D Chand Bothers Ltd v BPT (South Sea) Company Ltd [1998] FJHC 32; Hbc0088r.98s (16 March 1998)

Fiji Islands - D Chand Bothers Ltd v BPT (South Sea) Company Ltd - Pacific Law Materials

IN THE HIGH COURT JI

I

AT SUVA

CIVIL JURISDICTION

CIVIL ACTION NO. 0088 OF 1998

:

D. CHAND BROTHERS LIMS LIMITED
Plaintiff

AND:

1. BPT (SOUTH SEA) COMPANY LIMITED
2. BURNS PHILIP (SOUTH SEA) COMPANY LIMITED
Defendants

Mr. S. Chanor the Plhe Plaintiff
Mr. J. Howard for the Defendants

REASONS FOR DECISION

On the 5th of February the plaintiff company through its solicitors sought ex-parte, an order restraining the defendants from seizing or selling a motor vehicle registration No: CL099 which was then in the possession and control of the plaintiff company.

The following day when the application came on to be heard Counsel for the plaintiff company advised the Court that the defendants had seized CL099 purportedly in exercise of its powers under a Bill of Sale.

By an inter-partes summons dated 23rd February 1998 the defendant sought, amongst other orders, the dissolution of the ex-parte orders and the return of CL099 within 24 hours. The summons was heard and granted on the 26th February. On that occasion I stated that I would furnish my reasons which I now do.

On the 6th February 1998 I granted to the plaintiff company an ex-parte order to the effect that the defendants their servants and/or agents forthwith return to the possession of the plaintiff company, the vehicle registration No: CL099. I further restrained the defendants from seizing the vehicle and/or attempting to sell it. Liberty was reserved to the parties to apply on 2 days notice.

It appears from the papers that the business relationship between the parties dates back to October 1991 when the plaintiff company first purchased from the defendants three (3) vehicles inclusive of a Road Grader, for a total sum in excess of $80,000. The purchase was secured by a 'Company Charge' in the form of a Bill of Sale granted by the plaintiff company over all the vehicles, including CL099.

Two (2) years later on or about the 24th of December 1993 the plaintiff company purchased a further vehicle registration No: CR099 from the defendants on '30 day credit terms'. This vehicle was not included in an amended schedule to the defendants above-mentioned Bill of Sale nor does it appear that the Bill of Sale was upstamped so as to include its purchase price in the stamping fees. Be that as it may it is not seriously disputed that CR099 was subsequently involved in an accident and was written-off on or about the 23rd of July 1994 after barely six months.

It is common ground that despite several requests for payment in respect of CR099 very little has been paid since March 1994 and there is at present an outstanding debt in excess of $60,000 in respect of the vehicle CR099.

After 3 long years of waiting on the 8th of January 1998 a formal Demand Notice was issued on the plaintiff company. In it, the defendants sought payment of the amount owing on CR099 by 18th January 1998 and specific reference was made to two (2) Bills of Sale including that over CL099, which it is claimed secured the debt owing on CR099. Again no response was received from the plaintiff company.

It is plain beyond any doubt that at the time of the execution of the Bill of Sale over CL099 the plaintiff company had not purchased CR099 from the defendants. We are accordingly here dealing with what might be described as 'after-acquired property'. Furthermore, on the defendants own admission 'the plaintiff has paid in full the purchase price of vehicle registration No: CL099'. We are therefore dealing additionally, with a debt over an unscheduled vehicle.

Despite repeated requests for a written discharge of the Bill of Sale over CL099, the defendants 'has exercised its discretion in favour of retaining its security over vehicle No: CL099'. The relevant security over CL099 remains undischarged.

The Managing Director of the plaintiff company disagrees however and deposes that:

"... as far as the plaintiff company is concerned there is no money due to the defendants in respect of the Motor vehicle CL099, therefore ... the defendants have no rights title or interest to seize the vehicle No: CL099 from the plaintiff company".

The Credit Manager of the defendant company for his part asserts that:

"... the provisions of the Bill of Sale secured the vehicle (CL099) to the defendant for the plaintiff's present and future indebtedness to the defendant for so long as the Bill of Sale remained registered and not discharged."

It is unnecessary for present purposes to refer to the facts in any greater detail.

At the hearing of the inter-partes summons counsel for the defendants drew my attention to various Clauses in the Bill of Sale including that part of the Consideration Clause which reads:

"AND IN CONSIDERATION of all other present and future indebtedness of the Mortgagor to the Mortgagee whatsoever for goods supplied work done or otherwise upon any account whatsoever in the discretion of the Mortgagee (all of which said indebtedness is hereinafter referred to as and included in the term 'further advances') THE MORTGAGOR DOTH HEREBY GRANT ASSURE TRANSFER ASSIGN AND SET OVER to and unto the Mortgagee ALL AND SINGULAR the said chattels ... TO HAVE HOLD RECEIVE AND TAKE the said chattels unto the Mortgagee absolutely SUBJECT nevertheless to the proviso for redemption hereinafter contained ..."

and the terms of Clause 17 which states:

"THAT these presents shall be a continuing security notwithstanding any settlement of account intervening payment or other matter or thing and shall remain in full force and extend to cover all and any sums of money which may hereafter become owing by the Mortgagor to the Mortgagee until a memorandum of satisfaction hereof shall have been given by the Mortgagee to the Mortgagor."

On that basis defence counsel's submission is that so long as there was a debt owing to the defendants by the plaintiff company, the defendants were entitled to exercise their powers under the Bill of Sale and seize the vehicle over which the Bill of Sale was granted namely CL099, irrespective of whether or not the debt actually related to the vehicle seized.

Counsel for the plaintiff company's equally straight forward submission is that vehicle CR099 was sold and purchased on the basis of a '30 day credit' and was wholly unsecured.

What's more, in counsel's submission, a Bill of Sale unlike a 'floating debenture' which embraces all of a company's assets, is a 'specific charge' confined to a specific chattel and incapable of extending to future debts owed in respect of non-specified chattels, in this case, the debt relating to CR099.

If this were not so, then counsel submits, there would be no need to obtain guarantees or collateral securities. In simple terms the defendants Bill of Sale does not and cannot extend to cover debts unrelated to the chattel over which it is granted.

Counsel laid some emphasis on his assertion that a Bill of Sale, by definition, refers only to specific assets or chattels and there can be no 'default' under the Bill of Sale because the monies demanded in the defendant's Demand Notice refers to an unscheduled vehicle. I would agree if we were dealing with an 'absolute Bill of Sale' or, at least, a Bill of Sale to which the provisions of the Bills of Sale Act (Cap. 225) applied. Unfortunately in this case we are not.

In In re Standard Manufacturing Company [1891] 1 Ch.D. 627 Bowen L.J. in delivering the judgment of the Court of Appeal said at p.648:

"... the mortgages or charges of an incorporated company for the registration of which other provisions have been made by the Companies Clauses Act ... [See: Section 98(1) of our Companies Act 1983] are not within the Bills of Sale Act 1878."

In this latter regard Section 98(1) of the Companies Act 1983 renders a company charge 'void against ... any creditor' unless prescribed particulars of the charge are registered with the Registrar of Companies within 42 days of its creation, and Section 98(2)(b) recognises that a 'company charge' may be:

"... created or evidenced by an instrument which, if executed by an individual, would require registration as an instrument under the Bills of Sale Act;"

It is common ground that registration of the defendant's Bill of Sale was effected under the above provision.

In Nausori Daily Transport Ltd. v. Shiu Narayan [1981] 27 FLR 181 Kermode J. in holding that a Bill of Sale granted by an incorporated company over its property is not a Bill of Sale to which the provisions of the Bills of Sale Act apply, said, after setting out various portions of the Bills of Sale Act (Cap. 225), at p.135:

"The legislature has expressly excluded a Bill of Sale over chattels owned by an incorporated company from the operation of the Act by the definition of 'personal chattels'. While the plaintiff's Bill of Sale does confer power on the defendant to seize or take possession of the plaintiff's personal chattels referred to in the Bill of Sale, they are not 'personal chattels' as defined by the Act."

In light of the above, even accepting that a 'company charge' evidenced by a Bill of Sale is not a debenture or 'floating charge', nevertheless, I cannot accept any of plaintiff's counsel's submissions that are based on the assumption that a 'company charge' in the form of a Bill of Sale is in law, a Bill of Sale and must therefore comply with the various provisions of the Bills of Sale Act (Cap. 225) such as, the requirement that the registration of the Bill of Sale be renewed every five years.

Even more significant in my view is the scholarly judgment of Adams J.A. in Faiz Sherani v. Latchman and Others reported in (1965) 14 F.L.R. at pp.34 to 51 where in tracing the origins of our present Bills of Sale Act said at p.42 para. A:

"There is no doubt that the Fiji Ordinance is founded on [the Bills of Sale Act 1878 (U.K.)] and like it and its predecessor, was directed against frauds on creditors by means of secret bills of sale."

and later at para. F his lordship said:

"In England the Act of 1878 is supplemented by the amending Act of 1882 and except for two later amending Acts irrelevant for present purposes, the English law is still to be found in the Acts of 1878 and 1882. No provisions derived from the latter have been adopted in Fiji ... The Act of 1882 applied only to bills of sale given as security for the payment of money. There is no such distinction in Fiji, and the proper construction of the Ordinance must be one that will apply to all sorts of bills of sale, whether securities for money or 'absolute' bills of sale.

Bills of Sale to which the Act of 1882 applies are rendered 'void except as against the grantor' in respect of any chattels not specifically described in a schedule, or of which the grantor was not the true owner."

More particularly Lord Herschell stated in Manchester Railway Co. v. North Central Wagon Co. (1888) 13 A.C. 534 at p.561 that the distinct purpose of the Bills of Sale Act 1882 (U.K.):

"... was to prevent needy persons being entrapped into signing complicated documents which might often be unable to comprehend, and so being subjected by their creditors to harsh and unreasonable provisions. A form was accordingly provided to which bills of sale were to conform, and the result of non-compliance with the statute was to render the bill of sale void even as to the parties to it."

In this latter regard it is noteworthy that Section 4 of the Bills of Sale Act 1882 (U.K.) expressly requires:

"... a schedule containing an inventory of the personal chattels comprised in the bill of sale and such bill of sale, ... shall have effect only in respect of the personal chattels specifically described in the schedule."

Further Section 5 of the 1882 Act expressly excludes 'after-acquired' property '... of which the grantor was not the true owner at the time of the execution of the bill of sale'.

As to the mandatory 'Form' of the Bill of Sale imposed by the 1882 Act it will be seen that the consideration clause requires the specification of a precise liquidated amount.

Quite clearly there is a good deal of merit in the submissions of counsel for the plaintiff company in so far as the defendants reliance on its Bill of Sale is that it was additionally granted 'by way of security for the payment of money' and was not solely, an 'absolute bill of sale'.

Indeed it was to remedy the kinds of complaints raised by plaintiff's counsel that the 1882 Act was passed in the United Kingdom but unfortunately, 'no provisions derived from the 1882 Act were adopted in Fiji', and therefore, whilst I accept that the enforcement of the defendant's Bill of Sale against a scheduled vehicle (CL099) which has been fully paid-off and for a debt relating to an unscheduled vehicle (CR099) might be considered 'harsh' by some, I am constrained to uphold the exercise of the defendants powers in seizing CL099 under the Bill of Sale.

For the foregoing reasons the ex-parte injunction was discharged and the plaintiff company was ordered to return the vehicle CL099 to the defendants.

D.V. Fatiaki
JUDGE

At Suva,
16th March, 1998.

Hbc0088r.98s