Vilash v Australia and New Zealand Banking Group Ltd [2001] FJHC 211; HBC230.2001 (6 July 2001)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC0230 OF 2001

BETWEEN:

KRISHNA PRASAD VILASH f/n Ram Vilash of Suva, Fiji, Company Director
1st Plaintiff

AND:

BROADWAY MUFFLER MANUFACTURING
CO LTD a duly registered limited liability company having its registered office at Suva, Fiji
2nd Plaintiff

AND:

AUSTRALIA AND NEW ZEALAND BANKING
GROUP LIMITED
Defendant

G. O’Driscoll for the Plaintiffs

S. Lateef for the Defendant

Dates of Hearing: 19th June, 6th July 2001

Date of Judgment: 6th July 2001

JUDGMENT

By Notice of Motion dated 29th of May 2001 the Plaintiffs applied for Injunctions restraining the Defendant from selling by Mortgagee Sale a property owned by the Plaintiffs in Vatuwaqa.

In an affidavit supporting the Motion the Plaintiffs stated that all mortgage payments were up to date and that consequently the Defendant had no right to sell the properties although the Plaintiffs admitted that they had not repaid the capital sum of $300,000.00 and other charges due under the mortgage. They gave no undertaking in damages either in their affidavit or through their counsel.

The Defendant claims that it has the right to sell the properties notwithstanding the mortgage payments have never fallen into arrears because it says that the Plaintiffs have made no effort to pay the capital sum owing despite numerous promises to do so.

By letter dated 5th January 1999 the Defendant informed the Plaintiffs that it was unable to continue with banking facilities to the group and required full payment of the entire indebtedness no later than 31st January 1999.

I am satisfied that the Plaintiffs never kept numerous promises either to refinance their loan or sell the properties in question. The Defendant contends in these circumstances it has the right to tell the Plaintiffs it no longer wishes them to be its customers.

I refused to grant the Injunctions on the ground that the fact that no undertaking in damages had been given by the Plaintiffs was sufficient to refuse the application for Injunctions and relied on the decision of the Full Court of Victoria in National Australia Bank Ltd and Others v. Bond Brewing Holdings Ltd and Others [1991] VicRp 31; (1991) 1 V.R. 386, the judgment of the Full Court commencing at page 530.

In that case the Full Court held that the Judge at first instance had no right to appoint Receivers in the absence of an undertaking as to damages by the Plaintiffs because the Court had no power to award damages to the companies for any harm suffered by reason of the erroneous order appointing the Receivers.

The judgment of Brooking J. is particularly helpful on this question. For example at page 601 he said:

“On occasions it has been expressly said that without the usual undertaking the party enjoined is without remedy for the loss which the injunction has caused. The body of authority is substantial.”

He then cited numerous authorities for that proposition.

Then at page 602 he said:

“We were not referred to, nor have I been able to find, anything a judge has ever said suggesting that damages may be awarded in the absence of the undertaking, always, assuming of course that no wrong known to the law has been committed. All the authorities point the other way. This is not in the least surprising. Equity has its own means - an anticipatory one - of avoiding injustice, by refusing to grant an injunction or appoint a receiver by interim or interlocutory order except on terms. The applicant can take the order or leave it, but if he takes it he does so on terms which make clear, once recourse is had to the authorities, the extent to which he is at risk in relation to damages.”

These two statements by Brooking J. may be summarised in one sentence: The Court has no jurisdiction to award damages to the party injuncted in the absence of an undertaking in damages by the party seeking the injunction.

During my oral reasons I also stated that in my opinion a Banker was entitled to tell a customer who had failed to honour promises to reduce a debt owing to the Bank that it did not wish to continue the Banker-Customer relationship with him. I said that I considered this was simply a matter of common sense but I had no time when delivering my judgment to research any law on the subject. This I have now been able to do by referring to Paget’s Law of Banking, 9th Edition at pages 70 - 72. At page 70 the authors say:

“The relationship of banker to customer is one of contract, though for long this way of looking at the matter seemed not to have attracted much attention in the courts.”

A little later they say:

“The general contract is a simple, indivisible contract (see Atkin LJ, in Joachimson v. Swiss Bank Corporation, (1921) 3 KB 110 at 127), though with many facets; it arises the moment the parties agree to enter into contractual relations with each other (see Salmon J. in Woods v. Martins Bank Ltd (1959) 1 QB at 63, (1958) 3 ALL ER 166 AT 173) and continues until brought to an end by consent or (perhaps) by revocation by either party; it is a contract which is unwritten and undefined by the parties - in other words, it is implied.”

In Prosperity Limited v. Lloyds Bank Limited (1923) 39 TLR 372 McCardie J. held that in the absence of special stipulation a banker can close his customer’s banking account in credit only on giving him a reasonable notice, dependent on the nature of the account and the facts and circumstances of the case.

In the instant case I am satisfied that more than adequate notice was given to the Plaintiffs of the Bank’s insistence that they repay their debt. On their failure to do so I am satisfied that as a matter of law the Bank was entitled to refuse to have them as its customers any longer. Accordingly I refused to grant the injunction.

Since delivering my oral reasons, I note that on 13th July 2001 the Plaintiffs wholly discontinued their action against the Bank by Notice of Discontinuance filed that day.

JOHN E. BYRNE
JUDGE