Jay v Brothers [1982] CKHC 5; Plaint 36.1981 (30 August 1982)

IN THE HIGH COURT OF THE COOK ISLANDS
AT RAROTONGA
(CIVIL DIVISION)

PLAINT NO. 36/81

DAY JAY
Plaintiff

v

JOHN BROTHERS
Defendant

Mrs T. Browne for Plaintiff
Mr J. MacFadzien for Defendant

Date of Hearing: 30 August 1982.

DECISION OF CHIEF JUSTICE SPEIGHT

This is a claim for debt by Mr Dan Jay against Mr John Brothers for an amount advanced by him allegedly to Mr Brothers, the claim was for $1,115 but by consent that is amended to $1,095. The statement of defence denied that the loan had been made to the defendant and said that any instalments paid had not been paid by the defendant. It transpires that the money was advanced for the purchase by way of importation of a number of motor cycles which were subsequently apparently handled and registered by a Company of which the defendant was one of the proprietors J.B. Auto Works Limited. The other proprietor and director was the defendant's wife Mrs Brothers. The evidence now throws up the defence that the advance was not made to the defendant personally but to the Limited Liability Company and that he is not liable. It is clear that the Limited Liability Company is quite insolvent and has apparently ceased to trade. This sort of conflict arises hundreds of times in the Courts where a person lends money or supplies goods and the legal person that has been invented by British law in the person of a Limited Liability Company is distinct from the individual person who may be running its affairs. I suppose I have heard scores of cases where a claim such as this is made and the defendant says not me my Company. It is often hard to determine the difficulty. One looks first at the evidence given by the Plaintiff to see whether or not it was clear that he was lending his money or supplying his goods or doing the work for the Company or for the individual. Here, Mr Jay who appears to be a straightforward man but not much versed in business I fancy, says that the deal was between himself and John Brothers; it was a direct deal, a gentleman's agreement between them and it was to be kept as an agreement between them personally because neither he nor Mr Brothers wished their respective wives to know about it. That would be a prime facie case of a personal loan. One must therefore turn attention to challenge which is important and in the face of that prima facie evidence there is an onus upon the defendant to show not where the money went but with whom the Plaintiff was told he was dealing. I am not satisfied from Mr Brother's evidence, particularly from some of the remarks he made right at the end in re-examination that he in the early days himself understood the distinction between himself and the Company as legal entities so that we do not have any evidence from him whereby he claims that he made it clear to Mr Jay that it was not a personal loan. There are also some matters in his evidence which give an indication that this is only an excuse thought up comparatively recently. For example there are the letters written by Mr Jay's solicitors claiming that this was a loan to Mr Brothers and the letter of 3 October 1980 from Mr Brothers solicitor says "Our Client believes that he is able to pay." No mention at that stage of the present defence. Mr Brothers has produced a cheque book butts which he says is the Company's cheque book with the payment of $2,000 to purchase the motor cycles but that does not advance his case because in the same book there are butts which show small payments obviously of a domestic nature to Rusco Stores, Temehani Store, Atua Bakery, all for a few dollars so that it looks as if the funds between him and his Company were mixed just as Mr Jay says that such repayments were made sometimes came from the cash box. It is also interesting to note that both men are quite clear that Mrs Brothers was to know nothing about this loan. She is a director of the Company and later, although I know there were other troubles between them, as a director she repudiated the loan. I have also thought about the willingness of Mr Jay at a later stage to be paid back by the Company or paid along with its other creditors. I think that is immaterial because when one has had money owing for three years or more, one does not care much who pays it so long as one is paid. It gets down therefore to the balance of proof. At balance I accept that Mr Jay wrote his cheque out to John Brothers not to anybody else, that he regarded it as a loan to that person and that Mr Brothers did not take any steps then or for a long time afterwards to suggest that it was not a personal transaction. Accordingly on balance I accept the Plaintiff's evidence and there will be judgment for him for $1,095 and costs and disbursement to be fixed by the Registrar. Because of understandable reasons Mr Jay long ago abandoned getting any interest so no interest is awarded.