Noon v Burns Philp (South Sea) Company Ltd [1997] FJHC 226; Hbc0509j.95s (7 August 1997)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. 509 OF 1995

Between:

1. YEE WAH NOON
2. KUMAGAI GUMI COMPANY LIMITED
Plaintiffs

and

BURNS PHILP (SOUTH SEA) COMPANY LIMITED
Defendant

and

BULA RENTAL LIMITED
Third Party

Mr. Gago for the Plaintiffs
Mr. M. Young for Defendant
No appearance for Third Party

JUDGMENT

By originating summons dated 6 October 1995, the Plaintiffs are seeking certain Orders, declarations and damages.

Background

The second plaintiff (P2) bought motor vehicle Reg. No. CB025 (hereafter referred to as the 'vehicle') for the sum of $16,500.00 on 19 January 1989 from the Third Party who were the registered owners of the vehicle on 22 September 1988. The P2 did not register it in its own name until 6 September 1989. Thereafter the first plaintiff (P1) who was employed by P2 at the material time bought the vehicle in September 1990 from P2 for the sum of $7707.34. The P1 registered it in his name on 21 May 1991.

At the time of purchase by P2 there was no bill of sale over the vehicle.

On 24 December 1991 the defendant seized the vehicle from P1 pursuant to a purported Bill of Sale dated 2 March 1989 given by 3rd Party to the defendant.

The P1 says that at the material time the vehicle could not be lawfully comprised in, neither could it be made the subject of the defendant's purported Bill of Sale as the 3rd Party had sold same to P2 on 19 January 1989; its seizure was therefore unlawful, illegal, invalid and void. He also says that the said Bill of Sale and the Deed of Charge "in any event" are non-registrable instruments under the Bill of Sale Act Cap 225 and the Companies Act Cap. 247.

After the vehicle was seized P1 says that he had to rent a car for use to discharge his duties for one week for the sum of $350.29 between 2 to 8 January 1991.

The defendant neglected, failed and/or refused to return the vehicle to P1 wherefore Plaintiffs claim the following reliefs (as per Originating Summons):

1. A DECLARATION that at the material time, Motor Vehicle Registration No. CB 005 was not comprised in nor could it be made the subject of the Defendant's purported Bill of Sale and/or Charge dated the 2nd March, 1989 respectively, within the meaning of Section 2 of the Bill of Sale Act, Cap 225 and Sections 98 and 99 of the Companies Act, Cap 247.

2. A DECLARATION that at the material time, the Defendant was not the holder of a valid Bill of Sale and/or Charge over Motor Vehicle Registration No. CB 005 and therefore its seizure of the said vehicle on 24th December, 1991 was unlawful, illegal, invalid and void.

3. A DECLARATION that in any event the purported Bill of Sale and/or Charge is fraudulent, void and unenforceable for non-compliance within the meaning of Sections 7, 9 and 10 of the Bill of Sale Act, Cap. 225 and non-registrable under Sections 98 and 99 of the Companies Act, Cap 247.

4. AN ORDER that the Defendant hands over the Motor Vehicle Registration No. CB 005 to the 2nd Plaintiff. ALTERNATIVELY, the Defendant pays the value of the said vehicle as purchased by the 1st Plaintiff being the sum of $7,707-34 (seven thousand seven-hundred and seven dollars and thirty-four cents).

5. AN ORDER that the Defendant pays to the 1st Plaintiff the sum of $350-29 (three hundred and fifty dollars and twenty-nine dollars) being the sum paid on the hire of a rental car after the 1st Plaintiff's vehicle was seized.

6. Damages.

7. The Costs of these proceedings.

For the defendant, GOPAL KRISHNA in his affidavit sworn 19 December 1995 states that the 3rd Party purported to unlawfully give the vehicle as security to the defendant and or represent itself as able to provide a Bill of Sale. The defendant's claim against the 3rd Party is that it should be indemnified by 3rd Party should the defendant be found liable to the Plaintiffs. The defendant says that as far as it is concerned the 3rd Party is the mortgagor under the Bill of Sale dated 2 March 1989 given to the defendant as mortgagee over the vehicle. KRISHNA states that the search at the Department of Road Transport as to the ownership of the vehicle reveals that the 3rd Party was the owner as at 2 March 1989.

Issues

The issues for determination are:

(a) Whether at the material time, the Third Party was seised of the interests in the Motor vehicle registration No. CB 055 as to grant a charge over it in favour of the Defendant after he had sold it to the 2nd Plaintiff. In other words, could the said vehicle be made the subject of the Bill of Sale and/or Charge by the Third Party at the material time? and

(b) Whether the Defendant's Bill of Sale and Charge are valid and enforceable in law as to defeat the Plaintiff's title.

Consideration of the issues

It is the Plaintiffs' contention that the 3rd Party had sold the vehicle to P2 on 19 January 1989, that is, well before the purported Bill of Sale and possession was given to P2. However, P2 admits that the ownership was not registered with the Department of Road Transport in time until 6 September 1989. It submits that non-registration did not vitiate the sale.

The situation in this case is that when the 3rd Party gave the Bill of Sale on 2 March 1989 it had already sold the vehicle to P2, but P2's ownership was not registered with the Transport Department until 6 September 1989. The search Report reveals ownership was in 3rd Party on 22 September 1988 and in P2 on 6 September 1989.

It therefore appears that when the Defendant took Bill of Sale it was aware from the record at the Road Transport that the 3rd Party was the registered owner. Then on 21 May 1991 the P1 was registered as the owner when he bought the vehicle from P2.

The defendant's financial controller in the affidavit he filed said that the Third Party fraudulently purported to transfer the vehicle to the Plaintiffs in violation of the defendant mortgagees' registered interest in the vehicle.

The defendant denies any liability as claimed by the Plaintiffs.

In reply to the defendant's affidavit the Plaintiffs say that the 3rd Party could not have purchased the vehicle on or about March 1989 as it was clearly the registered owner on 22 September 1988 but the defendant produced a search certificate from the Department of Road Transport dated 20 December 1995 stating that as at 2nd March 1989 the 3rd Party was the registered owner of the vehicle from 22 September 1988 to 28 May 1991.

The Search Certificate dated 4 September 1995 produced by the first plaintiff shows that P1's ownership of the vehicle was registered on 21 May 1991. It also shows that Mr. Dalip Singh was owner on 9.4.87; the other subsequent owners were 3rd Party on 22.9.88 and 2nd Plaintiff on 6.9.89.

The 3rd Party neither entered an appearance nor did it appear at the hearing.

In support of their claim the Plaintiffs called MR. MOSESE TUKI YASA, the Industrial Relations Officer, of the second Plaintiff, as their witness. He took an active part in the purchase of the vehicle from the 3rd Party and he paid for it by cheque the sum of $16,500.00. He asked for transfer form but the 3rd Party said that it will sign it upon expiry of the 3rd Party Policy. Registration of ownership took place on 6 September 1989. This witness said that he does not know anything about the Bill of Sale; all he knows is that he took delivery of the vehicle after paying for it.

The defendant's witness was MR. MICHAEL LEE, the Credit Manager of Asco Motors. He is employed by the Defendant and Asco Motors is defendant's subsidiary company. His duties involve looking after Bill of Sale. He outlined briefly the procedure that is followed when taking a bill of sale over a vehicle. The witness said that he has the file in the matter which shows that there is a Certificate from the Solicitor certifying that the Bill of Sale once registered becomes a first charge 'which means no prior encumbrances'. He disagreed with his predecessor and said that his vehicle was not sold to 3rd Party but the defendant merely took Bill of Sale "to secure existing debts or advances - no new lending".

Findings

Upon considering the whole of the evidence before me I find that: (a) the second plaintiff purchased the said vehicle from the 3rd Party on 19 January 1989 and paid for it but it had not registered its ownership until 6 September 1989 (b) similarly, the first plaintiff bought the vehicle from the second plaintiff in September 1990 but did not register his ownership until 21 May 1991 (c) the defendant took security for the then existing debts and advance from the 3rd Party by taking a bill of sale over the vehicle and other vehicles; this was done on 2 March 1989. At that time the vehicle was already sold to the second plaintiff on January 1989 but the second Plaintiff's ownership was not registered with the Transport Department until after the Bill of Sale was granted. Similarly, the first plaintiff bought the vehicle from the second plaintiff but he did not register his ownership until 21 May 1991.

I find as fact that when the defendant took the Bill of Sale as security, the vehicle had already been sold to the second plaintiff but there was no existing Bill of Sale over it. Granted that the record at the Transport Department showed the 3rd Party as the owner since 1988 and that the defendant had no reason to believe that vehicle did not belong to the 3rd Party, and that a proper search was made at the Transport Department and the solicitor's certificate was obtained that there were no encumbrances, it was a serious lapse on the part of the defendant not to have ascertained where the vehicle was and in whose possession it was. It was abundantly clear that the defendant never in fact inspected the vehicle or even saw it before it took Bill of Sale over it. This indeed was a serious lapse and fatal to the defendant's defence, and I see no reason why an innocent purchaser should suffer for it irrespective of when the ownership of the vehicle was entered in the record kept by the Department of Road Transport.

The seizure of the vehicle was in these circumstances unlawful as the vehicle did not belong to the 3rd Party when it gave this as security. The 3rd Party knew very well that it had already sold it to the Second Plaintiff when it gave the Bill of Sale. The Company (3rd Party) was completely dishonest in its dealings with the defendant.

I therefore find that the defendant should compensate the first plaintiff for the loss it has suffered as claimed. The second plaintiff has not suffered any loss as it had already bought the vehicle and subsequently sold to its employee the first plaintiff.

I also find that it is the 3rd Party which is solely liable to the defendant for having given the bill of sale to the defendant when it had already sold the vehicle to the second plaintiff. The 3rd Party chose not to defend this action which could also be taken as admission of liability.

In the outcome, for the above reasons, there will therefore be judgment for the first Plaintiff against the Defendant in the sum of $7707.34 being the value of the vehicle and the sum of $350.29 being the sum paid by the first plaintiff on the hire of a rental car after the vehicle was seized making the total sum of $8057.43 with costs to the first Plaintiff against the defendant which is to be taxed unless agreed. As for damages claim I would like to hear counsel on this and if pursued it will have to be assessed. There will also be judgment for the defendant against BULA RENTALS LIMITED (the Third Party) to indemnify the defendant in the amount of the judgment and damages when assessed with costs to the Defendant to be taxed if not agreed.

D. Pathik
Judge

At Suva
7 August 1997

HBC0509J.95S