Summit Retreading Company Ltd v Goundar [1997] FJHC 210; Hbc0503j.92s (29 May 1997)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. 503 OF 1992

Between:

SUMMIT RETREADING COMPANY LIMITED
Plaintiff

and

1. VIJENDRA GOUNDAR T/A LAUTOKA TIRE SERVICE
AND WHEELS AND TIRES
2. RADHIKA GOUNDAR
d/o Subarmani Goundar
Defendants

Mr. D. Jamnadas for the Plaintiff
Mr. H. Shah for the First Defendant
Mr. S. Maharaj for the Second Defendant

JUDGMENT

In this action the Plaintiff claims against the Defendants the sum of $239,752.02 being the balance amount due and owing by them to the Plaintiff for goods sold and delivered to them upon their request between the months of August and November 1992. The Plaintiff further claims (a) an injunction restraining the defendants from disposing of and dealing with and or removing from the jurisdiction of this Court any and all assets and monies of the defendants; (b) the return of all goods purchased by the defendants from the Plaintiff (c) the costs of this action and (d) such further or other relief as this Court deems just.

The issues

The agreed facts are that the Plaintiff sold and delivered to Lautoka Tire Services and Wheels and Tires of Lautoka goods for which the balance sum of $239,752.02 remains outstanding.

The issues as agreed to be determined are:

1. Whether the goods were supplied to the 1st Defendant or the 2nd Defendant or to both.
   
2. Whether the 1st Defendant or the 2nd Defendant or both were trading as Lautoka Tire Services and/or Wheels and Tires.
   
3. Whether the 1st Defendant or the 2nd Defendant or both owe the Plaintiff the sum claimed.
   

The Plaintiff's case

The Plaintiff is a duly incorporated company carrying on business in Fiji as tire retreaders, retailers and wholesalers of new tyres, tubes and accessories.

The defendants are involved in the business of retailing tyres etc.

During the months of August 1992 and November 1992 the defendants ordered and were supplied by the Plaintiff tyres, tubes and "ancillary accessories" to the value of $282,907.11.

In part payment of the said debt the defendants paid to the Plaintiff the sum of $61,118.14 by cheque which was dishonoured upon presentation to the bank.

Despite several demands the defendants have not paid the said sum.

Subsequent to the making of the demand the Company took certain tyres from the defendants' premises to the value of $43,155.09 leaving the said balance of $239,752.02 as due and owing by the defendants to the Plaintiff.

For the Plaintiff GERWIN WENZELL KEIL testified that he was the managing director of the Company in 1982 until December 1994. He was in charge of day to day running and daily trading. The D1 was its best customer and he dealt with him from 1984 to 1992. He supplied the goods in question to "Lautoka Tire Services", "Nadi Tire Services" and "Wheels and Tires". The D1 sometimes took tyres in his small utility when he came to Suva but most of the times they were delivered to the respective businesses.

Mr. Keil tendered to Court a bundle of Invoices for the period 4 April 1989 to 14 May 1991 (exhibit I) to show that D1 had dealing with the Plaintiff and he paid for goods supplied to him for that period.

The Plaintiff asserts that D1 used to place orders himself and goods would be delivered by the Plaintiff's drivers and signatures showing acceptance of delivery would be obtained on the Invoices.

Mr. Keil tendered to Court Invoices for the period 3 August 1992 to 3 November 1992 (exhibit 2) amounting to $286,466.39. He says that a cheque for $61,118.14 was received from "Lautoka Tire Services" but it was dishonoured on presentation (exhibit 3). Mr. Keil spoke to D1 who said he will discuss the matter when he comes to Suva as he was having financial problem. He sent a facsimile message (exhibit 4) stating that he will not be able to keep his appointment.

The witness told his employees to seize as much of the goods supplied by it from Lautoka Tire Services. This was done and credit was given for $43,155.09 (exhibit 5).

First Defendant's Defence

By his Statement of Defence the First Defendant (D1) denies that at the material time he was involved in the business of retailing tyres under the style of "LAUTOKA TIRE SERVICES" (the "LTS") and "WHEELS AND TIRES" (the "WT") of Lautoka.

He not only denies ordering or receiving tyres etc to the value of $282,907.11 but also denies that he paid to the Plaintiff the said sum of $61,118.14. He further denies that the company took the items back as alleged.

The D1 denies that he is indebted to the Company in the balance sum claimed. He says that he did not receive any 'particulars' as stated by the Plaintiff.

In his evidence he said that during the period in question he did not have any interest in the business of Nadi Tire Services and Wheels and Tires and as for Lautoka Tire Services he said that he sold it to D2 in July 1992. He said that he still assisted her in the business and did place some orders but not in his "personal capacity" and admitted signing for some deliveries. He says that D2 is responsible for payment of the amount claimed.

He agreed in cross-examination by Mr. Jamnadas that LTS burnt down in mid November. He denied that he obtained credit "fraudulently" from the Plaintiff. When asked by Court he said no one asked him to sign for delivery of goods; he said he signed as he "happened to be there and signed in good faith".

When cross-examined by Mr. Maharaj about the Sale and Purchase Agreement between D1 and D2, he said it was stamped in November, but then in the next breath said "not sure". He gave two different versions of what happened to it. At first he said he had the document at home and then to the next question he said he gave to his counsel for safe keeping. When asked by Court "which one do I believe?" he said he meant "photocopy of stamped document".

Second defendant's defence

The second defendant (D2) denies owing the sum claimed or any sum at all. She also denies requesting the Plaintiff to supply the goods at all and denies receiving the details of the goods supplied as claimed. She is asking the Court to dismiss the claim against her.

The D2's evidence is that she wanted to buy the business of Lautoka Tire Services run by D1 and had entered into an agreement dated 28 August 1992 with him. It was her husband who made all arrangements with D1 in this regard. She paid a deposit of $20,000 into the trust account of Mr. Shah. But because she was a housewife and had no experience of running a business she found it difficult to run it so she decided to cancel the agreement and asked D1 to return the said deposit to her. She got her solicitor to write to Mr. Shah accordingly on 12 November 1992. In the period from the time of signing the agreement and 12 November 1992 she said that she herself had no dealing with the Plaintiff as she never ordered anything or talked to them. It was D1 who ordered goods and she was never seen by the Plaintiff about the business. Further, she had nothing to do with the business of WHEELS & TIRES. The sum of $20,000 had not been refunded to D2. Although she was given authority to sign cheque for LTC, the D1 controlled all books, he paid accounts and all income was kept by him. She insisted on the return of the deposit but D1 refused.

The cheque for $61118.04 dated 31 October 1992 (exhibit 3) was brought by D1 to her to sign saying that the Plaintiff is pressing him for payment.

When cross-examined by Mr. Shah she admitted that she was involved in the business in July 1992. She took delivery of tyres (100 of them) and tubes (400) and sold them during that month. At that time she was signatory to the cheques but she did not keep the income. She denied ordering goods. When it was put to her "Ordered on your behalf", she said "No". Evidently orders were given by D1. She admitted she bought jewellery worth $3000 and paid by cheque of LTS. She signed cheque for $61,118.14. She denied ever speaking to Plaintiff. She said that D1 was in full control of the business and he brought the said cheque for her to sign at her house.

Consideration of the issues

Findings of fact

The evidence reveals that the goods were ordered by D1 himself and no one else and were supplied to him despite the fact that D1 says that he sold the business to D2. I do find this as fact on a balance of probabilities. The Plaintiff and D1 had a long association in business until November 1992. The D1 traded as "Lautoka Tire Services" and "Wheels and Tires". It is clear from evidence and which I accept that it was D1 that the Plaintiff dealt with all along and it was only D1 whom the Plaintiff knew. The Plaintiff had no knowledge of any business dealing between D1 and D2; in fact it does not know D2 at all. There is no evidence of D2 having ordered any goods and I accept the testimony of D2 in this regard. I find these as fact on a balance of probabilities.

Although the Plaintiff has issued this Writ against both the defendants it says through its counsel that if Court finds that D2 was involved then it asks for judgment against both.

I am satisfied and find as fact that D1 had all along held himself out to the Plaintiff and its agents and servants as the owner of the businesses of LTS and WT and he was the only one who placed orders for goods supplied to LTS and WT. Although the cheque was signed by D2, it is LTS which received the goods. The D2 was only the authorized signatory to cheques. The fact that the signatory to the cheque for $61118.14 is D2 does not mean that D2 is responsible for payment for the goods for that is a matter of arrangement entirely between the D1 and D2. In regard to the understanding between D1 & D2, the Plaintiff was not aware and it had no contact with D2 in its business dealings with LTS. I find that D1 had not indicated to Plaintiff the purported change of ownership and I reject as untrue what he said in that connection. Had there been a change the Plaintiff would have discussed credit terms and present liability for goods already supplied as it did with D1 when he commenced business with them.

The proper thing would have been for him to properly advise the Plaintiff of his proposed new arrangement and to the placing of orders and as to who was going to be responsible for payment. This I find he did not do and kept ordering as if there was no change to his dealings with the plaintiff.

To show that there was no notification of such alleged change is borne out by KEIL'S evidence when he said that when the said cheque was dishonoured on presentation, D1 when told of the dishonour promised to come to Suva and discuss the matter and stated that he was having financial problem with his company. He further promised that he will "settle his account by part-payment towards cheque". Later when he could not come he sent a facsimile message (exhibit 4) that he had to appear in Lautoka Court and so he cannot come.

The evidence of GERWIN WENZELL KEIL (the Managing Director) (PW3) was supported in regard to material particulars by WENZELL EUGENE KEIL (PW2) a director of Plaintiff Company and TULSI RAM SHARMA (PW3), Sales Manager. I accept their testimony on material issues. They had been personally dealing with D1; the cheque of LTS which D1 gave also covered goods supplied to "Nadi Tire Service" (the "NTS"). They said that D1 was the one who ordered goods between July and November 1992. They had no dealing with D2 and they do not even know her. I also accept the evidence of DHARAM RAJ (PW5) who was a delivery driver but now Branch Manager, Nausori. He is familiar with D1 and the people who accepted deliveries on his behalf. He was the one who was given the cheque by D1. This cheque he gave to his boss and saw it after it was dishonoured.

I find as fact from all the evidence before me that it was D1 who traded as LTS, WT and NTS all along and placed orders himself for goods supplied by the Plaintiff and for which the Plaintiff is now claiming although there were many instances when delivery of goods supplied were accepted by his servants and agents whose names have been mentioned in evidence. I further find as fact that for all intents and purposes it was D1 who was fully in command of the businesses and he held himself as such too, particularly in so far as the Plaintiff is concerned.

Subject to what I have to say hereafter in regard to the dealing between D1 and D2 I find on the first issue that the goods were supplied to D1 and not to D2. I further find, on the second issue that it was D1 who was trading as Lautoka Tire Services and Wheels & Tires and not D2.

It is important that I should now consider the dealing between D1 and D2 although in the findings that I have already made, the strength or otherwise of the Sale and Purchase agreement which the parties entered into and the evidence given in relation thereto had been considered by me.

Very briefly, the undisputed facts are that D1 and D2 entered into a Sale and Purchase Agreement (the "Agreement") for D2 to purchase the business known as "Lautoka Tire Services". D2 is a housewife and has no experience whatsoever of doing business. She was so to say like fish out of water and found it hard to run the business, for that is the distinct impression I get from the evidence. In the very early stages she decided to throw the towel in and set the train in motion to rescind the agreement and asked for the return of the deposit of $20,000 (which was also the full purchase price) which according to the agreement was deposited into Mr. Shah's Office. This sum was to be paid out to D1 upon the "stamping of this agreement" (clause 4). The D1 was required under clause 5, 6 and 7 to transfer the business, transfer meter and water meter and all improvements in the said business respectively but he did not do any of these things.

It is borne out in evidence that although the agreement is dated 28 August 1992 it was not stamped until 12 November 1992 and these are evident from the agreement itself. The D1 also mentioned that he gave the business to D2 in July 1992.

I have considered the whole of the evidence in relation to this dealing and I come to the conclusion and find as fact that within a short time D2 found it hard to manage and so rescinded the agreement but all along D1 himself kept on placing orders for goods and even took delivery of them which he admitted and the reason he gave for doing that was because he "happened to be there". In this state of things the Plaintiff was under the impression, and rightly so, that it was the D1's business and it was dealing with him as previously for many years.

I find that for some unknown reason the agreement was not stamped until 12 November 1992. It was on 9 November 1992 that cheque for $61,118.14 (dated 30.10.92) which was later dishonoured was presented to Bank by the plaintiff. This was the time when the Plaintiff stopped its dealings with D1 trading as Lautoka Tire Services and in other business names. It is quite obvious from this that despite knowing of D2's demands, whilst not complying with Clauses 5, 6 & 7 of the agreement himself, to avoid payment of his said debt D1 goes ahead and stamps the agreement to show that the agreement is in force to enable him to lay his hands on the said $20,000. One other observation I would like to make on clause 4 of this agreement, and it is this, that the D1 and D2 may have been trying out, so to say, how the deal was going to work out, but that, in the meantime, this gave D1 enough rope to put it around D2's neck to tie her up to force her to meet the debt owed to the Plaintiff.

For the above reasons I find that D2 is in no way responsible to pay the claim in this action.

Therefore, on the third issue I find that it is the first defendant and not the second defendant who owes the Plaintiff the sum claimed.

Conclusion

To conclude, as can be deduced the decision in this case depended entirely on the credibility of witnesses. It was a question of whom to believe in regard to the material issues before the Court. There was also the need to make findings as to the said Sale and Purchase Agreement. I believe the evidence adduced by the Plaintiff to prove the claim only against the first defendant. I reject the first defendant's version altogether suggesting that it is D2 who should be paying. D2's version is the accepted one.

For the reasons given hereabove, on the first issue I accept the testimony of the Plaintiff's witnesses in regard to the material particulars and reject that of the first defendant. I therefore find that the goods were supplied to the first Defendant and not to the second defendant for, in a nutshell, he held himself out to the Plaintiff as the person at the helm as usual and that he was going to meet payments as and when due. Not knowing what is alleged to have been transpiring between D1 and D2 the Plaintiff was completely unaware of the undercurrent to deprive it of its claim for goods supplied and for which it expected payment, and rightly so, from the first defendant as it did for many years in the past.

I further find that it was the first defendant and not the second defendant who traded as "Lautoka Tire Services" and "Wheels and Tires".

For these reasons, I find that it is the first defendant who is solely responsible for the payment of the amount claimed in this action.

There will therefore be judgment for the Plaintiff against the first defendant for the sum of $239,752.02 as claimed with costs to be taxed if not agreed. The claim against the second defendant is dismissed with each party to bear his own costs.

D. Pathik
Judge

At Suva
29 May 1997

HBC0503J.92S