Merchant Finance and Investment Company Ltd v Popular Investments Ltd [2009] FJHC 244; HBC101.2005L (30 October 2009)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No. HBC 101 of 2005L

BETWEEN:

MERCHANT FINANCE & INVESTMENT COMPANY LIMITED
1st Plaintiff

AND:

OLIMAGS and/or OLIVER KARAN SINGH
2nd Plaintiff

AND:

POPULAR INVESTMENTS LIMITED
1st Defendant

AND:

HOTEL 2000 LIMITED
2nd Defendant

AND:

MICHEAL FENECH
3rd Defendant

INTERLOCUTORY JUDGMENT

Of: Inoke J.

Counsel Appearing: Mr D Gordon for the Plaintiffs
No appearance

Solicitors: Messrs Gordon & Co for the Plaintiffs
Defendants in person

Date of Hearing: 28 October 2009
Date of Judgment: 30 October 2009

INTRODUCTION

[1] This is an application to restrain the Third Defendant, Michael Fenech, from interfering with the enjoyment and use of a motor vehicle now in the possession of the Second Plaintiff, Olimags.

CASE HISTORY

[2] The application came by way of Ex-parte Originating Summons filed on 13 April 2005. It was first called on 13 April 2005 and Connors J ordered the application to be served and to proceed inter-parte. On 15 April 2005, the Third Defendant, Fenech, through his Counsel gave an undertaking to the Court not to interfere with the Second Plaintiffs, Olimags, quiet and peaceful enjoyment and peaceful use of a Toyota Landcruiser Wagon, previously registered as DT 288 but now registered with special number "OO" (the "Landcruiser") until further order of the Court. On 22 July 2005, all the parties being represented by Counsel, agreed that by consent, Fenech was to be restrained in the same terms as in the undertaking he gave the Court on 15 April 2005. The other outstanding matter was the declaration that the Bills of Sale over the vehicle were illegal, null and void and should be cancelled forthwith.

[3] To cut a long sad story short, it eventually came to be heard before me on 28 October 2009. On the way, solicitors for the First and Second Defendants withdrew in early 2006 because their clients would not listen to their sound advice and early this year solicitors for the Third Defendant withdrew because their client has deserted them and taken his files. An Affidavit of service of the solicitors’ application to withdraw for the First and Second Defendants by advertisement has been filed. An affidavit of service on the Third Defendant has also been filed. The Defendants have never appeared in Court. None of the Defendants appeared when they were called on the day of the hearing.

THE APPLICATION

[4] The Originating Summons was supported by an affidavit by the Manager Western of the First Plaintiff, Merchant Finance. I am grateful for Mr Gordon’s very helpful written submissions.

[5] The facts as appear from the affidavit are these. On 31 May 2001, the First Defendant, Popular Investments, entered into a Master Hire Purchase Agreement ("MHPA") with the First Plaintiff, Merchant Finance, in respect of the Landcruiser. Under the terms of the MHPA, Merchant Finance was the owner and Popular Investments was the hirer of the Landcruiser. The Landcruiser had been bought by Merchant Finance from Asco Motors for $107,000. A Bill of Sale over another vehicle owned by Popular Investments as collateral security was also executed by Popular Investments in favour of Merchant Finance on 31 May 2001.

[6] On 7 June 2001, Popular Investments transferred and registered the Landcruiser to the Second Defendant, Hotel 2000. The reason this was done so easily was that both companies had common directors, Mr Rupeni Koroi and his wife Reapi. The vehicle was then used by them to obtain loans from the Third Defendant, Fenech, for their kava selling business by offering and signing over bills of sale over the Landcruiser in favour of Fenech. The first Bill of Sale from Hotel 2000 to Fenech was executed on 8 April 2002 and registered on 23 April 2002 to secure a loan of $57,000. A second Bill of Sale was executed on 12 April 2002 was also registered on 23 April 2002 to secure $20,000. Popular Investments defaulted in its repayments to Merchant Finance and on 16 July 2002, Merchant Finance authorised a bailiff to seize the Landcruiser. The vehicle was repossessed on 23 July 2002 and subsequently transferred to Merchant Finance on 24 October 2002 and sold by public auction to Khans Rental Cars. The Landcruiser was transferred on 24 October 2002. Khans Rental Cars then sold it to Olimags on 14 December 2004. Fenech tried to seize the Landcruiser from Olimags hence this action.

THE QUESTION

[7] The question raised in this case is this: Are the rights of a registered bill of sale holder defeated by the rights of an owner of property arising out of an unregistered prior hire purchase agreement?

[8] In Australia and New Zealand Banking Group Ltd v Koi [1994] FJHC 7; Hbc0231j.92s (10 January 1994), Fatiaki J effectively answered the question in the affirmative. The case was taken on appeal and the Court of Appeal (Sir Peter Quinlan, Ward and Thompson JJA) affirmed the High Court decision: Australia and New Zealand Banking Group Ltd v Merchant Bank of Fiji [1994] FJCA; Civ App ABU11 of 1994S (24 November 1994). The matter was taken further to the Supreme Court but the Court refused leave to appeal on the basis that the case did not raise any issue of general importance justifying an appeal: Australia and New Zealand Banking Group Ltd v Merchant Bank of Fiji [1995] FJSC; Civ App CBV1 of 1995 (21 November 1995.

[9] The facts of that case are identical to the facts in this case. It is true that the case went all the way to the Supreme Court but it is not true, as Mr Gordon wanted me to accept, that the Supreme Court affirmed the decision of Fatiaki J because leave to appeal was refused on a different ground and the point was not argued in the Supreme Court. The Court of Appeal was the highest the case ever went. In any case, I am bound to follow the decision if it cannot be distinguished.

[10] The point was not argued in the form of the question that I have posed. The case was argued on the basis of the nemo dat rule. With the greatest of respect, I think not enough emphasis was based on the effect of the provisions of the Bills of Sale Act. The decision effectively nullifies the security provided by the Act to an innocent holder of a bill of sale. I emphasise the word innocent.

[11] I think if the true owner allows his motor vehicle to be registered in some body else’s name as the owner and takes no steps to safeguard his interest, for example, by registering a bill of sale or having his interest noted in the register of ownership at the Land Transport Authority (LTA), and an innocent third party subsequently acquires rights under a registered bill of sale after having searched the bill of sale Register and the LTA records, then the true owner should not be allowed to complain that he has a prior and overriding right. In this respect I differ from Fatiaki J in the above case. As I have said, to hold otherwise would defeat the very basis of registration, notice and security afforded by the Bills of Sale Act.

[12] Mr Gordon argued his case along the lines of the ANZ case (supra).

[13] I acknowledge his well researched submissions, but I think I need not set them out in this Judgment because it is not necessary for me, in my view, to decide this case on the authority of the ANZ case (supra) because s 14 of the Bills of Sale Act provides:

The registration of a bill of sale must be renewed, or further renewed, as the case may be, at least once every five years, and, if a period of five years elapses without such renewal or further renewal the registration shall become void.

[14] The Bills of Sale may have been valid at the time this action was filed but there is no evidence before me that the two Bills of Sale registered on 23 April 2002 were renewed after the 5 year period required under s 14. The Bills of Sale are therefore void.

COSTS

[15] I exercise my discretion and not award costs because I think the Plaintiffs won by default rather than by design.

ORDERS

[16] The Orders are therefore as follows:

1. The Plaintiffs application by Ex-parte Originating Summons filed on 13 April 2005 is granted as to paragraph (iv).

2. There is no order as to costs.

Sosefo Inoke
Judge

POST SCRIPT

[A] In the course of the hearing Mr Gordon referred me to the affidavit in support of his client’s case by directing me to the "large affidavit". There were in fact 3 "large affidavits" in the Court file. Two of them were affidavits of service annexing documents already in the Court file. I asked him why affidavits of service in this Court always annexed documents which were already on the Court file and he answered that there is a practice direction to that effect. If there is such a practice direction or such a practice then it should be changed. There is limited storage space in the Registry. I do not see much sense in storing more copies of documents which are already in the Court file.

[B] In the absence of a practice direction to the contrary the practice in this Court from now on in respect of affidavits of service is this:

[1] It is not necessary to annex copies of documents which are already on the Court file.

[2] It is sufficient that the process server identify the document that is being served in sufficient detail in his affidavit of service.

[3] Any affidavits of service filed in this Court not complying with this direction will be returned unfiled for due compliance.

Sosefo Inoke
Judge