding up, the court may (i) exercise its inherent jurisdiction to refuse admission or to admit and adjourn the petition where the debt is disputed bona fide or where the petition is otherwise an abuse of process; and (ii) whether, on the materials before the court, the petition founded on the claimed debt should be admitted, kept on file and its hearing adjourned sine die.

Analysis: The Court examined the scope of its inherent power to prevent abuse of its process at the stage of presentation of a winding up petition and concluded that the court may either refuse to admit a petition or admit it and adjourn its hearing (including restraining advertisement or directing service of notice) where justice so requires. The Court considered authorities establishing that a petition is an abuse of process if founded on a debt which is disputed bona fide and that the court should not make a winding up order based on such a disputed debt. On the facts before it the Court found that the debt was disputed bona fide, took into account the company's offer to furnish security (which the petitioner rejected) as material evidence of bona fides, noted defects in verification of parts of the petition, and observed the existence of pending litigation relevant to the controversy.

Conclusion: The Court held that it has discretion at presentation to admit a petition and stay further proceedings where appropriate; on the facts the petition was admitted but kept on file and its hearing adjourned sine die (not to be advertised). The petitioners were ordered to pay the costs of the hearing. The petition was not finally determined on the merits and its hearing is to await final determination of the pending suit.

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