Money World (Fiji) Ltd v Sy Piin Chung [2002] FJHC 300; HBC225.2001 (5 June 2002)

0IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC 225 OF 2001

Between:

MONEY WORLD (FIJI) LIMITED
Plaintiff

And

SY PIIN CHUNG
PACIFIC IT (FIJI) LIMITED
Defendants

Mr. V. Kapadia for the Plaintiff
Mr. A. Tikaram for the Defendants

RULING

This is a contested application for summary judgment under Order 14(1) of the High Court Rules.

The plaintiff’s claim (as amended) may be conveniently split up as follows:-

1. Against the 1st defendant (S. P. Chung)
   

(a) Commission on encashment of FNPF cheques ( July, 2000 - March 2001)	$102,650.92
(b) Payments for personal expenses	$ 45,886.75
TOTAL	$148,537.67

2. Against the 2nd defendant [Pacific IT (Fiji) Limited]

(a) Purchase price of Foreign Exchange crystal display Rates Boards	$ 8,000.00
(b) Payments for company purchases	$ 38,999.66
TOTAL	$46,999.66

More particularly, the claim against the first defendant is that during the relevant time he was the general manager of the plaintiff company which operated out of premises at FNPF’s Downtown Boulevard and is a licensed foreign exchange dealer that also encashed FNPF cheques for a commission of $15.00 for every $1000.00 encashed.

As general manager the first defendant was responsible for overseeing the plaintiff company’s operations and, in that capacity, the plaintiff company claims, he received and misappropriated commissions payable to the plaintiff company, and further, he made payments out of the plaintiff company’s account for his own personal purchases as well as for purchases made on behalf of the second defendant company of which he was also the general manager at the relevant time.

In its joint defence the first defendant denies owing the commissions claimed [i.e. 1(a) above] and says: ‘.....the sum.....has always been in the plaintiff’s account and the plaintiff is confused because of its system of trading and accounts keeping...’ As for the unauthorised payments made for personal/non-plaintiff company purchases [i.e. 1(b) & 2(b) above], the defendants deny owing any money and request ‘...further and better particulars’. In so far as the crystal display rates boards are concerned [i.e. 2(a) above], the defendants admit that ‘the amount owing to the plaintiff is only $3,000 and not $8,000'. The defendants also counterclaimed for the purchase price of the first defendant’s shares in the plaintiff company, an amount of $24,000 and for advances of $17,610 made to the plaintiff company.

In reply, the plaintiff company whilst accepting that negotiations for the purchase of the first defendant’s shares in the plaintiff company were undertaken, nevertheless, denies that any monies are due because ‘the transaction is dependant upon all relevant clearances and approvals being obtained from the Reserve Bank of Fiji, Fiji Islands Trade and Investment Bureau and the Inland Revenue Department which .......are being awaited upon....’. As for the counterclaimed advances the plaintiff seeks ‘....further and better particulars’.

There are before the Court the following affidavits filed by the parties:

1. Primary affidavit of Ulaiasi Waqa Lee dated 17th August, 2001 ;
   
2. Affidavit of S. P. Chung (1st defendant) dated 21st September, 2001 ;
   
3. An affidavit in reply of Ulaiasi Waqa Lee dated 9th October, 2001.
   

I am also grateful to counsels for the comprehensive written submissions filed in support of their oral arguments and which I have found very helpful.

In essence, defence counsel writes:

‘Just by looking at the affidavits filed by the parties (and I would add the numerous annexures attached) one can instantly see the huge amount of differing figures being thrown about and it is our submission that because of the conflicting amounts it is not possible for this Court to pronounce on the summary judgment application without a proper trial’

Furthermore, as there is a counterclaim, ‘the defendants are entitled to unconditional leave to defend upto the amount of the counterclaim’.

Plaintiff’s counsel for his part describes the defence affidavits and submissions as ‘a lot of words and a smoke screen statements’ and counsel emphasised the numerous admissions derived from the defendants own correspondence and accounting.

In this regard plaintiff’s counsel, relying on the first defendant’s admissions in para 5(c) of his affidavit as to the commissions received in July and August 2000, writes:

‘...for the purposes of the summary judgment application (the plaintiff) is prepared to accept this is the amount that has been taken by the first defendant, based on the first defendant’s own figures. The first defendant has not shown any way that he has repaid the sum of $57,277.00. There is a bare denial with no particularisation of any defence to the claim.’

As for the ‘personal purchases’ [i.e. 1(b) & 2(b) above], after referring to the first defendant’s written responses to the queries raised by the plaintiff company’s external auditors, counsel writes:

‘....on the first defendant’s admission a sum of $11,560.66 is owing to the plaintiff by the first defendant and a sum of $20,922.85 is owing to the plaintiff by the second defendant. These figures are derived from the entries beside which the first defendant says ‘not paid’. Therefore on the first defendant’s own admission, the defendants owe to the plaintiff a total sum of $32,483.51 for goods and services paid using plaintiff’s monies.’

With regard to the defendants’ counterclaims, plaintiff’s counsel points out that the first defendant’s shares in the plaintiff company were sold to Andy Lim a co-shareholder of the plaintiff company and not to the plaintiff company. In other words, assuming that the share purchase price is payable, it is a ‘personal debt of Andy Lim and not the plaintiff company (which) cannot in law finance the purchase of its own shares.’ (see: section 58 of the Companies Act 1983). Accordingly counsel submits that the defendant’s counterclaim against the plaintiff company for the purchase price of the shares is ‘misconceived’ and misdirected.

In so far as the counterclaimed ‘advances to the plaintiff company’ is concerned counsel writes:

‘no evidence of any kind has been adduced....(and in any event)....The plaintiff was a phenomenally successful company with gross profits ranging from between $50,000 to $100,000 per month and had no need for cash advances from anyone.’

The principles that guide a court in the exercise of its discretion under Order 14 are well known and are fully traversed in the submissions of defence counsel. They need not be repeated. Suffice it to say that where a plaintiff’s application for summary judgment is presented in proper form and order then ‘...it is for the defendant to satisfy the court that there is some issue or question in dispute which ought to be tried...’

Mindful of the above I turn to consider the first defendant’s explanation(s) regarding each of the plaintiff company’s heads of claim:

1(a) FNPF Commissions

In this application the plaintiff company’s claim under this head is limited to the two (2) amounts that represent the nett FNPF commissions collected for the months of July 2000 and August 2000 namely, $(40,811.00 + 16,466.00) = $57,277.00. These amounts were clearly recorded in Internal Memoranda of the plaintiff company supplied to the first defendant and seemingly accepted by the first defendant in his affidavit in opposition [para. 5(c)] and which Ulaiasi Waqa Lee claims ‘.....(the first defendant) has not provided any evidence of any repayment to the plaintiff (other than) a bare denial in his affidavit and in his defence’.

In this latter regard the plaintiff company’s evidence is that during the relevant period i.e. September 2000 to March 2001 on the instructions of the first defendant a separate ‘suspense account’ was created and a percentage of the FNPF commissions collected on behalf of the plaintiff company was diverted into the ‘suspense account’ instead of being deposited into the plaintiff company’s bank account. The first defendant had also kept FNPF commissions in his personal safe.

The first defendant for his part accepts that he had kept aside ‘(funds) in safe custody for immediate encashment of FNPF cheques’ but this practice had stopped ‘after January 2001'. Whatsmore such funds as were retained are recorded in Annexure ‘C’ which was allegedly prepared by Ulaiasi Waqa Lee and shows a nett ‘credit balance of $60,954.00 (in favour of the plaintiff company) which only means that the FNPF encashment funds have been channeled back into the plaintiff’s accounts’.

There is a fundamental difference as to the authorship of Annexure ‘C’ with the first defendant asserting that it was prepared by Ulaiasi Waqa Lee and the latter denying it. But, whatever its authorship, I cannot agree with the interpretation of Annexure ‘C’ advanced by the first defendant or that the authorship of the document is a ‘triable issue’ sufficient to bar the grant of summary judgment.

Quite simply, the mere fact that a document records ‘receipts’ and ‘payments’ and has a ‘nett credit balance’ does not necessarily mean that the actual cash which is represented by the credit balance is either in the creditor company’s office safe or in its bank account.

Furthermore the first defendant’s deposed ‘purpose’ in creating the ‘suspense account’ i.e. to have a fund readily available for encashing FNPF cheques, differs quite graphically from the avowed purpose expressed in his earlier letter of May 4, 2001 (Annexure ‘E’ to the first defendant’s affidavit) after he had been taxed about the ‘suspense account’, wherein he wrote:

‘The suspense account was created solely for the purpose of some security and insurance that when we finalise the documentation for the sale of our shareholdings to you, which we had done in March 2001, we would not be short changed and left defenceless.’

Be that as it may, no explanation has been forthcoming from the first defendant as to the whereabouts of the July and August 2000 commissions received by the plaintiff company and shown in its internal memoranda nor has there been any attempt by the first defendant to account for the same other than a bald assertion that ‘the plaintiff is confused’.

From the foregoing I am satisfied that the first defendant has no arguable defence to the plaintiff company’s claim for the July and August 2000 commissions for encashing FNPF cheques and I enter judgment for the plaintiff company in the sum of $57,277 under this head of claim.

2(a) Crystal Display Rate Boards

Under this head of claim, on the basis of the defendants admission in the Statement of Defence (paras 7 & 8) ‘......(that) the amount owing to the plaintiff is only $3,000 not $8,000...’, I enter judgment for that amount against the defendants.

1(b) & 2(b) Personal/Non-plaintiff company Purchases and Payments

The particular nature of these various purchases and payments are described in Ulaiasi Waqa Lee’s affidavit in reply as follows:

‘...the second defendant was purchasing using plaintiff’s funds, stocks of Golf Clubs, Golf Shoes, Caps, Golf Balls, T-shirts and other Golf accessories including food imports such as Noodles, Tomato Sauce, Tinned Herrings, Soy Sauce and confectionery which the Second Defendant was wholesaling to Joes Farms......similarly the First Defendant made personal payments to his family members and his friends and for personal purchases .....using the plaintiff’s funds and these amounts remain due and owing by the Defendants.’

In this regard it is an admitted fact that monies claimed under this head:

“.....are all bank draft records made out by Ulaiasi Waqa Lee on behalf of Pacific IT for payment of the 2nd defendant’s trade suppliers for golfing equipment and general merchandise for sale at 2nd defendant’s premises...(and)....likewise with the list under (the 1st defendant’s) name totalling $45,886.75 these again are bank drafts records made out by Ulaiasi Waqa Lee on my behalf for payment of my personal/company accounts.” [see: para 7(a) & (b) of the first defendant’s affidavit]

The first defendant asserts, without any particulars, however, that the claimed amounts ‘are monies respectively paid by 1st and 2nd defendants to the plaintiff to enable the plaintiff to purchase bank drafts on behalf of the 1st and 2nd defendants’.

As it subsequently turns out on the first defendant’s own accounting, only some of the bank drafts were paid for and others are clearly accepted by the defendants as ‘NOT PAID’ [see: Annexures ‘E’ & ‘G’ in the first defendant’s affidavit]

On the basis of Annexures ‘E’ and ‘G’ which are prepared by the first defendant on the second defendant’s letterhead the outstanding ‘NOT PAID’ amounts claimed by the plaintiff company under this head totals $34,295.64 and accordingly judgment is entered against the defendants for that amount.

Summary:

On the application of the plaintiff company judgment is entered against the defendants as follows:

➢ Against the 1st defendant (S. P. Chung) for unpaid FNPF commissions for July/Aug 2000 - $57,277.00

➢ Against the 2nd defendant [Pacific IT (Fiji) Ltd] the Balance owing on the crystal display rates boards - $3,000.00

and, jointly and severally against both defendants, in respect of the personal/non-plaintiff company purchases and payments, the sum of $34,295.64.

In respect of the defendants pleaded counterclaim for the purchase price of the first defendant’s shares in the plaintiff company, in light of plaintiff counsel’s submissions which I accept, paragraphs 10(a) and 11(a) of the Statement of Defence are struck out as misconceived and disclosing no reasonable defence to the plaintiff company’s claim.

Save for the above, leave is granted to the defendants to defend the plaintiff company’s claim conditional upon the payment, within 14 days, of the sum of $(57,277.00 + 3,000.00 + 34,295.64) = $94,572.64 together with 4% p.a interest calculated on the judgment sum with effect from 24th May 2001 until finally paid. Costs in the cause.

(D. V. Fatiaki)
Judge

At Suva
5th June 2002