Khan v Khan [2010] FJHC 101; HBC005.2010L (1 April 2010)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Case No. HBC 005 of 2010L

BETWEEN:

MOHAMMED ALEEM KHAN
(father’s name Mohammed Hakim Khan)
of Kennedy Avenue, Nadi, Fiji, Businessman.
Plaintiff

AND:

MOHAMMED BAVED YAKUB KHAN & MOHAMMED NASIR KHAN
both of Lautoka, Fiji, Company Directors.
Defendants

Counsels Appearing: Mr. Kini Maraiwai for the Plaintiff
Ms. Natasha Khan for the Defendants

Solicitors: Maraiwai Law for the Plaintiff
Natasha Khan Lawyers for the Defendants

Date of Hearing: Friday 26th March 2010
Date of Judgment: Thursday 01st April 2010

RULING

1. On the 08th day of January 2010, the Plaintiff filed a Writ of Summons and Statement of Claim. The Claim seeks judgement in the sum of $408, 862.63 plus general and exemplary damages and indemnity costs. The Plaintiff alleges that on the 28th January 2005, he lent out to the Defendants on their request the sum of $408,862.63 "to help out with the Defendants financial obligations and to save the Defendants’ business". The Plaintiff alleges that the money lent has not been repaid by the Defendants as promised.
   
2. On 05th of February 2010, the Defendants filed an Acknowledgement of Service.
   
3. Earlier, on the 3rd of February 2010, the Plaintiff filed a search at the Registry. On seeing that no Acknowledgement of Service had been filed, the Plaintiff then filed to enter Default Judgement. This was entered on the 18th day of February 2010.
   
4. Before me is a Summons by Natasha Khan & Associates filed on the 5th day of March 2010 seeking to set aside unconditionally a default judgement entered against the Defendants on the 18th day of February 2010. Ms. Khan also seeks Orders that the Plaintiff’s Statement of Claim filed be struck out on the grounds that it is scandalous, frivolous or vexatious and/or is an abuse of Court process.
   
5. The application is made pursuant to Order 13 Rule 10 and Rule 9 and Order 18 Rule 1(b) and (d) of the High Court Rules and the inherent jurisdiction of this Honourable Court.
   
6. The Defendants rely on two Affidavits of Mohammed Nasir Khan father’s name Mohammed Yakub Khan. The first was sworn on 03rd day of March 2010 and filed on 05th March 2010. The second, a supplementary Affidavit, was sworn on the 5th day of March 2010 and filed on 08th day of March 2010.
   
7. The Application is opposed by Maraiwai Law, the Solicitors for the Plaintiff who rely on the Affidavit of Jackson Yavalanavanua which was sworn on the 24th day of March 2010 and filed on the same day.
   
8. At the hearing of this case, Ms. Khan highlighted that a related Winding up proceeding (Aleems Investment Limited –v- Khan Buses Limited – HBF 15 of 2009L) had been dealt with by Mr. Justice Inoke in September 2009. The petition in that matter was filed by Aleem’s Investment Limited to wind up Khans Buses Limited. The same debt alleged against Khan’s Buses Limited by Aleems Investment Limited in HBF 15 of 2009 is being alleged by Mohammed Aleem Khan against Mohammed Naved Yakub Khan and Mohammed Nasir Khan in this Writ claim. Mr. Maraiwai does not dispute that HBF 15 of 2009 dealt with the same factual matrix.
   
9. When the Winding Up proceedings came before Mr. Justice Inoke, he found the following facts:
   
   • [8] ......Sometime in early March 2000, Aleem [the Plaintiff in this case now before me] approached Nasir [the 2nd Defendant in the case now before me] requesting a loan. Aleem told Nasir that he was aware that Khans Buses had an overdraft facility with the Habib Bank that was not being used at that moment and that a manager, one Asad Khan (Asad), at the Bank could arrange for Aleems Investment to use that unused facility. Nasir told Aleem that he would agree to that proposal if the facility was restored within 90 days and Khan Buses would not in anyway be liable for repayment. On 7 March 2000 Aleem drove them to Bank’s Suva office and they met with Asad and the Bank’s accountant. Nasir repeated what he had told Aleem that he was agreeable to the proposal so long as Khans Buses would not be liable for repayment of the facility, interest or charges. The unused overdraft facility was for $200,000. It was accepted and at the request of Asad, Nasir wrote a cash cheque for $200,000 to be drawn out of the facility account. That cheque was deposited into an account in the name of "ASHLEEM INVESTMENT LIMITED" on 7 March 2000. The records of that company are not available at the Companies Office but Nasir believes that Aleem is connected with it. The facility was not repaid by Aleem or Ashleem Investment Limited. Despite the arrangements agreed to in Suva on 7 March 2000 the Bank pursued Khan Buses for repayment of the facility. Several attempts to resolve the matter failed but it appears, as deposed by Aleem in his affidavit, that Aleems Investment paid back the facility to the Bank on 28 January 2005. Aleems Investment now issues this winding up petition in an attempt to recover that payment to the Bank.
     
10. At paragraph 10 and 11 of the judgement, Mr. Justice Inoke said as follows:
    
    • [10] .......this is a petition based on a debt that is the Petitioner’s own. The only connection between the Petitioner and the Respondent is that the $200,000 was drawn out of the Respondent’s account. The money was not for the benefit of or used by the Respondent. The Bank has been paid back so, even if it had a claim against Khan Buses, that is now extinguished. I cannot see any basis at law whatsoever for Aleems Investment to recover from Khan Buses the money it had paid to the Bank.
      
    • [11] It is trite law that a person does not have to pay a debt that is not his. Similarly, it is trite law that a s 221 Companies Act demand and winding up petition cannot be issued for a debt that is not the respondent company’s or, worse still, the petitioner’s own debt owed to someone else. On these principles alone, the Petition as well as any court action against Khan Buses based on these facts, whether by writ or otherwise, should be permanently stayed. If the money has been used by Ashleem Investment Limited or some other person then those are the proper parties to pursue. Not Khan Buses. If the issue of these proceedings or subsequent proceedings is to facilitate joinder of some other parties, when Aleem knows full well the circumstances behind the dealings with the Bank, no clearer case of abuse of process or of a frivolous and vexatious action can be found. He can sue those persons independently of Khan Buses.
      

11. At paragraph 17, Mr. Justice Inoke J said as follows:

[17] It is obvious that once there is a finding that the Petition in this case was doomed to fail and that Aleem knew as well as his solicitors that Khan Buses did not owe any money to his company then such a substantial intention as mentioned by Brennan J exists and the further prosecution of this Petition or any proceedings based on these facts will constitute an abuse of process.

12. Amongst the Orders that Mr. Justice Inoke made was the following:

15. Any further proceedings, howsoever commenced, in respect of the arrangements entered into between the parties and Habib Bank on 7 March 2000 and the said Petition, other than an appeal in respect of this Judgment, are also stayed and the court registries are directed not to accept or issue any such proceedings. (my emphasis).
    

13. Ms. Khan submits that the Registry should not have accepted or issued the Writ filed by the Plaintiff as it was in direct contravention of the Orders of Inoke J. Mr. Maraiwai submitted that the effect of Inoke J’s Orders were to stay only the Winding Up proceedings.

14. I accept Ms. Khan’s submission. The filing of the Writ of Summons and Statement of Claim by the Plaintiff was a deliberate act of defiance of Inoke J’s Orders. The Registry should not have issued the documents but I accept that it was easy for the documents to have been processed undetected by the unsuspecting staff. The more onerous duty however was on the Plaintiff’s solicitors who were aware of the earlier orders and yet rather underhandedly tried to "sneak" the documents in.

15. Because of that, the default judgement entered on the Writ and Statement of Claim is therefore irregular and must be set aside unconditionally as of right.

ORDERS

1. The Default Judgement is set aside unconditionally.
   
2. The Writ of Summons and Statement of Claim are also struck out.
   
3. Costs to the Defendant on an indemnity basis to be taxed if not agreed.
   

Anare Tuilevuka
Master

01st of April, 2010.