Westpac Banking Corporation v Slatter [1996] FJHC 127; HBC0451d.95s (5 July 1996)

IN THE HIGH COURT OF FIJI
(AT SUVA)
CIVIL JURISDICTION

ACTION NO. HBC0451 OF 1995

BETWEEN:

WESTPAC BANKING CORPORATION
a trading bank having its principal place of
business at 1 Thomson Street, Suva
Plaintiff

AND

RICHARD CARDO SLATTER
also known as RICHARD MARK SLATTER
c/- Cardos Chargrill Bar, Victoria Parade, Suva,
Company Director
Defendant

J.R. Howard for the Plaintiff
D. Sharma for the Defendant

Dates of Hearing: 17th May and 19th June 1996
Date of Interlocutory Judgment: 5th July 1996

INTERLOCUTORY JUDGMENT

In the Statement of Claim annexed to the Writ herein which was issued on 25th September 1995 the Plaintiff claims the sum of $19,039.18 allegedly due to it from the Defendant by a written Guarantee Agreement jointly and severally entered into by the Defendant and one John Bullock on the 24th of October 1991.

The Statement of Claim alleges that the Plaintiff made advances to a company called Roaring Thunder Company Limited of which the Defendant and John Bullock were the only two Directors.

The Plaintiff then alleges that on the loan payments falling into arrears the Plaintiff on 6th October 1994 served a Demand Notice on Roaring Thunder Company Limited demanding immediate payment of the outstanding balance at that date, namely $16,878.25 and interest.

It is alleged that on the 9th of January 1995 Roaring Thunder Company Limited was indebted to the Plaintiff in the amount of $17,171.33 and interest and by a written demand of that date the Plaintiff served a Demand Notice on the Defendant for payment of that sum. The Plaintiff alleges that the Defendant has failed to pay the amount due to the Plaintiff.

On the 13th of November 1995 a Statement of Defence was delivered by the Defendant and by Summons dated 27th March 1996 the Plaintiff applies for an order to strike out that Defence. This Summons is presently before me.

The Defence admits that the Defendant signed a document at the Plaintiff's insistence but the Defendant does not recall the nature of the document because neither its terms nor purpose were explained to him. The Defendant alleges that he was simply requested by the Plaintiff's officers to sign a document which he did.

The Defendant claims that he had signed the document in front of an employee of the Plaintiff without first being given any independent legal advice.

He also claims that the Plaintiff has not exhausted or taken any action against the company or the other Directors thereby causing the Defendant great prejudice.

Finally he alleges that the Plaintiff induced the Defendant to execute the Guarantee in breach of its own rules and regulations and through mis-representation.

In support of the Summons to strike out the Defence the Plaintiff has filed two affidavits, the first by Nalin Kalyan the Manager Legal with the Plaintiff on the 23rd of February 1996 and the second by Pradeep Kumar Lal the Manager Legal of the Plaintiff from 10th June 1996. This affidavit was filed after the Defendant's counsel repeated the Defendant's claim that he had not received any Bank Statements from the Plaintiff. Annexed to Pradeep Lal's affidavit are copies of Bank Statements which the Plaintiff says were forwarded to the Defendant at P.O. Box 545, Nadi and P.O. Box 10125, Nadi Airport. Also annexed to the affidavit is a copy Statutory Declaration by one Anil Vikash, an officer of the Plaintiff at its Nadi Branch to the effect that on the 6th of October 1994 an original Demand was served by him at the registered office of Roaring Thunder Company Limited in Nadi. Also annexed to the affidavit is a Statutory Declaration dated 9th January 1995 stating that on the 9th of January 1995 one Shudeer Kumar an officer of the Plaintiff at its Suva Branch served an original Demand dated 9th January 1995 on the Defendant in Suva requiring the sum of $17,171.33 to be paid to the Plaintiff by the 30th of January 1995.

The Defendant filed an affidavit in response to the first affidavit on behalf of the Plaintiff on the 16th of May 1996. This was by Roshni Prasad a Law Clerk employed by the Defendant's solicitors which states that Miss Prasad has been advised but, she does not say by whom, and verily believes that the Statement of Defence is not scandalous, vexatious, frivolous or an abuse of the Court's process. She further states that she has also been advised and verily believes, again not stating the source of her advice, that the Defence raises a number of issues of merit which give rise to triable issues. These are allegedly:

(a) That there was no independent legal advice given to the Defendant at the time he executed the Guarantee;

(b) That the Plaintiff's solicitors refused to supply the Defendant with further and better particulars of the claim even though they were requested to do so;

(c) The Guarantee purports to secure loans which were allegedly granted in October 1991 when no such loan was granted in that month;

(d) That the loan agreement signed by the Defendant and John Bullock on the 30th of May 1991 only secures the sum of $10,000.00 whereas the Statement of Claim states that the Plaintiff advanced the sum of $20,000.00 to Roaring Thunder Company Limited;

(e) That the Plaintiff has not attempted any direct recovery from the company nor from John Bullock thereby causing great prejudice to the Defendant, in view of the fact that John Bullock was the principal partner in the company.

In the second affidavit filed on behalf of the Defendant, this time by the Defendant himself on the 24th of June 1996, the Defendant states that no Bank Statements were supplied to him individually and that he was only made aware of the details of the accounts on 17th June 1996. He denies that any Demand was served on him either on 6th October 1994 or the 9th of January 1995.

The Defendant then repeats his allegations of being denied any opportunity of obtaining any legal advice and that no actions have been taken against the company to realise its assets, nor have any proceedings been commenced against the other Guarantor John Bullock. As to the Guarantee he deposes that he was induced to sign it by one of the Plaintiff's officers who witnessed his signature on the basis that if the company ever fell into arrears the Plaintiff would first call up its securities over the assets of the company and, in the event that this did not result in full recovery for the Plaintiff, only then would the Guarantors be called on. He then makes other allegations one of which is that the Plaintiff's actions in witnessing its own guarantees together with the alleged promises and inducement offered to the Defendant are contrary to the provisions of the Fair Trading Decree 1992 and amount to misleading and deceitful conduct.

To enable a loan to be granted to the company the Plaintiff obtained two signed documents from the Defendant and his Co-director. These were a Loan Agreement dated 6th September 1991 and the Guarantee signed by both the Defendant and John Bullock with the Company's seal affixed thereto. I say immediately, and not for the first time in Fiji, that the Instrument of Guarantee typical of most others, is by any standard a formidable document which in my opinion even an experienced lawyer would require much concentration to enable him to understand. It is worded in legal expressions familiar to lawyers but most of them contained in long sentences which I have little doubt most laymen would have much difficulty in comprehending. In my opinion the time is well overdue in Fiji to follow the practice now mandatory in Australia, New Zealand and England that a summary in simple English setting out the rights and obligations of the mortgagor and mortgagee of any real or personal property must be given to the mortgagor before he or she signs any mortgage document and that the mortgagor be given an opportunity to obtain independent legal advice before signing such document.

That said, I nevertheless have difficulty even at this stage of accepting many of the complaints and assertions made by the Defendant. Thus in paragraph 10 of the Defence the Defendant admits that he signed the Guarantee which means that he acknowledges Clause 16 of the Guarantees that it is agreed that the Guarantor does not execute the instrument as a result of any promise, representation, statement or information of any kind whatsoever made to him by the Plaintiff. Even if he did I find it hard to believe that any businessman would sign a Guarantee without first reading it or if he did, and was uncertain about the meaning of any part of it, seeking clarification from the Plaintiff or time to obtain legal advice. In a document annexed to the first affidavit filed on behalf of the Plaintiff which is a letter dated 29th May 1991 from the Plaintiff to the Directors of the Company both the Defendant and his Co-director John Bullock signed to the effect that the various terms and conditions in the document were acceptable. Those most relevant here are that the Bank would provide an overdraft limit of $10,000.00 for working capital, a term loan limit of $10,000.00 for ANZ Bank debt takeover and a Lease Finance limit of $24,000.00 for ANZ Bank debt takeover. The security for these facilities provided by the company consisted of a registered Bill of Sale by the company over all its assets, unlimited joint and several Guarantee by the Directors Mr. John Bullock and Richard Mark Slatter and a Lease Agreement by the Company over a Toyota Hiace Van. I fail to understand therefore how the Defendant can say that he was unaware of the nature of the commitment which he and his Co-director were then about to undertake.

Clause 8 of the Guarantee which is initialled in the margin by the Defendant states that the Guarantee is to be "security for the whole of the moneys hereby secured".

Clause 10 states that a certificate signed by or on behalf of any Manager of the Plaintiff stating the amount of moneys secured by the Guarantor shall be conclusive evidence against the Guarantor that the amount so stated is correct.

Clause 27(b) of the Guarantee states that the expression "the Guarantor" shall be a reference to each of the Guarantors severally as well as jointly.

Clause 2(a) of the Loan Agreement annexed to the first affidavit filed for the Plaintiff and again signed on behalf of the company by both the Defendant and John Bullock on the 6th of September 1991 states that the security for the loan is to be that stated in the Terms and Conditions of Loan dated 29th May 1991.

All these matters raise considerable doubt in my mind as to the genuineness of the Defendant's allegations. Nevertheless the claim by the Defendant that he was induced to sign the Guarantee by the Plaintiff's officers and his claim that the Plaintiff gave him no opportunity to seek legal advice on the implications or contents of the Guarantee raises a triable issue. So too does the Defendant's claim in his affidavit of the 19th of June that the Plaintiff's practice of witnessing Guarantee documents is contrary to its own requirement for a certificate from an independent legal practitioner that the Guarantor has understood the terms of the Guarantee before signing it. In my judgment also the Defendant's claim that the Plaintiff's actions in witnessing its own Guarantee and the alleged promises and inducements made by its officers are contrary to the provisions of the Fair Trading Decree require investigation which only can take place at a trial.

I am not impressed by the Defendant's claim that he never received any Bank Statements. I would have thought it the essence of common sense for any businessman who had signed a Guarantee of up to $20,000.00 to make sure that he received Bank Statements regularly from the bank. He complains that these were sent to the company at two addresses in Nadi but I would have thought any prudent company director in the Defendant's position would immediately enquire from the Bank why he had not received any such statements. The Defendant appears not to have done so and as such may well turn out to be the author of his own problems.

However the law is well settled and was stated as far back as 1895 by Lopes L.J. in Roberts v. Plant [1895] UKLawRpKQB 22; (1895) 1 Q.B. 597 at 604 who said:

"The meaning of the order is, that in a certain class of cases, where the plaintiff has a clear case, he ought not to be subjected to the expense and delay of going to trial, but ought to be allowed to sign judgment summarily; and therefore, where the plaintiff shews that he has a good cause of action, and the defendant cannot make out that he has any plausible ground of defence, the plaintiff is entitled to judgment provided that his claim is one which comes within the terms of the order."

It was held in Pemberton v Chappell [1986] NZCA 112; (1987) 1 NZLR 1 that in cases such as this the onus is on the Plaintiff to convince the Court that the Defendant has no fairly arguable Defence.

Obviously the credibility of the Defendant is in issue here as of course may also be that of the Plaintiff. For these reasons and despite the reservations I have expressed I consider that it would be unfair to strike out the Defendant's Defence at this stage but I also consider that the Defendant must provide some tangible evidence of his sincerity in wishing to defend this action. I therefore order that within 14 days of the delivery of this judgment the Defendant pay into Court as security for the further prosecution of this action the sum of $15,000.00. If that is not done then the Plaintiff doubtless will have recourse to further action. Costs of the present proceedings will be in the cause.

JOHN E. BYRNE
J U D G E

Cases referred to in judgment:

Fair Trading Decree 1992.
Roberts v. Plant [1895] UKLawRpKQB 22; (1895) 1 Q.B. 597.
Pemberton v. Chappell [1986] NZCA 112; (1987) 1 NZLR 1.

The following additional cases were mentioned in argument:

Jacobs v. Booth's Distillery Co. (1901) 85 L.T.R. 262.
National Bank of Fiji v. Singh Civil Action No. 214 of 1991 - unreported judgment of Scott J. dated 15th July 1993.
Williamson v. London and North Western Railway Company [1879] UKLawRpCh 164; (1879) 12 Ch. D. 787.

HBC0451D.95S