Fiji Development Bank v Ledua [2011] FJHC 662; HBC560.2007 (20 October 2011)

IN THE HIGH COURT OF FIJI AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC 560 of 2007

BETWEEN:

FIJI DEVELOPMENT BANK
a corporate body having its Head Office at 360 Victoria Parade, Suva, Fiji.
PLAINTIFF

AND:

ESAROMA LEDUA
of 193 Ragg Avenue, Namadi Heights, Tamavua,
Suva, Fiji, Company Director.
1st DEFENDANT

AND:

MELE LEDUA
of 193 Ragg Avenue, Namadi Heights, Tamavua,
Suva, Fiji, Company Director.
2nd DEFENDANT

AND:

LOTE RASIGA
of Qauia Village, Qauia, Lami,
Company Director.
3rd DEFENDANT

AND

MINISTRY OF FISHERIES AND FORESTS
and ATTORNEY GENERAL OF FIJI.
3rd PARTIES

BEFORE : Master Deepthi Amaratunga

COUNSEL : Mr. Nand M. of Nands Law for the Plaintiff
Mr. Vosora of Mamlakah Lawyers for 1st, 2nd and 3rd Defendants
Mr. Pratap. for the 3rd Party.

Date of Hearing: 22nd September, 2011

Date of Ruling: 20th October, 2011.

RULING

1. INTRODUCTION
   

1. The Plaintiff filed this action for the recovery of an outstanding balance in a loan facility granted to Wikava Marine Industries, where the 1st, 2nd and 3rd Defendants were guarantors to the said loan. The 3rd Party is the ministry which deals with the subject of fisheries, and the Defendants allege that they could not engage in the business of fishing in order to repay the loan as 3rd party has refused to issue a fishing licence.
   
2. This is an application by way of summons by the 3rd Party seeking strike out of them from this proceedings in terms of Order 18 rule 18 (a) and (d) of High Court Rules of 1988. The third party was added by the Defendants before they filed their statement of claim on an ex parte third party notice that was issued to the 3rd Party and an acknowledgment of service was filed and a Defence to 3rd Party Notice was filed denying any liability and also state that no application for fishing was ever made by the Defendants. Defendants were unable to produce any such application and the basis for 3rd Party notice fails.
   

2. FACTS
   

3. The Plaintiff filed this action against the Defendants to recover the outstanding debt that had accrued to them due to non settlement of the loan granted to the 1st Defendant to purchase a fishing vessel under a special scheme of credit.
   
4. The Plaintiff filed this action on 4th December, 2007 and the Defendants filed an acknowledgement of service to Defendants was filed on 12th December, 2007.
   
5. After filing the acknowledgment of service, but before filing the statement of defence the Defendants issued third party notice.
   
6. On 22nd April, 2008 the third party has filed acknowledgement of service and the defence to third party notice was also filed subsequently and stated inter alia as follows:-
   
   1. It had not received any application from the Defendants for fishing licence and was not in a position to issue such licence.
      
   2. They came to know that Defendants have sought a licence only from this proceedings but unable to find any records of such an application.
      
   100. If they made an application, for tuna long line license the said application would have been vetted by the 3rd Party and would have put to Licensing Committee to issue a new licence.
        

100. LAW AND ANALYSIS
     

7. Order 16 rule 1 of the High Court Rules of 1988 states as follows:-
   

“1(1) Where in any action a defendant who has given notice of intention to defend

1. Claims against a person not already a party to the action any contribution or indemnity; or
   
2. Claims against such a person any relief or remedy relating to or connected with the original subject-matter of the action and substantially the same as some relief or remedy claimed by the plaintiff; or
   

100. Requires that any question or issue relating to or connected with the original subject-matter or the action should be determined not only as between the plaintiff and the defendant but also as between either or both of them and a person not already a party to the action;
     

8. Then, subject to paragraph (2), the defendant may issue a notice in Form No 9 in Appendix [1], (in this Order referred to as a third party notice), containing a statement of the nature of the claim made against him and, as the case may be, either of the nature and grounds of the claim made by him or of the question or issue required to be determined.
   
9. According to the Order 16 rule 2 of the High Court Rules of 1988
   

‘(2) A defendant to an action may not issue a third party notice without the leave of the Court unless the action was begun by writ and he or she issues the notice before serving his or her defence on the plaintiff.’

10. The object of the rules of this order are two fold according to the White Book (1988) and they are:
    
    • (1) To prevent multiplicity of actions and to enable the Court to settle disputes between all parties to them in one action (per Lord Esher M.R. in Baxter v France [1895] UKLawRpKQB 27; [1895] 1 QB 591, p 593 and see Barclays Bank v Tom [1923] K.B 221, pp 223,225 and cf s 49(2) of S.CA 1981); and
      
    • (2) To prevent the same question from being tried twice with possibly different results (per Blackburn J. in Benecke v Frost [1876] UKLawRpKQB 49; (1876) 1 QBD 419, p 422; cf. Ex p young [1881] UKLawRpCh 138; (1881) 17 Ch.D 668; Re Slamon (1889)42 Ch.D 352, p 360) (cited with approval by Pennycuick J in Standard Securities Ltd v Hubbard [1967] Ch 1056. P 1059)’ (White Book 1988 p 232) 16/1/1.
      
11. The 3rd Party to this action was added to the action by the Defendants on the belief that the 3rd Party failed to issue a fishing licence and that had resulted in the non payment of the loan. No evidence of such refusal or rejection was produced by the Defendants to substantiate their position.
    
12. There was no evidence of any application being made by the Defendants for the fishing licence no reply to the Defence to third party notice was filed and no affidavit in opposition of this application for strike out was filed, though this summons was served with the affidavit in support attached on 12th May, 2011. This leaves the evidence of the 3rd Party unopposed.
    
13. The liability of payment of any loan lies to the person who obtained the loan and the guarantors. Obtaining of fishing license would have been a precondition for the grant of the said loan which was granted on a special credit scheme for fishing, but non issuance of licence by itself cannot join the ministry concerned to this action which is clearly a recovery of a loan. There are certain conditions that has to fulfill before the issuance of any licence and fulfillment of those are essential. In this action there is no evidence of any application being made for licence and or any rejection or refusal by the third party.
    
14. The 3rd Party has explained in detail the procedure in obtaining fishing licence and further state that the Defendant’s upon receiving the fishing vessel was exclusively engaged in collection of fish and not fishing from rural areas within Fiji and they later went into Shipping Franchise Scheme, for which they did not require a fishing licence. These affidavit evidence was not contradicted by the Defendants since they did not opt to file an affidavit in opposition though several opportunities were granted to them to do so. Even at the hearing no documentary proof was tendered by way of an affidavit.
    
15. The application of the law relating strike out of action is important and in the case of Imtiaz v Rizvi [2011] FJHC 108; HBC194.2009L (3 February 2011) Justice Inoke stated as follows as regards to the applicability of the law.
    

“[6] The law is well settled. I refer to the Court of Appeal in National MBF Finance (Fiji) Ltd v Buli [2000] FJCA 28; ABU0057U.98S (6 July 2000):

The law with regard to striking out pleadings is not in dispute. Apart from truly exceptional cases the approach to such applications is to assume that the factual basis on which the allegations contained in the pleadings are raised will be proved. If a legal issue can be raised on the facts as pleaded then the courts will not strike out a pleading and will certainly not do so on a contention that the facts cannot be proved unless the situation is so strong that judicial notice can be taken of the falsity of a factual contention. It follows that an application of this kind must be determined on the pleadings as they appear before the court

[7] See also Tawake v Barton Ltd [2010] FJHC 14; HBC231.2008 (28 January 2010), a decision in which Master Tuilevuka summarised the law in this area and which I respectfully adopt:

[33] The jurisdiction to strike out proceedings under Order 18 Rule 18 is guardedly exercised in exceptional cases only where, on the pleaded facts, the plaintiff could not succeed as a matter of law. It is not exercised where legal questions of importance are raised and where the cause of action must be so clearly untenable that they can not possibly succeed (see Attorney General –v – Shiu Prasad Halka 18 FLR 210 at 215, as per Justice Gould VP; see also New Zealand Court of Appeal decision in Attorney -v- Prince Gardner [1998] 1 NZLR 262 at 267.

[34] His Lordship Mr. Justice Kirby in Len Lindon –v – The Commonwealth of Australia (No. 2) S. 96/005 summarised the applicable principles as follows:-

1. It is a serious matter to deprive a person of access to the courts of law for it is there that the rule of law is upheld, including against Government and other powerful interests. This is why relief, whether under O 26 r 18 or in the inherent jurisdiction of the Court, is rarely and sparingly provided.
   
2. to secure such relief, the party seeking it must show that it is clear, on the face of the opponent's documents, that the opponent lacks a reasonable cause of action ... or is advancing a claim that is clearly frivolous or vexatious ...
   

100. An opinion of the Court that a case appears weak and such that it is unlikely to succeed is not, alone, sufficient to warrant summary termination ... Even a weak case is entitled to the time of a court. Experience teaches that the concentration of attention, elaborated evidence and argument and extended time for reflection will sometimes turn an apparently unpromising cause into a successful judgment.
     

4. summary relief of the kind provided for by O 26 r 18, for absence of a reasonable cause of action, is not a substitute for proceeding by way of demurrer ... If there is a serious legal question to be determined, it should ordinarily be determined at a trial for the proof of facts may sometimes assist the judicial mind to understand and apply the law that is invoked and to do so in circumstances more conducive to deciding a real case involving actual litigants rather than one determined on imagined or assumed facts.
   
5. if, notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action which it has failed to put in proper form, a court will ordinarily allow that party to reframe its pleading ...
   

The guiding principle is, as stated in O 26 r 18(2), doing what is just. If it is clear that proceedings within the concept of the pleading under scrutiny are doomed to fail, the Court should dismiss the action to protect the defendant from being further troubled, to save the plaintiff from further costs and disappointment and to relieve the Court of the burden of further wasted time which could be devoted to the determination of claims which have legal merit." (emphasis is added)

16. It is also noteworthy that the addition of 3rd Party to this proceedings were begun before the filing of the statement of defence being filed and in such a situation the only remedy available for the 3rd party is to seek a strike out after filing their defence to third party notice, which the 3rd Party has done. They were unnecessarily added to this action as a third party and even when they have indicated this in their defence to third party notice, the Defendants did not take note of that. When this application for strike out of the 3rd Party was made again the Defendants did not file an affidavit in opposition, though more than one opportunity was granted to them to do so. The said third party notice can be regarded as an abuse of process, considering the circumstances of this case which clearly indicate that Defendants either knew or would have reasonably known that 3rd party notice was bad in law as well as in fact. This amounts to abuse of process, to delay this recovery of money against the Defendants, and incurring unnecessary cost to 3rd party.
    

4. CONCLUSION
   

17. In this action the Defendants were the guarantors of the loan and admittedly the loan was defaulted. So, imputing the liability on the 3rd Party, cannot be substantiated in the absence of any evidence of making an application for such licence for fishing. There is clearly no reasonable cause of action disclosed against the third party and has failed to fulfill the requirements laid done in Order 16 rule 1(1) for third party notice. In the circumstances the summons for strike out 3rd Party from this action is granted and the cost of this application is assessed summarily at $750 to be paid by the 1st, 2nd and 3rd Defendants jointly and or severally to the 3rd Party within 21 days.
    

5. FINAL ORDERS
   

1. The 3rd party is struck off.
2. The Defendants to pay a cost of $750 to the 3rd Party within 21 days.
   

Dated at Suva this 20th day of October, 2011.

.................................................
Mr. Deepthi Amaratunga
Master of the High Court
Suva