Fiji Development Bank v New India Assurance Company Ltd [2007] FJHC 19; HBC299.2003 (11 June 2007)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO.: HBC 299 OF 2003

BETWEEN:

FIJI DEVELOPMENT BANK
Plaintiff

AND:

NEW INDIA ASSURANCE COMPANY LIMITED
Defendant

Mr. N. Lajendra for Plaintiff
Mr. A. Narayan for Defendant

Date of Hearing: 4th June 2007
Date of Ruling: 11th June 2007

DECISION

Brightspot Fashions Limited is the registered lessee of Native lease 16714. There was a double storey building on it. It operated a business from that building. The plaintiff is a financier. It advanced certain sum of money to Brightspot and took mortgage over the native lease as security.

Brightspot insured the building, stock, business furniture, plant and contents with New India Assurance Company Limited the defendant. The double storey building was insured for $200,000.00. The rest namely contents etc. for $220,000.00. The plaintiff had no bill of sale over stock etc. The insurance policy showed Brightspot Fashions Limited as owner and the Bank as mortgagee. The policy also carried an endorsement "Loss if any payable to Fiji Development Bank (Rakiraki) as mortgagee whose discharge shall be sufficient and binding to the company".

On 20th May 2000 Brightspot building was destroyed by fire. On 8th May 2001, Brightspot was paid $133,000.00. It signed a discharge voucher "in full satisfaction, compromise and discharge of all claims for loss and expense sustained to property insured". Brightspot admits receiving the $133,000.00 and signing the discharge.

The Bank has sued the insurance company for loss or damage caused by fire to the building. Brightspot alleges in its affidavit that there was no settlement by it for destruction of the building. It says it is an interested party to the proceedings as it owned the native lease and building and it had insured the property. It wants to be joined firstly as a co-plaintiff or alternatively as an interested party.

One of the defences raised by the defendant is that the discharge given by the plaintiff was the end of the matter. There could be no further claims against it including the Bank. If that is so, then sound commercial sense dictates that Brightspot has an interest in these proceedings. If the Bank is not entitled to anything from the defendant, then obviously it would exercise its powers of sale under the mortgage and may even sue for residual balance. In the final analysis, the Brightspot has to pay the Bank what is due under the mortgage. In the event, the Bank were to settle its claim for a low sum, then again Brightspot will suffer. Even if this case were to be settled, I believe the sanction of Brightspot is necessary for it to protect its interest.

Brightspot does not dispute that the Bank is entitled to make a claim.

The defendant is objecting to joinder of Brightspot on three grounds:

(a) The plaintiff is represented by a firm of solicitors and the application should have come through the same firm of solicitors. To allow joinder would mean two different firms acting for the two plaintiffs. It also says that there is possibility of conflict or at least the court cannot rule out the possibility on the basis of current pleadings. The defendant submits the plaintiff in its claim is alleging that the defendant should have paid the moneys to the plaintiff and not to Brightspot.

(b) Secondly, the defendant says that this being a claim in contract, the limitation period has expired and allowing Brightspot to now become a party is by passing the provisions of the Limitation Act.

(c) Thirdly, the defendant submits that there would be prejudice to the defendant because it would be denied the limitation defence. Further there would be delay caused in finalization of proceedings as there would be inevitable resultant amendments if Brightspot is joined as a party.

This application is made pursuant to Order 15 Rule 6 of the High Court Rules and the inherent jurisdiction. Order 15 Rule 6 provides for misjoinder and non joinder of parties’ Rule 6(2) provides –

"(2) Subject to the provisions of this rule, at any state of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application –

(a) order any of the following persons to be added as a party, namely –

(i) any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, or

(ii) any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy which in which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter."

The rule gives the court discretion to join or not to join. The Court can impose such terms as it considers just. It must be noted that this is a facilitative or an enabling rule and the paramount consideration is to have before the court all necessary parties. It also gives the Court enormous flexibility as to who can participate and by appropriate terms define the level of participation. The issue really boils down to this – Will Brightspot’s rights against or liabilities to any party to the action in respect of the subject matter of the action be directly affected by any judgment which may eventually be made in this case. I think so.

If I dismiss the plaintiff’s claim, then Brightspot has to pay that much more to the plaintiff. If the judgment goes in favour of plaintiff, Brightspot gains. Further this being a policy of indemnity insurance, the presence of the owner of the property would assist the court should the value of the property become an issue as it is very likely. The owner would be able to give relevant evidence.

Limitation Period:

The limitation period for a claim based on contract, as this case is, the six years. The fire occurred on 21st May 2000 so the limitation period expired on 20th May 2006.

However Section 23 of the Limitation Act gives the court a discretion to allow a joinder of a party even if the limitation period has expired. The defendant was aware of the action and therefore would have preserved all relevant evidence which is likely to be documentary seeing that the defendant is an insurance company.

These proceedings were instituted well before the expiration of the limitation period. The insured property that as the building was owned by Brightspot. The insurance policy shows the plaintiff as mortgagee and Brightspot as owner. Without expressing any conclusive opinion, it is arguable that the relevant action is vested in both. This is a matter to be decided at the trial.

Prejudice:

I agree that any adjournment of case causes some prejudice. It delays the trial. Witnesses need to be summoned once more. However, I propose to make orders in such a way that there is no postponement of trial. The events which gave rise to this claim occurred over seven years ago concerns and any further postponement of this case is unwarranted.

If I join the applicant as a co-plaintiff there is no guarantee that the two plaintiffs will retain one firm of solicitors. It may also necessitate amendments to pleadings. The plaintiff’s solicitors are not agreeable to Brightspot being joined as a co-plaintiff. Hence some vague warning of fighting in the face of the enemy is there. So joining Brightspot as a co-plaintiff is not the prudent course. I propose to join the Brightspot as an interested party with liberty given to it that if the plaintiff fails to bring in satisfactory evidence about the value of the building, then it could do so. It is also given liberty to cross examine the defendant’s witnesses relating to this aspect with leave of the court.

It is also given liberty to bring in evidence relating to the circumstances in which the fire occurred and to cross examine defendant’s witnesses with leave of the court. I say with leave of the court because if the court is of the view that the plaintiff has adequately cross examined a witness then such leave may not be forthcoming.

Any need for pleading – No

Given that Brightspot has sworn an affidavit disclosing the nature of its interest, I am of the view there is sufficient information contained in it so the prospect of the plaintiff or the defendant being caught by surprise is minimal.

Accordingly I order Brightspot to be joined as an interested party.

[Jiten Singh]
JUDGE

At Suva
11th June 2007