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High Court of Fiji |
IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION
CIVIL ACTION NO. HBC0302 OF 1997
Between:
SAFAIRA ULUINACEVA
Plaintiff
and
NATIONAL MBf FINANCE LIMITED
DAYA SINGH s/o Ram Chandra and
CHANG MUNG both of Suva trading under
name and style of Chevy Motors
Defendants
Mr. S. Chandra for the Plaintiff
Mr. I. Fa for the 1st Defendant
JUDGMENT
In this action the plaintiff claims against the first defendant (D1) the sum of $19,600.00 (Nineteen thousand six hundred dollars) being made up as follows: deposit of $8500.00, 12 months payment amounting to $8,100.48 at $675.04 per month and general damages and loss of use $900.00. The plaintiff also claims interest and costs of this action.
Background facts
Most of the background facts surrounding this case are not in dispute. These facts are well set out in the plaintiff’s counsel’s written submission and they are as follows:
On or about 13th October 1994 the Plaintiff became interested to purchase motor vehicle No. CL744 and paid a holding deposit of $300.00 (Three hundred dollars) to the 2nd Defendant (Chevy Motors) in respect of the motor vehicle (hereinafter called “the vehicle”) from sale and secure the same until payment of full purchase price from 1st Defendant.
On about 28th October 1994 the Plaintiff purchased the vehicle from the 2nd Defendants and the 1st Defendant agreed to finance the purchase of the vehicle on a Hire Purchase Agreement dated the same day. This action of 1st Defendant required that it had to purchase the vehicle from the 2nd Defendants and as owner then enter into a Hire Purchase Agreement with the Plaintiff as the hirer.
The Plaintiff upon request by the 1st Defendant deposited with it a sum of $8,500.00 (Eight thousand five hundred dollars) being her share of the contribution towards the purchase. The 1st Defendant then paid the full sum of $24,500.00 (Twenty four thousand and five hundred dollars) directly to the 2nd Defendants to obtain the release of the vehicle for the Plaintiff.
The Hire Purchase Agreement of 28th October 1994 (hereinafter referred to as the “agreement”) covered a balance of $16,000.00 (Sixteen thousand dollars) together with insurance and financial charges (including interest) of $8,301.37 making a total of $24,301.37 (Twenty four thousand three hundred one dollars and thirty seven cents) which was to be paid by the Plaintiff by regular monthly instalment of $675.04 over a period of 3 (three) years under the agreement. It transpired later that the vehicle was under a Bill of Sale to Fiji National Provident Fund. This Bill of Sale was registered prior to the agreement. By virtue of the High Court Action No. 197/95 instituted by FNPF it seized the vehicle from the Plaintiff. The Plaintiff lost the vehicle that she purchased from the 2nd Defendants on Hire Purchase Agreement from the 1st Defendant.
The other agreed facts are that the first defendant obtained a Hire Purchase Agreement (the ‘agreement’) from the plaintiff to secure its finance and a guarantee in its favour from the plaintiff’s husband Josaia Uluinaceva over the said vehicle. The first defendant paid the full purchase price to the second defendant less $300 which was paid by the plaintiff to the second defendant.
Issues for determination
In the Pre-trial Conference Minutes filed herein are set out numerous matters for determination.
Plaintiff’s submissions
The learned counsel for the plaintiff submits that the plaintiff approached the first defendant (D1) to finance the purchase of the vehicle. To obtain Hire Purchase Agreement over the vehicle D1 requested the plaintiff to deposit the sum of $8,500 which she did. Then D1 released the balance sum of $24,200.00 directly to the second defendant (D2).
Counsel submits that D1 failed to do searches for prior encumbrances at the Land Transport Authority, Registrar of Deeds, Merchant Bank of Fiji and the Credit Corporation of Fiji Ltd. as a normal practice. A search at the Registrar of Titles would have revealed that there was a Bill of Sale No. 4112/95 registered in the name of Fiji National Provident Fund.
Counsel says that the evidence reveals that no search was done and that D1’s witness said that it was not the practice of the bank to search at these places mentioned before obtaining a Hire Purchase Agreement when the transaction occurred.
At the time of the execution of the Hire Purchase Agreement (the ‘agreement’) on 28 October 1994 there existed a Bill of Sale properly given to FNPF. The D1’s witness Kishore Goundar stated that although there is no record of any search having been done in this case, the D1 now does all the necessary searches.
It is the plaintiff’s submission that D1 did not seriously take ‘duty of care and procedure involved’ in obtaining a proper secured Hire Purchase Agreement over the vehicle. The vehicle was not properly transferred to D1. Counsel said that D1 being a Bank as lender could have reasonably foreseen in the circumstances that due to its carelessness, the borrower could lose the motor vehicle which it did. In support of his argument counsel referred the Court to the Court of Appeal case of ANZ Banking Group Ltd v Merchant Bank of Fiji 40 F.L.R. 266 (1994).
On loss of use of vehicle, counsel submitted that the plaintiff was suddenly left without a vehicle; she did not know that the vehicle was encumbered by Bill of Sale to FNPF. As a result she has lost the deposit paid by her and 12 months monthly repayments to D1. She is claiming loss of use at the rate of $30 per day for 30 days making a total of $900.00.
Counsel submits that D1’s counterclaim be dismissed as in High Court Action No. HBC 464/95 the Court gave judgment against D2 (Daya Singh – the 3rd defendant in that action) but not against the Plaintiff who was the second defendant in that action.
Mr. Chandra says that the plaintiff is entitled to a refund of the deposit of $8500.00 with interest from the date of deposit; refund of repayments in the sum of $8,100.48 with interest from the date of seizure; general damages and loss of use $900.00 and costs of this action.
First Defendant’s submission
Mr. Fa for the first defendant submitted that the Bill of Sale was given by one Charlie Yee aka Chang Ming was unknown to both the plaintiff and D1. He said that D1 had done an ownership search and vehicle search at the Land Transport Authority and found no encumbrance over the vehicle. The D1 then proceeded to pay D2 the purchase price for the vehicle and have it registered in its name as owner.
Counsel submits that because there was a contractual relationship between D1 and the Plaintiff the former cannot be liable. The D1 obtained from D2 an indemnity in the event title was in dispute. In this regard he submits that the parties are bound by their agreement contained in the Hire Purchase Agreement dated 28 October 1994.
In his submission Mr. Fa referred the Court to clauses 6 and 15 of the Agreement and argued as follows (in his own words):
“The Agreement clearly establish that liability in relation to a defect in title or not being of merchantable quality or not being fit for purpose are not those of the owner but those of the hirer. Further the Hirer also declares that they have inspected the vehicle. This is evidence that the hirer has made his or her inquiries in relation to the vehicle and placed no reliance whatsoever on the 1st Defendant. It was also proved in evidence that the Plaintiff in choosing to purchase this particular vehicle from the 2nd Defendant at no time sought the advice of the Plaintiff (should be D1) or relied on the Plaintiff (should be D1) in any manner or form for advice or guidance. In fact it was established and became clear during the proceedings that the Plaintiff had chosen the car from the 2nd Defendant and had done its deal with the 2nd Defendant. It only came to the 1st Defendant solely for the purpose of obtaining finance. Some of those terms are set out above. They include the fact that the hirer had inspected the vehicle and was buying through its own free will and decision making process and that the 1st Defendant would not be liable for any defect in title.”
Mr. Fa further submits:
“The Plaintiff argues that the 1st Defendant owed the Plaintiff a duty of care. The facts do not support this. The 1st Defendant is a finance provider and nothing else. It has done its part by providing the relevant finance. The Plaintiff is a businesswoman and had the resources to engage a lawyer to act on her behalf but she didn’t. The 1st Defendant is not a professional adviser and at no time warranted or represented to the Plaintiff that it was. The Plaintiff cannot now impute negligence on the 1st Defendant for its own negligence and shortcomings. We submit that a duty of care is not owed as this is a contractual situation and the parties obligations to each other are set out in the agreement.”
For these reasons counsel says that the plaintiff’s claims ought to be dismissed. He says that the real culprit in this matter is the second defendant who represented that the motor vehicle was free from encumbrances. He says:
The 1st Defendant has no relationship with the 2nd Defendant. In fact it is the Plaintiff who has the relationship with the 2nd Defendant as it is the one who brought the 2nd Defendant to the 1st Defendant after having done a deal with him. The fact of the matter is the 2nd Defendant lied to the Plaintiff and then subsequently to the 1st Defendant. In this regard the 1st Defendant surely cannot be held liable. Finally we would like to point out to the Court that at the hearing, the Plaintiff did not prove any claim for damages or loss. It did not lead any evidence in this regard.
Determination of the issues
The circumstances leading to the Agreement being executed have been outlined hereabove.
The facts as I find them to be as derived from the evidence, the documents tendered to Court and the said High Court Civil Action No. HBC0464/95S (between National MBF Finance Fiji Ltd (plaintiff) AND Chevy Motors (1st Defendant), Mrs. Safaira Uluinaceva (2nd defendant), Daya Singh f/n Ram Chandar & Chang Mung (3rd Defendant) are stated hereunder.
In the said C.A. 464/95 the D1 (in the present action) obtained judgment against D2 (in the present action) but no judgment was given against the plaintiff. Hence the plaintiff in this case was not made liable and she was absolved from all liability.
The Court was in 464/95 dealing with the same transaction which is the subject- matter of the present case. The judgment was given for $24,640 against the first defendant in that action. Therefore the D1 (in the present action) is entitled to recover the said sum from the said 1st and 3rd defendants in that action. How the judgment sum is made up is stated as follows in the judgment at page 4:
“The first relief claimed by the Plaintiff is judgment for $24,301.37 (inclusive of interest at the rate of 13% p.a.) “as the sum advanced by the Plaintiff to the 2nd Defendant under a financing agreement for the purchase of the said vehicle”. That is not a sum advanced by the Plaintiff to the Second Defendant. That was the sum required to be paid under the hire purchase agreement by the second Defendant over a period of 3 years. In practical terms the sum ‘advanced’ to the second Defendant was $16,000 being the cash price of $24,500. Less a deposit of $8,500 paid by the Second Defendant. Finance (including interest at a flat rate of 13% p.a.) and insurance charges of $8,301.37 were added to make the total payment of $24,301.37 payable by the Second Defendant. The indemnity (Exhibit A) given by the First Defendant does not indemnify the Plaintiff for payment of this sum by the Second Defendant.”
It is clear that part of the judgment debt includes $8,500 deposit paid by the plaintiff in the present action. This amount should actually be paid out to the plaintiff because she has lost the vehicle through no fault of her own.
Furthermore, it is clear on the evidence, looking at the judgment, it was the first defendant in the present action which purchased the vehicle from the second defendant although the purchase was negotiated by the plaintiff herself. The judgment at p2 states:
“The Second Defendant agreed to purchase a Toyota Wagon CL744 from the First Defendant and the Plaintiff agreed to finance the purchase by the Second Defendant on hire purchase. This required the Plaintiff to purchase the vehicle from the First Defendant and then, as owner, to enter into a hire purchase agreement with the Second Defendant as hirer. The First Defendant, in consideration of the purchase price of $24,200 paid to it by the Plaintiff, gave the Plaintiff a written indemnity against losses it may suffer.”
So, it was the D2 in this action who gave a written indemnity to D1 in this action ‘against losses it may suffer’. It was then that D1 entered into the Hire Purchase Agreement with the plaintiff.
The situation boils down to this that the D1 was the owner of the vehicle and not the plaintiff. Therefore before it became the owner it should have caused the necessary search to be done to see that the vehicle was free from all encumbrance despite whatever assurance the 1st and 3rd defendants in that action gave to the D1 in that regard.
It is also borne out from the judgment at pages 2-3 that the vehicle was subject to a bill of sale to FNPF where in Suva High Court Action 197/1995 against D1 (in this action) orders prevented D1 from dealing with the vehicle and required it to hand over the vehicle to FNPF. The judgment said that “the plaintiff therefore lost the vehicle that it had purchased from the first defendant and also lost the benefit of the hire purchase agreement entered into with the second defendant.”
Although the plaintiff negotiated the purchase of the vehicle from D2 and paid a deposit of $300 to them, the bulk of the finance was arranged with D1. D1 also wanted the plaintiff to pay a deposit of $8500 which she did.
It is clear from the evidence, that D1 did not do any search to ascertain if the vehicle was free from encumbrances. If D1 had searched at Registrar of Titles and other places referred to above it would have revealed that there was a Bill of Sale No. 4112/95 registered in the name of Fiji National Provident Fund. If it did a search, which it did not on the evidence, it did not discover any encumbrance, which cannot be so. The witness for D1 is saying that now it does searches which shows that it has learnt from its mistakes.
As an institution which lends money it was incumbent on D1 to seek legal advice to protect its interests. The normal and proper practice is that a lending Bank and in this case it was the owner of the vehicle should obtain a proper Certificate from its solicitors after search before moneys are advanced even if a borrower (in this case the “hirer”) has or has not a solicitor acting for him or her. It was stated by the Court of Appeal in the Merchant Bank of Fiji case (supra) that:
“We understand that it is usual for those who buy second hand vehicles or lend money to the owners on the security of their vehicles to search the register of bills of sale”.
In the circumstances of this case the plaintiff never became the registered owner of the vehicle as the Bill of Sale was registered earlier which was not discharged before the execution of the Hire Purchase Agreement. In fact, there is no evidence that there is statutory provision for the registration of hire purchase agreement. Here the facts are quite simple, that is, that at the time of entering into a hire purchase agreement there was already a registered Bill of Sale over the said vehicle. Not having done any search neither the plaintiff nor the defendant were aware of the encumbrance to prevent a dealing with the said vehicle.
Defendant’s counterclaim
In the Amended Counter-claim the D1 stresses the point that the plaintiff ‘should have done a vehicle search upon receipt of the quotation dated 13 October 1994 from the seller before agreeing to purchase the said vehicle’. It further says that that there was no obligation on the part of D1 under the agreement to do a vehicle search. This amounted to negligence on the part of the plaintiff resulting in the re-possession of the vehicle by FNPF which was the holder of the Bill of Sale over the said vehicle.
I have considered D1’s counterclaim. In the light of my findings of fact I see no merit in its claim as the Court in C.A. 464/95 did not find the plaintiff liable at all and as there was no judgment against her in this transaction.
The D1 claimed under the Counterclaim payment by the plaintiff of the balance of $8009.52 allegedly due under the agreement together with interest thereon. The said $8009.52 is made up of the purchase price of $24,500.00 less $8000.00 which comes to $16,500.00. From this is deducted $8100.48 being payments made over a period of 12 months leaving the said balance of $8009.52.
Conclusion
In view of what I have stated hereabove, in the light of the said civil action and on the other evidence, the first defendant’s counsel’s submission do not hold any water, inter alia, in regard to his argument on ‘indemnity’ and clauses 15 and 16 of the agreement. I see no merit whatsoever in his arguments.
I find that there was negligence on the part of the first defendant in not looking after the interest of the purchaser. It went ahead and purchased the vehicle for itself without doing any search. The search would have certainly revealed that there was a registered Bill of Sale in favour of FNPF. Consequently, the plaintiff suffered badly not only by losing the vehicle as it was taken away from her through a Court Order but lost the deposits and the payments she made to the first defendant over a short period of time.
All this happened through negligence on the part of the first defendant which owed a duty of care to the plaintiff.
In this case it is clear on the evidence that the plaintiff has lost the deposit of the said sum of $8500.00 (eight thousand five hundred dollars).
She has also lost the sum of $8100.48 (eight thousand one hundred dollars and forty-eight cents) being repayment at the rate of $675.04 per month for 12 months as a result of the seizure of the vehicle by FNPF.
Because of the seizure of the vehicle the plaintiff had lost the use of her vehicle in her business for 30 days at the rate of $30.00 per day amounting to $900.00 (nine hundred dollars) by way of general damages. This is the amount which the plaintiff is claiming.
For the reasons given the defendant’s (D1’s) counterclaim is dismissed with costs.
In the outcome, for these reasons the plaintiff succeeds in her claim. I therefore enter judgment for the plaintiff against the first defendant as follows:
Interest thereon from the date of deposit
to date of this judgment at the rate of 6% p.a.
(to be calculated)
Interest thereon from the date of seizure
(5.10.95) to date of this judgment at the rate
of 6% p.a. (to be calculated).
for business for 30 days at $30.00 per day.
The costs on the claim and counterclaim are to be taxed unless agreed.
D. Pathik
Judge
At Suva
23 April 2004
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