Carpenters Fiji Ltd v Mohammed Yakub Khan and Company Ltd [2011] FJHC 104; HBC250.2001L (2 February 2011)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No: HBC 250 of 2001L

BETWEEN:

CARPENTERS FIJI LIMITED
Plaintiff

AND:

MOHAMMED YAKUB KHAN AND COMPANY LIMITED
Defendant

FINAL JUDGMENT

Judgment of: Inoke J.

Counsel Appearing: Ms B Narayan for the Plaintiff
Ms N Khan for the Defendant

Solicitors: Lateef & Lateef for the Plaintiff
Natasha Khan Associates for the Defendant

Date of Hearing: 4 June 2010, 18 August 2010
Date of Judgment: 2 February 2011

INTRODUCTION

[1] The Plaintiff hired one of its trucks to the Khan family under a lease agreement in May 1996. The Khans defaulted in the lease payments and when the Plaintiff tried to repossess the truck they hid it. It took some months before the Khans returned the truck. By that time the truck was in a very bad state of repair and some parts were missing. The Plaintiff sued the Khans company for the costs of repairs and missing parts.

[2] The Khans dispute the claim. They say that the truck was driven back to the Plaintiff's yard. It was in perfectly good order when it was returned. Someone somehow stole the parts and damaged the truck whilst it was being held in the Plaintiff's yard. This is my judgment after hearing the case.

CASE HISTORY

[3] As is apparent from the case number, the Writ of Summons and Statement of Claim was filed in 2001, 27 August 2001 to be exact. It was heard undefended by a Judge on 8 August 2005 and his Lordship gave judgment in favour of the Plaintiff. The matter was taken on appeal by the Defendant to the Court of Appeal and on 5 November 2008, by consent of the parties, the Court of Appeal set aside the judgment and sent the matter back to this Court for retrial before another judge. It was first called on 23 January 2009 before the Master and subsequently on several occasions, throughout the year, because the parties indicated that they were pursuing settlement. The Master having made no headway in disposing of the matter put it before me for mention on 8 December 2009. No one appeared for the Defendant on that day so I adjourned it to 2 February 2010. On 2 February, again no counsel appeared for the Defendant but the company secretary did appear. Despite no Pre-trial conference being held I set the matter down for hearing on 31 May 2010 because it had been unresolved for too long.

THE STATEMENT OF CLAIM

[4] The Plaintiff's claim was that it was the owner of a Nissan 10 wheeler truck, registration number CY311. By a lease agreement dated 3 May 1996, it leased the truck to a firm called "M Y Khan-Earthmoving and Haulage Contractors". On 7 October 1997 the firm became registered as a limited liability company called "Mohammed Yakub Khan and Company Limited", which is the Defendant, and which took over the repayments under the lease. The Defendant defaulted under the agreement and when the Plaintiff tried to repossess the truck the Defendant refused to disclose its whereabouts. The Defendant later on returned the truck and the Plaintiff discovered that the Defendant had damaged it and removed some parts and items, totalling $35,000. The Plaintiff made several attempts to recover the parts without success and therefore claimed the costs of repossession and judgment for $35,000, interest and costs.

THE DEFENCE

[5] The Defendant admitted that the Plaintiff was the owner of the truck and that a lease agreement was entered into as alleged but denied that it had anything to do with the truck.

THE HEARINGS

[6] On 31 May 2010, again, no counsel but one of the Khans appeared and asked for an adjournment on the basis that he had been sick and needed more time to prepare. He wanted me to accept his medical certificates of 3 April 2010 to prove his illness. Ms Narayan opposed the application. She was ready to proceed with the trial on that morning. She had come with three witnesses and asked for their costs, her preparation and attendance and transport costs.

[7] I decided to give Mr Khan another chance despite the lateness of the application and rescheduled the trial for 4 June 2010 on the condition that the Defendant paid the Plaintiff's costs thrown away of $1,000 by the next Friday and if not paid, the hearing was to proceed in the Defendant's absence on 4 June 2010. On the morning of the hearing of 4 June 2010, the matter was stood down for a while to allow the Defendant to pay those costs.

FURTHER ADJOURNMENT AND AMENDMENTS

[8] On the morning of the trial Ms Khan appeared for the Defendant. She made two applications. The first was for leave to amend her client's Defence. I refused it because she had acted as counsel on previous occasions and it was very late in the day indeed to be making amendments.

[9] She then made an application for an adjournment. She had not filed her application because she said the Registry refused to accept her summons that morning as the file was already with me in Court. The application was opposed. I refused this application too because it was not a good enough reason and the papers had only been shown to opposing counsel in Court that morning. I then ordered the trial to proceed.

THE TRIAL

The Documents

[10] The Plaintiff produced a bundle of documents verified by a certificate under s 11 of the Civil Evidence Act 2002 which I accepted into evidence. The Defendant did not produce any documents.

The Plaintiff's Evidence
PW1

[11] The Plaintiff's first witness was the Manager Legal of Carpenters Finance. She started work with the Plaintiff in 2009 and has had carriage of this matter. Her evidence is from her personal knowledge of the case and from the company's records. This matter was first heard in 2005. All witnesses were present at that hearing. But for this morning's hearing none of them were present; one is deceased and the other two are no longer employees and could not be located despite her searches. The Appeal Record contained the High Court record of evidence. She relied on that record as her evidence here.

[12] The Plaintiff had a lease agreement with a business trading as the Defendant company. The lease agreement dated 3 May 1996 was between the Plaintiff and the Khans trading as M. Y. Khan & Co. Two trucks were the subject of the lease but only one of them is the subject of these proceedings, truck number CY 311. The monthly repayments were $8,148.06 commencing on 3 June 1996 for repayment of the total sum of $488,583.60 over 5 years.

[13] The witness said the limited liability company, Mohammed Yakub Khan & Co Ltd, registered on 7 October 1997, was making payments for the firm M Y Khan & Co, registered on 30 October 1978, and all dealings in respect of the lease were with the Defendant Company. Payments were by cheques from the Defendant drawn on 10 September 1999 for $8,285.56 and one on 2 July 2000 for $9,250.00. Both trucks were insured under the name M Y Khan Transport for a year from 1 July 1999. On 6 September 1999, the other truck got damaged while offloading wood chips at the Lautoka wharf and the insurance claim was lodged in the name of "Mohammed Yakub Khan & Co." Even the quotation for the repairs to the truck was directed to "M Y Khan & Co Ltd".

[14] In October 2000, the Defendant delivered the truck to the Plaintiff's yard in Lautoka and the Plaintiff upon inspection found that the truck had been damaged and certain parts and items had been removed. The inspection was done by the Plaintiff's Motor Division on 21 October 2000. Annexed to the affidavit was an inventory of the missing parts dated 24 October 2000. The Plaintiff made numerous attempts to recover the missing parts from the Defendant but all attempts proved futile. The pictures that were taken of the truck showed severe damage and neglect and a lot of missing parts. The detailed quote for the new parts to replace the missing ones, dated 2 November 2000, was for $25,136.36. The judgment of Finnigan J was for this amount.

[15] In cross examination the witness said that she got the addresses of the other witnesses from their employment records and searched but could not locate the witnesses. But she agreed that she did not put an advertisement in the paper or tried to find out if the witnesses were dead or alive. She did not agree that the Khan's firm never became incorporated. The limited liability company was a separate legal entity. It took over the debt as evidenced by the cheques and the insurance claim. The business records also showed that the Plaintiff dealt with the Defendant company which took over the lease and used the trucks for the same business. Although she agreed that the Khans' firm was in 6 names but the company only had 2 of them as shareholders.

[16] The Defendant's case was that the truck was driven to the Plaintiff's yard in a working condition and the parts went missing after that. So much time was taken up in cross examination by counsel for the Defendant in putting to the witness that the truck could not have been driven to the Plaintiff's yard if the parts alleged to be missing were in fact missing. This witness was not an expert in truck mechanics so obviously she could not answer those questions in a way that supported the Defendant's case. Indeed, the Defendant did not call an expert witness for this purpose.

[17] The witness was shown a delivery docket which had a date 21 October 2000 purporting to be for the return of the truck CY311. She said no one seemed to know anything about it. The docket was a very bad photocopy. Counsel for the Defendant informed the Court that the company's documents were lost in a fire three years ago. This copy came from the lawyer's file.

The Affidavits

[18] The affidavits of the then Plaintiff's legal supervisor, now deceased, sworn on 23 August 2001 and 20 September 2001 said that the Defendant defaulted in its payments from 27 July 1999. At that time, $16,428.62 was in arrears and the outstanding balance was $226,057.89. The Plaintiff then issued seizure notices on 27 August 1999, 1 October 1999, 18 November 1999 and 3 January 2000 to its bailiff to seize both trucks from the Defendant. The Plaintiff managed to repossess the other truck but not truck CY311 because the Defendant refused to disclose its whereabouts. The Defendant had in fact removed the truck from its Lautoka yard to its yard in Sabeto, Nadi. The Plaintiff then placed an advertisement in the Fiji Times newspaper on 27 September 2000 offering a reward to any person who had knowledge of the whereabouts of truck CY311. About a month after the advertisement was published the Defendant returned the truck. It had a lot of missing parts. The Plaintiff tried to recover them and was denied entry to the Defendant's yard. The Plaintiff had to apply to the Court for an order fearing that the Defendant's workers would be violent.

The Defendant's Evidence
DW1

[19] Mohammed Nasir Khan was called on behalf of the Defendant company. He was a director for the company. His evidence was that the firm M Y Khan & Co was made of their father and his five sons; he is one of the sons. The firm no longer operates. It owns property but no business. He is a shareholder in the Defendant company. His father, Mohammed Yakub Khan, is the other shareholder. The business is now done under the company's name. He was aware of the lease dealings. The lease was in the firm's name and it was not taken over by the company. He explained that the firm hired trucks to the company. And the reason for issuing the two cheques by the company was that the firm had ceased hiring and the cheques were to help the firm out. But he could not explain why the quotation for repairs to the other truck dated 12 October 1999 was issued to the company.

[20] When asked why he did not return the truck he said when the Plaintiff repossessed the other truck, they refused to return the trailer attached to it. I pointed out to counsel that the question was not put to the Plaintiff's witness so she should not have asked it otherwise I would have to recall PW1. Counsel then said that the question did not go to the claim. The question was therefore irrelevant and counsel did not pursue it further.

[21] The witness said that the truck was driven to the Plaintiff's yard where heavy vehicles were repaired. The yard was not enclosed and anyone could walk in and out of it. His counsel took him through a whole series of questions which were to the effect that the truck could not have been driven there with all of the parts alleged by the Plaintiff to be missing.

[22] He explained that the original delivery docket would have been left with the Plaintiff. The carbon copy would have been kept by his company. It was lost when his house caught fire. The photocopy showed that the truck was signed as received on 21 October 2000, 12.20pm. It was signed by a Mr Shameem. The handwriting on the docket said (in italics):

DELIVERY DOCKET

21-10-2000

TO: Carpenters Fiji Ltd

Lautoka

Lautoka Yard

Return of 1 only Nissan 10 wheeler truck engine no PF6116831 chasis no CWB450PC0733 Reg No CY311 As is where is. Missing windscreen side mirrors lights number plates (Truck delivered by driver Vili)

Truck No. CY311

Received by (undecipherable scribble) 21/10/00 12.20 pm.

Mr Shameem of Carpenters ...

[23] Mr Khan saw the truck before it was delivered. He said the only missing parts were those noted on the docket. He was not called for a joint inspection. The truck was 4 to 5 years old when it was returned.

[24] In cross examination, Mr Khan said his firm ceased operation sometime in 2000. The company was formed in 1997. When it was put to him that the firm had ceased operation before the company was formed, Mr Khan did not agree and said that the firm was still running at the time. The two businesses were not actually similar. The company was not so much into earthmoving; more into real estate. When asked why hire trucks when the company was into real estate, he said sometimes he hired trucks for earthmoving in real estate. When it was put to him that it was the same business for both he answered that the company did not do everything and land development could involve earthmoving. Instead of paying the firm the company paid the Plaintiff. He said he did not bring any documents to the trial because he did not think the question would arise. When asked for the reason why he did not return the truck he said when the Plaintiff seized the other truck, they took his trailer with it and refused to return it. But he agreed that there were no documents to show that he complained about it. When pressed further about his defence, Mr Khan blamed his father and his lawyer.

The Affidavits

[25] Mr Khan did not rely on any of the affidavit material. That is understandable in light of his company's defence, namely, that the Plaintiff sued the wrong person. However, out of fairness to him and his company, I will consider the affidavit of his father, Mohammed Yakub Khan, filed on 17 September 2001. The affidavit simply said that the Defendant company had "nothing to do with the earlier partnership and neither did the Defendant company take over payment of the said truck"; the Defendant company had "nothing to do with the said truck"; the Defendant did "not deliver the said truck as is alleged" by the Plaintiff; and the Defendant company did "not interfere with the said truck in any manner whatsoever".

CONSIDERATION OF THE EVIDENCE

Did the Plaintiff sue the wrong party?

[26] I find Mr Khan's answers to the question of whether the company took over the debt unpersuasive. I also do not believe his explanation that the firm did not cease carrying on business of haulage and earthmoving contractors. He was rather evasive and unconvincing in his evidence.

[27] Instead I prefer the evidence given on behalf of the Plaintiff. The truck was initially leased by the firm. The firm ceased to carry on the business of haulage and earthmoving. That business was taken over by the company. The lease was then taken over by the company and the trucks were used for its own business. The Defendant company took over the debt from the firm.

Was the Defendant responsible for the damage and missing parts?

[28] Slightly more difficult to decide is whether the truck was driven to the Plaintiff's yard and in good repair. Mr Khan was adamant that the truck was driven there. He said it was accepted by the Plaintiff. The evidence was a copy of the delivery docket dated 21 October 2000 signed by a Mr Shameem. I find the docket unconvincing and the explanation for the loss of the original equally tenuous. The copy was handwritten and the "signature" did not appear to be a signature but rather someone had just written in "Mr Shameem of Carpenters". The Plaintiff's motor division carried out an inspection and produced a report on the same day. Although there was a second report dated three days later and there were some differences between the documents I do not think they are significant. The photographs that were taken correspond with the list of missing parts in the report. Mr Khan said the truck could not have been driven there with that extent of the damage and missing parts. Even if that was true, it seems to me quite unbelievable that the Supervisor of the Plaintiff's motor division would make up such an extensive list in his report. It would also be impossible for the Plaintiff, or anyone else for that matter, to inflict such extensive damage or remove those parts within the same day. Further, even though the docket says "truck delivered by driver Vili" it did not necessarily mean that Vili drove it there. It seems to me that the truck was not driven but delivered to the Plaintiff by some other means.

[29] I accept the documentary evidence of the Plaintiff as proof of the extent of the damage and missing parts. The valuation and the photographs were not challenged. The Defendant did not seriously contest the evidence on quantum. Consistent with its Defence strategy, the Defendant simply said the damage was done by someone else and the lease also was with someone else.

[30] Finally, it was by consent that the judgment of Finnigan J was set aside on appeal and sent for retrial before me. Because of that I do not think that I was restricted to the evidence in this trial. Had it been necessary, I think it would have been permissible for me to look at the judgment and findings of Finnigan J.

COUNSELS SUBMISSIONS

[31] Counsel for the Defendant submitted that the Plaintiff's claim is for special damages and therefore must be specifically pleaded, relying on the Fiji Court of Appeal decision in Credit Corporation (Fiji) Ltd v Khan [2008] FJCA 26; ABU0040.2006S (8 July 2008).

[32] I do not accept that it was not specifically pleaded. It does not matter that the words "special damages" were not used. As she acknowledged in her submissions, that judgment made it clear that the basis of the rule was "fairness: to ensure that the party against whom such damages are claimed has proper and particularised notice of the claim". I do not think the Defendant can make that complaint here or say that it had been surprised because the particulars had not been provided. The Plaintiff claimed nothing more than what was pleaded in its Statement of Claim which was served and acknowledged by the Defendant nearly ten years ago and to which it had filed a Defence of bare denials.

[33] I also do not accept that the lease agreement did not allow for the cost of repairs and missing parts to be recovered. Clauses 7 and 12 of the lease required the lessee to keep the truck in good repair and condition and working order and shall deliver it to the Plaintiff on termination of the lease in such repair and condition, wear and tear from normal use excepted. Those clauses were clearly breached in this case entitling the Plaintiff to damages as claimed.

[34] Counsel for the Plaintiff submitted that the firm assigned the debt to the Defendant company. She also submitted that, in the alternative, I could allow substitution of the company as the lessee and the Defendant in this case. I think the proper and correct view is that this is a case of novation where the company took over the debt of the firm with the tacit approval of the Plaintiff.

[35] The claim could have been better pleaded but it nevertheless showed an actionable wrong on the part of the Defendant and, had amendments been sought, they would have been given. Although proof of the Plaintiff's claim had not been ideal, and this was probably because of the delays caused by the matter going on appeal, I find that on balance the Plaintiff has proven its claim and accordingly enter judgment for the Plaintiff in the sum of $25,136.36.

INTEREST

[36] The claim for interest was not pursued in counsels' submissions but it was nevertheless made so I should consider it. Section 3 of the Law Reform (Miscellaneous Provisions)(Death and Interest) Act allows the Court, if it thinks fit, to award interest on the whole or any part of the damages for the whole or any part of the period between the date when the cause of action arose and the date of judgment.

[37] The Plaintiff had consented to the appeal rather than opposing it so it should not be entitled to interest for the period from the issue of the Writ. Interest should only be allowed from the time the matter was sent back on appeal to date. Interest therefore is to be calculated from 5 November 2008 to 2 February 2011, a period of roughly 27 months. I note that interest under the lease for moneys due under it for failure to return equipment was 20% p a. However, I will only award the usual interest rate of 6% p a. The interest therefore computes to $25,136.36 x 27 months x 6%/12 = $3,400 rounded up.

COSTS

[38] The Plaintiff is entitled to its costs which I summarily assess, based on the case history as outlined above, at $1,500.

ORDERS

[39] The Orders are therefore as follows:

1. The Defendant shall pay to the Plaintiff the sum of $25,136.36 together with interest thereon of $3,400.00.
   
2. The Defendant shall pay to the Plaintiff $1,500 for costs.
   

Sosefo Inoke
Judge