Ram v Kumar [2004] FJHC 365; HBM0029.2003L (3 February 2004)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

CIVIL ACTION NO. HBM0029 OF 2003L

BETWEEN:

SUNIL CHANDRA RAM
1st Plaintiff

DAYA RAM
also known as Rajendra Prasad
2nd Plaintiff

AND:

NAREND KUMAR
1st Defendant

OFFICIAL RECEIVER
as the Provisional Liquidator of Roxy Motorparts Limited
(Company in Liquidation)
2nd Defendant

Counsel for the Plaintiffs: Dr. Sahu Khan, Ms. Sahu Khan
Mr. Haroon Ali Shah

Counsel for the Defendants: Mr. Siddarth Nandan

Date of Hearing: 2nd February 2003
Judgement Delivered: 3rd February 2003

EXTEMPORE JUDGMENT

Application

This matter comes before the Court by Notice of Motion filed on 8 December 2003 which Notice of Motion seeks and I quote: -

“(a) That this proceedings instituted in this Honourable Court by the defendants be dismissed and/or struck out as being a nullity and/or instituted without authority and/or instituted without the authority and/or consent of the plaintiffs.
(b) That the Orders made by this Honourable Court on 3 December 2003 be discharged and/or dissolved;

(c) Such further or other relief as to this Honourable Court seems just.
(d) Costs on indemnity basis.”

The motion came before Byrne J. on 11 December 2003 when it was adjourned to 12 January 2004 before the Deputy Registrar and ultimately it came before the Court for hearing inter-parties.

The Orders that the Motion seeks to have discharged or dissolved were made by the Court ex-parte on 3 December 2003 on an ex-parte Notice of Motion filed by or on behalf of the defendants. The Orders made were: -

“(a) That Civil Action No. 133 of 2003 in the First Class Magistrate’s Court at Nadi be removed from the First Class Magistrate’s Court at Nadi and be transferred to the High Court at Lautoka;

(b) That the Land Transport Authority be joined as a party to this action;

(c) That the Orders made by the Honourable Resident Magistrate Syed Mukhtar Shah on 20 November 2003 be quashed;

(d) That the Orders made by the Honourable Resident Magistrate Syed Mukhtar Shah on 25 November 2003 be quashed;

(e) That the Land Transport Authority to transfer titles and/or the ownership of the motor vehicles registration numbers: EA 048, EA 061, DK 476, DK 477, DU 442, DU 443, DU 444, DU 445, DU 446, DZ 617, DX 426, DX 427, DX 428, DX 429, DX 430, EA 307, EA 332, DO 598 (hereinafter referred to as “the said motor vehicles”) together with the rental car permits from the 2^nd Plaintiff to Roxy Motorparts Limited trading as Roxy Rentals and the plaintiffs be restrained from interfering with the use of the said motor vehicles together with the rental car permits in anyway whatsoever once the said transfer has been effected;

(f) That the Plaintiffs be restrained from dealing in any manner whatsoever with the motor vehicles registrations numbers: EA 048 EA 061, DK 476, DK 477, DU 442, DU 443, DU 444, DU 445, DU 446, DZ 617, DX 426, DX 427, DX 428, DX 429, DX 430, EA 307, EA 332, DO 598 together with the rental car permits;

(g) That the Plaintiffs be restrained from using the motor vehicles registration numbers EA 048, EA 061, DK 476, DK 477, DU 442, DU 443, DU 444, DU 445, DU 446, DZ 617, DX 426, DX 427, DX 428, DX 429, DX 430, EA 307, EA 332, DO 598 together with the rental car permits in any manner whatsoever;

(h) That copies of the Order to be served on the plaintiffs and the Land Transport Authority together with all supporting documents by the 10^th day of December 2003;

(i) Liberty to apply to any party within seventy two (72) hours notice.”

The plaintiffs relied on the affidavit of Sunil Chandra Ram sworn on 8 December 2003 and the defendants relied on the affidavit Lesi Tuiwawa sworn on 2 December 2003. The plaintiffs filed skeleton written submissions and a list of authorities.

Background

The letter dated 15 October 2000 (annexure C to the affidavit of Daya Ram also known as Rajendra Prasad) the 2^nd Plaintiff and Roxy Motorparts Limited agreed for the 2^nd plaintiff to take over the business Roxy Rentals effective from 1 April 2001. Roxy Motorparts Limited was wound up apparently effective from 11 April 2001. Commencing on 28 November 2001 the plaintiff purchased a total of 17 motor vehicles. The plaintiffs by writ of summons filed on 21 November 2003 in Nadi Magistrate’s Court commenced action against the defendants.

By Order made on 3 December 2003 as mentioned earlier, those proceedings were removed to this Court and the Orders referred to above were made.

The Court rules Order 29 Rule 1(2) states and I quote: -

“Where the applicant is the plaintiff and the case is one of urgency and the delay caused by proceeding in the ordinary way would entail irreparable or serious mischief such application may be made ex-parte on affidavit but except as aforesaid, such application must be made by Notice of Motion or Summons.”

The applicant for an ex-parte order in this instance was the defendant and not the plaintiff. The defendants argued that they can rely on Order 2 Rule 1(1) to overcome the words of Order 29 Rule 1(2). I do not agree, no authority was referred to to support this proposition.

The Law

The defendants submitted that Section 313 of the Companies Act Cap. 247 operates so as to make the acquisition of the business by the plaintiffs “a fraudulent preference” and that the authorities considering “Mareva injunctions” can be relied on to overcome the provision of Order 29 Rule 1(2).

The cases sighted were Chartered Bank v. Daklouche & Anr. [1980] 1 All E.R. at 205 which authority was relied on by Fatiaki J. in Seng Mi Commercial Company v. John Y. Singh & Company Limited and John Yogendra Singh (Civil Action No. HBC0018 of 1997) at Suva.

At page 9 of the judgment His Lordship’s said and I quote: –

“In Chartered Bank v. Daklouche (1980) 1 All E.R. 205 where ‘fraud’ had been pleaded as a ‘cause of action’ against the defendant husband alleging inter alia that he was part of a conspiracy to defraud his creditors, Lord Denning M.R. in extending the Mareva injunction in that case against both husband and wife said at p.208:

It is very easy to transfer money from one bank to another at a moment’s notice.

And later at p.210 the learned Master of Rolls said:

The law should be that there is jurisdiction to grant a Mareva injunction, even though the defendant may be served here. If he makes a fleeting visit, or if there is a danger that he may abscond or that the assets or moneys may disappear ... a Mareva injunction can be granted.

Eveleigh L.J. for his part in supporting the ‘cause of action’ endorsed a passage in Kerr on Fraud and Mistake (7^th edn.) where the learned author wrote:

Civil courts have an original and inherent jurisdiction to relieve against every species of fraud not being relief of a penal nature ... Deeds, obligations, contracts ... may be the instruments to which parties resort to cover fraud, ... but none of such devices (and here I would include a sham company) or instruments will be permitted by a Court of Equity to obstruct the requirements of justice.”

The plaintiffs submit that if fraud is relied on by the defendants – Order 5 Rule 2(d) requires proceedings to be commenced by Writ and not by Notice of Motion.

Section 313 of the Companies Act requires the transfer, conveyance etc to meet the tests required in respect of a bankruptcy petition before it is “deemed a fraudulent preference.”

Section 46 of the Bankruptcy Act requires the transaction to be undertaken “with a view to giving such creditor ... a preference over the other creditors...” to be deemed fraudulent and void.

I am not satisfied on the evidence before me that the transaction as a whole was undertaken with a view to giving a preference, particularly in view of the consideration paid and the fact that 17 motor vehicles were purchased by the plaintiff after the vendor company was wound up.

Whilst other issues were raised in argument I don’t think it is necessary to consider them to determine the matter pursuant to Order 29 Rule 1(2).

Conclusion

The breach of Order 29 Rule 1(2) cannot be remedied. Compliance with the Order is mandatory in my opinion and accordingly the Orders of 3 December 2003 must be discharged.

The Orders that I propose are –

(a) The Orders made by this Court on 3 December 2003 be discharged that the Land Transport Authority be joined as a party to these proceedings.

(b) That the Land Transport Authority to transfer the vehicles and permits referred to in Order (e) of the Orders of 3 December 2003 to the 2^nd Plaintiff.

(c) That all motor vehicles referred to in Order (e) of 3 December 2003 held by the defendants be released to the plaintiffs forthwith.

(d) The defendants to pay the plaintiffs’ costs.

JOHN CONNORS
JUDGE

AT LAUTOKA
3^RD FEBRUARY 2004