Fiji Development Bank v Singh [2007] FJHC 137; HBC 0056.2003 (27 April 2007)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 0056 of 2003

BETWEEN

FIJI DEVELOPMENT BANK
Plaintiff

AND

ARUN KUMAR SINGH
AND
VINESH KUMAR SINGH
Defendants

Before: Master Udit

Counsel: Mr N. Lajendra for the Plaintiff
No appearance for the defendant

Date of Hearing: 26^th March, 2007
Date of Ruling: 27^th April, 2007

JUDGMENT

Introduction

[1] By a Summons dated 15^th January, 2007, the Fiji Development Bank (the Bank) seeks an order that a Summary judgment be entered against Arun Kumar Singh and Vinesh Kumar Singh (the defendants) as followed:-

(a) Judgment in the sum of $35,677.62.

(b) Interest at the rate of 10.5% per annum from 25^th January, 2005 until the date of judgment.

(c) Costs.

[2] The application is supported by a meticulous affidavit of Yvonne Fatiaki, acting Senior Manager Legal, an employee of the Bank.

Background facts

[3] A writ of summons was issued by the Bank against the defendant on 7^th February, 2003. Primarily, the claim is for default of re-payment. Paragraphs 2 and 3 of the Statement of Claim encapsulate the claim. For that reason, they are reproduced in full below:-

2. "The Plaintiff had entered into certain leasing facilities with the Defendants under Lease Purchase Agreement No. 95323 date 9^th September 1999.

3. The Defendants made default in their rental payments as a result of which, the Plaintiff repossessed and sold the truck subject to the Lease Purchase Agreement. After crediting the sale proceeds, the amount owed by the Defendants as at 24^th January 2003 was $35,677.62. Interest accrues on the said amount at the rate of 10.55% per annum from 25^th January, 2003".

Similar relief as the one sought in the Summons is also prayed for as final reliefs in the Statement of Claim.

[4] At this juncture, I find is appropriate to note that the plaintiff faced immense difficulties with serving documents to the defendants from the commencement of the suit leading to the present summons. Only for a brief period, the defendant had a counsel which eased the requirements of service. Otherwise, the plaintiff had to resort to substituted service, which resulted in unwarranted costs. At least, the defendants could have provided a fixed address for service to avoid such costs.

[5] On 17^th August, 1999 the defendants sought leasing finance from the Bank, which was duly approved on 24^th August, 1999. A sum of $58,000.00 was approved for the purchase of a ten wheeler truck. It was accepted by both the defendants respectively on 26^th and 27^th of August, 1999 (see Annexure "A2" of Yvonne Fatiaki's affidavit). The referenced annexure comprehensively stipulates the terms and conditions of the leasing facility. Interest rate was agreed at 10.5% and any default carried with a further default rate of 2%. Payment was on a monthly instalment of $1,716-00 commencing from 20^th October, 1999. Funds were released for the purchase of the truck after acceptance of the terms and conditions as per annexure "A2". The defendants defaulted from the very first instalment. From then on, the account remained in arrears with multiple opportunities given by the Bank for regularising payment.

[6] Then, the 2000 political insurrection further aggravated the burgeoning arrears. Once again, the Bank gave indulgence by allowing part payments. However, all these provisions to rectify the defaults did no good. Default accumulated, which eventually resulted in the final notice for payment of the entire balance sum. Again, the defendants' pleaded with the bank to withhold the termination of the leasing facility. This time around, they cited bad weather condition as a reason for not keeping pace with the re-payments. Also, they offered to sell another truck for $10,000-00 and divert the funds towards reduction of the debt. This was eventually done. But it turned out to be a short term reprieve only. At last, the Bank was strained to exercise its right under the leasing agreement. The truck was seized. Competitive tenders were invited. Eventually, it was sold for $28,000-00 to the highest bidder. That left a balance of $35,670-00. Fourteen days, with effect from 29^th June, 2002, was given to the defendants to clear the debt, (see annexure "P" of Yvonne Fatiaki's Affidavit). This resulted in exchange of a few correspondences between the parties, but the debt remained unpaid. Thus, this action was commenced.

Plaintiff's Claim

[7] Mr Lajendra, on behalf of the plaintiff submitted that the claim is based upon a simple finance leasing agreement to purchase an asset; the truck. The latter was also taken as a security. Lessees of the funds were required to make monthly instalments. Any default carried with it the usual consequences, that is, realisation of security and thereafter the residual right to recover any balance sum still due and owing. He submitted that the Bank is doing exactly what it is entitled to do so, under the agreement duly executed by the defendants voluntarily.

Defendants Claim

[8] From the outset, I would make it abundantly plain that the Bank made all efforts to contact the defendants for service of the documents pertaining to this application personally. The defendants could not be traced, even on the last known address. Substituted service by publication in the Newspaper remained the only viable alternative, which was aptly resorted to. Still the defendants, to their detriment neglect to appear.

[9] However, I have considered the defendants allegations as pleaded in the Statement of Defence. These can be summarised as follows:-

(a) the defendants were not given independent legal advice, nor was the contents of the documents explained to them.

(b) The bank breached its promise to suspend and/or not to enforce rental payments in rainy season and when the truck was not earning income.

(c) Later, in September 2001 the Bank unilaterally increased the monthly rental payment from $1,760-00 to $3,500-00.

(d) The defendants had a ready and willing buyer to buy the truck for $60,000-00, whereas the bank failed its duty by selling the truck for $28,000-00. That is, purportedly at a gross under valued price.

(e) Once the truck was repossessed, the leasing agreement was determined, which extinguished the liability to pay any balance sum then due and owing.

[10] At this point, it is stressed that the defendants did not file any affidavit to support the aforesaid contentions. It is for the defendant to "..........show cause by affidavit or otherwise to the satisfaction of the court. He must "condescend upon particulars", and in all cases, sufficient facts and particulars must be given to show that there is a genuine defence". Chandra Lachmaiya Naidu & Anor -v- Carpenters Fiji Ltd [1992] 38 FLR 215

Principles for Summary Judgment

[11] The 'well established principles' for granting of summary judgment was recently summarised by the Court of Appeal in Carpenters Fiji Ltd. -v- Joes Farm Produce Ltd. (unrep) Civil Appeal No: ABU 0019/2006 at page 9 of the judgment as follows:-

"Summary judgment principles.

Here it is timely to state some of the well established principles relating to the entry of summary judgment:-

(a) the purpose of order 14 is to enable a plaintiff to obtain summary judgment without trial if you can prove each claim clearly and if the defendant is unable to set up, a bona fide defence or raise an issue against the claim which ought to be tried.

(b) The defendant may show cause against a plaintiff's claim on the merits e.g. that he has a good defence to the claim on the merits or there is a dispute as to the facts which ought to be tried or there is a difficult point of law involved.

(c) It is generally incumbent on a defendant resisting summary judgment, to file an affidavit which deals specifically with the plaintiff's claim and affidavit and states clearly and precisely what the defence is and what facts are relied on to support it.

(d) Set off, which is a monetary cross claim for a debt due from the plaintiff, is a defence. A defendant is entitled to unconditional leave to defend up to the amount to the set off claimed. If there is a set off at all, each claim goes against the other and either extinguishes or reduces it Hanak v Green (1958) 2 QB 9 at pg. 29 per Sellers LJ.

(e) Likewise where a defendant sets up a bona fide counter claim arising out of the same subject matter of the action, and connected with the same grounds of defence, the order should not be for judgment on the claim subject to a stay of execution pending the trial of the counter claim but should be for unconditional leave to defend, even if the defendant admits whole or part of the claim. Morgan & Sons Ltd. v S. Martin Johnson Company (1949) 1 KB 107 (CA).

Consideration of the Application

[12] The onus lies with the defendant to resist summary judgment. To do that, s/he must file an affidavit categorically addressing the claim. Failure to do so is fatal. The defendants failed to file any affidavit. Neither, did they oppose the application. For that reason alone, I would have allowed the application for summary judgment.

[13] However, since the action was commenced in 2003, it is prudent for me to deal with the application on its merits. More so, because of the statement of defence already filed. The Court of Appeal in Magan Lal Brothers Ltd. -v- L. B. Masters Civil Appeal No: 31/84 held that where there is no affidavit evidence, but a Statement of Defence is filed, the Court in exercising the discretion must consider the issues raised in the defence. The Court cited and adopted a passage from Halsbury's Laws of England (4^th Edition) volume 37 para 413 - 415, notes 4, where the authors noted:-

"The normal everyday practice is for the defendant to show cause by affidavit, and except in a clear case, it is rare for the court to allow a defendant to show cause otherwise than by affidavit. A defence already served may be a sufficient mode of showing cause, but not if it is a sham defence served early to avoid showing cause by affidavit".

Later, in 1992, his preposition was re-affirmed by the Court of Appeal in Chandra Lachmaiya Naidu & Anor -v- Carpenters Fiji Ltd., [1992] 38 FLR 215. I have taken full cognizance of the issues raised in the defence. Not only that, I will for convenience use them as a guide to address the issues underpinning the application.

(a) No independent legal advice given nor contents of the documents explained

[14] Indisputably, both the defendants unquestionably executed the offer letter. At least, prior to the execution of the said letter, the defendants neither raised nor sought time to seek independent legal advice. Needless to mention, after defaulting, the defendants wrote numerous letters (see annexure E, H1, H2, K) to the Bank seeking indulgence to clear the arrears. At no point, did they raise this issue.

[16] Be that as it may, such a defence is devoid of any merits. In Mary Maraia Petersen Hewitt and Anor -v- Habib Bank Limited, Civil Appeal No: ABU 007/2004S, the Court of Appeal very pertinently said:-

"The second difficulty is that it is settled law in Fiji that a defence of non est factum will not lightly be allowed when a person of a full age and capacity has signed a written document embodying contractual terms (see Fiji Development Bank v Raqona (1984) 30 FLR 151). The general rule is that a party of full age and understanding is bound by his/her signature to a document whether he/she reads or understands it or not. (See Gallie v. Lee [1971] A.C. 1004, 1016, 1019) We see no reason to depart from this rule in this case and therefore the first ground of appeal fails".

(emphasis added)

[17] The aforesaid Statement is apposite to the factual matrix of this case. Both the defendants are businessmen. They are deemed to be familiar with obligations and liabilities of borrowing money. I see no plausible reason to accept their ignorance, when in fact they have already derived the benefit by purchasing the truck. I hold that the defendants are bound by their signature. Therefore, the leasing agreement prevails.

(b) Suspension or no enforcement of repayment in rainy season and no income earning period.

[18] There is cogent evidence that at the repayments were neither suspended nor deferred. To the contrary, there is plethora of evidence of the Bank insisting payment instantaneously following default. It did not end there. Intermittently, the Bank threatened to realise the security and seek full recourse under the agreement, (Annexure C, D, E, and H1 of the supporting affidavit). If any oral representation is relied upon the defendants ought to have adduced the same. There is not an iota of any such evidence. Anyway, in law any such evidence would be rather difficult to sustain a defence of variation of written agreement. Lord Morris in Bank of Australasia -v- Palmer [1897] UKLawRpAC 44; (1897) AC 540 at 545 on such a presumption aptly said as follows:-

"..... testimony cannot be received to contradict, vary add to or subtract from the terms of a written contract or the terms in which the parties have deliberately agreed to record any part of a contract".

[19] The leasing facility instrument is unambiguous. It is in writing. Parties opted to retain written correspondence. Therefore, any arguments to vary, contradict, delete, or supplant it by oral arrangement or understanding is not sustainable and ought to be struck-out. I reject the defendants' contention on this point.

(c) Rental payment was unilaterally increased

[20] One of the issues raised in the defence is that the rental was unilaterally increased from $1,716.00 to $3,500-00. Mr Lajendra submitted that this argument is wholly erroneous. He referred me to annexure K of the supporting affidavit. This was a letter written by the defendant to the bank in which they specifically requested:-

"Further we want to arrange the balance arrears to be paid as follows. Normal payment of $1,716-00 in June 2001. Further increased payment of $3,500-00 per month from July 2001 until debt is cleared".

(emphasis is mine)

[21] Subsequently, the bank only accepted the proposal on a without prejudice basis. In view of the above this contention holds no merit and accordingly fails.

(d) Truck sold at an under-valued price

[22] Here, the defendants pleaded that the truck was sold at a grossly under-valued price. In addition, it is contended that they had a buyer, who was willing to pay a sum of $60,000-00. I have great difficulties with these for two reasons. Firstly, the value of truck when it was purchased was only $68,000-00, in August 1999. It was re-possessed and sold two years later. Was it really worth $60,000-00? Whether it was possible to receive any genuine offer for that sum considering the innate depreciation? Even if it was so, why did they allow the truck to be re-possessed? It could easily have been sold in consultation with Bank. Secondly, if there was an offer, why was it not communicated to the bank? Generally, the defendants kept all communication in writing. This could have even been communicated, even at the later stages leading up to but prior to the acceptance of the tenders. Until the tender was accepted the defendants' could still have redeemed by paying the money. But, there is no such evidence. No reference to this was made in any correspondence, even after the truck was sold. At least two letters (annexure "Q" and "S") were written to the bank by the defendant. From the letter of 27^th August, 2002 a clear inference to the contrary may be drawn. In it, one of the defendants' stated that he was in the process of obtaining quotation from 10 different motor vehicle dealers to ascertain the real market value of the truck. At best, an inference which can be drawn is that this ex-post facto argument is the last attempt to evade their obligation.

[23] In any event, the Bank received five tenders ranging from $22,000-00 to $28,000-00. Eventually, it was sold to the highest bidder for $28,000-00. From the evidence adduced, I am satisfied that the bank had done all that it could do at its disposal to obtain the best market price for the truck. In doing so it has not breached its duty as a mortgagee; Cuckmere Brick Co. Ltd. -v- Mutual Finance (1971) Ch. 949.

(e) Termination of leasing facility absolved the liability to pay the balance sum

[24] I must confess that this strange contention is not only irrational but mischievous. If any such contention was allowed by the Court to stand, it will be chaotic to the finance market. Lending institutions will be forced out of business. To avert any suicidal lending, they will decline to advance money unless it is extremely safe. The entire economy will be plunged in to dire straits hampering national development. Without even considering the evidence as a matter of principal I it ought to be summarily rejected. Nevertheless, the evidence adduced so far does not reveal any such intention. In that case the leasing agreement takes effect unabated.

[25] In addition, a financial institution is also entitled to recover all monies due and owing under the well known common law principle of money had and received.

Conclusion

[26] Lord Ackner in Banque de Paris at des Pays-Bas (Suisse) S. A. -v- De Naray [1984] 1 Lloyd's Rep 21 at 23 said;

"...the Court must look at the whole situation and ask itself whether the defendant has satisfied the Court that there is a fair and reasonable probability of the defendants having a real or bona-fide defence".

[27] Having looked at the whole situation, I am satisfied that the defendants failed to discharge their onus of establishing a "real or bona-fide" defence. I therefore order summary judgment for the plaintiff as prayed for in the sum of $35,677-62. Plaintiff is entitled to interest at the agreed rate of 10.5% per annum with effect from 25^th January, 2003 until payment of the judgment sum. I will so order.

[28] Mr Lajendra seeks costs of $2,500-00. In proceeding with this case, undoubtedly the plaintiff incurred unnecessary expenditure especially in serving documents. There is merit in Mr Lajendra's submissions. I will summarily assess the costs at $2,000-00.

Order:

(a) There be a summary judgment in favour of the plaintiff in the sum of $35,677-62 with interest at a rate of 10.5% per annum with effect from 25^th January, 2003 until the judgment is satisfied;

(b) Defendants to pay a cost of $2,000-00 to the plaintiff.

J.J. Udit
Master

27^th April, 2007