Credit Corporation (Fiji) Ltd v Ca'bella Pacific Construction (Fiji) Ltd [2006] FJHC 17; HBC0560.2005 (20 January 2006)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO.: HBC0560 OF 2005

BETWEEN:

CREDIT CORPORATION (FIJI) LIMITED
PLAINTIFF

AND:

CA’BELLA PACIFIC CONSTRUCTION (FIJI) LIMITED
FIRST DEFENDANT

YAUKUVE ISLAND RESORT LIMITED
SECOND DEFENDANT

Ms S. Devan with Ms N. Sharma for Plaintiff
Mr. D. Sharma with Ms Y. Fatiaki for Second Defendant
No Appearance for First Defendant

Date of Hearing: 16th January 2006
Date of Decision: 20th January 2006

DECISION

The Plaintiff is a well-known financial institution and generally makes financial advances for purchase of machinery and vehicles. The first defendant is a building contractor. The second defendant owns an island near Kadavu and intended to build a resort on the island. To build the resort it engaged services of the first defendant. It appears that on 1^st December 2003 the defendants entered into a contract to enable the first defendant to construct the resort. One of the equipments which the first defendant took into Yaukuve Island was a Bulldozer/Loader registered number DM 551. It is alleged by the plaintiff that the first defendant had secured this machine amongst other items to obtain a loan from it.

It alleges that loan moneys in the region of $168,000.00 (inclusive of interest) remain unpaid. It wants to seize the machine but it has met resistance from the second defendant which maintains that under the Building Contract, it has a right to detain the Bulldozer/Loader and has a lien over it “in lieu of all the moneys that the first defendant wrongfully claimed from us under the Building Contract which to date remains unaccounted for”.

The principal issue is whose rights take priority – the plaintiffs or the second defendants. The validity of Bill of Sale became a non issue once properly registered documents (Bill of Sale) and registration certificate were filed with affidavit in reply by the plaintiff. The other minor issue was whether the Bulldozer called Loader was in fact covered by the Bill of Sale.

Bulldozer/Loader:

The Bills of Sale Act (Cap 225) governs registrations and contents of Bills of Sale. Section 10 requires that the Bill of Sale shall be registered by presenting it together with an inventory or schedule. The Act itself does not state what details are to be inserted in the inventory or the schedule. An inventory is a detailed list of goods each one sufficiently described so they are capable of identification. The nature of description would depend on the type of chattels. In Carpenter v. Deen – [1889] UKLawRpKQB 123; (1989) 23 QBD 566 at 574 Fry L.J. stated that the purpose of inventory in a Bill of Sale was “to facilitate the identification of the articles enumerated in the schedule with those that are found in the possession of the grantor: that is to say, to render any dispute as to the intention of the parties as rare as possible, and to shut the door to fraud and controversy of which almost always arise when general descriptions are used”.

The controversial item in the Bill of Sale is described as –

“One only 10-ton caterpillar Bulldozer, registration number DM 551, Engine Number 45V61927, Chassis Number 3SCO3.”

In the Motor Vehicle Insurance Policy it described as “10-ton Caterpillar Front End Loader DM 551”.

The item is a motor vehicle. Normally the number plate is its most distinguishing and common method of its identification. Further, the engine number and chassis number are also given. These details are sufficient for its identification. The defendant’s objections have little merit.

Priority: Contractual Lien v. Bill of Sale:

The second defendant has set up a contractual lien. Its lien arises by virtue of a contract. Therefore the primary question will be the meaning of the terms of the contract.

The contract between the first defendant and the second defendant was executed on 11^th December 2003. The Bill of Sale in favour of the plaintiff was executed on the 13^th August 2004 that is after the contract. The second defendant’s right to take over and use or to take possession of the loader do not arise on the day of execution of the agreement. It only arose on happening of an event and that is if the first defendant committed a substantial breach of contract. Substantial breach is defined in Clause 25(2) of the contract and these include without reasonable cause contractor suspends work wholly, failure to proceed regularly and diligently with the works; refusal or persistent neglect to comply with written notice by an Architect and assignment of contract by contractor. It is only when there is a proven breach of contract committed by the first defendant do the second defendant’s rights as contractual lienee arise. Until breach, the first defendant is entitled to do what it pleased with the chattels. Only a breach of contract triggers a contractual lien in favour of the second defendant.

The affidavits as filed do not disclose when the alleged breach occurred whether before or after the execution of the Bill of Sale.

Opposed to this is the position of the plaintiff which holds a registered Bill of Sale and the right to seize and sell the items if the grantor failed to pay. It alleges that the first defendant owes it $168,764.77 as at 17^th November 2005. A bill of sale is a well recognized form of security for advances made and lending agencies often advance moneys on strength of such securities. This statutory security is not to be easily defeated unless there is clear and cogent evidence of a contractual lien.

Besides in Clause 16 of Thierry Morali’s affidavit, the second defendant says that in April 2005 it co-operated and allowed the plaintiff to remove whatever items were covered under the Bill of Sale. If the second defendant had a contractual lien or any right to withhold the items, why did it release some of the items in April?

I have to consider the nature of the chattels. The loader would depreciate in value if it is used. The second defendant is using the machine and yet has up till now not made any offers to make any payments of instalments. It just expects a free ride. Besides the plaintiffs claim under the Bill of Sale is against the first defendant which has taken no part in these proceedings.

I am of the view that there are no serious issues. The right of the plaintiff to seize and sell is clear cut. It should not be deprived of such a right.

Accordingly I order that the first and second defendants by themselves or their servants or agents or associates be restrained from preventing the plaintiff from seizing or repossessing the 10-ton Caterpillar Loader registration number DM 551, Engine Number 45V61927, Chassis No. 3SCO3. I also order costs against the second defendant in the sum of $600.00.

[ Jiten Singh ]
JUDGE

At Suva
20^th January 2006