Credit Corporation Fiji Ltd v Shamsood [2012] FJHC 1325; HBC13.2012 (31 May 2012)

IN THE HIGH COURT OF FIJI ISLANDS
AT LABASA
CIVIL JURISDICTION

Civil Action No: HBC 13 of 2012

BETWEEN: CREDIT CORPORATION FIJI LIMITED

[Plaintiff]

AND: MOHAMMED SHAMSOOD AKA MOHAMMED SAMSOOD SAKUR TRADING AS SAM CIVIL SERVICES

[Defendant]

Counsel: Mr. S Sharma for the Plaintiff

Mr. I Samad for the Defendant

Date of Interlocutory Judgment: 31^st May, 2012

INTERLOCUTORY JUDGMENT

[1]. The plaintiff, by a Notice of Motion, seeks following injunctive relief against the defendant.

1. That the defendant, by itself or its servants, agents and/or associate whosoever be restrained from in any manner interfering with the Plaintiff’s right of seizure and repossession of the goods and chattels contained in the Notice of Motion from (a) to (n);
   
2. That the defendant, by itself or itself or by servants, agents and/or associates or howsoever immediately release and deliver the foods and chattel as listed herein above ;
   
3. Defendant pays all costs and/ or charges associated with the conveying of the chattel to Suva;
   
4. That the Police Officers do act and render all assistance required by the Plaintiff in the enforcement of the Orders;
   
5. Costs of this application to be paid by the Defendant;
   
6. Such further relief/ Order as this Honourable Court may deem fit and expedient.
   

[2]. In support of the motion an affidavit sworn by Eparama Turaga, a registered bailiff, was filed.

[3]. The plaintiff is a limited liability company and operates as a commercial lender throughout Fiji Islands. The defendant was a customer of the plaintiff and certain credit facilities were advanced to the defendant by the plaintiff in exchange for certain chattels secured to the plaintiff by the Bill of Sale.

[4]. On 21.12.2011, the plaintiff, upon the request of the defendant, agreed to lend to the defendant a total sum of $923, 232.58 including interest, which sum was secured by Bill of Sale over certain items for the defendant.

[5]. The defendant had been in default of its repayments and as at 21.03.2012, the defendant owed a sum of $923, 232.58 comprised of the principal sum, interest and charges. Despite several default notices being sent to the defendant by the plaintiff, the defendant continued to default the repayment.

[6]. The plaintiff alleges that it cannot repossess the secured units as the units are presently kept at some unknown places or were hidden by the defendant.

[7]. It is further deposed that the value of the units is depreciating on the daily basis and in the circumstances the plaintiff is prevented from obtaining the best market price for sale of the said unit.
[8]. In response to the plaintiff’s affidavit, an affidavit was filed by Mohammed Shamsood, the director of the defendant company.

[9]. As can be seen from the affidavit, the main contention of the defendant is that the Bill of Sale was not registered on the 21.03.2012 and therefore the plaintiff had no right to repossess or seize any chattels.

[10]. It is further deposed that proper adequacy as to damages are not given, there are issues as to fraud, the matter has been reported to the police and it is currently under the investigation.

[11]. In reply to the defendant’s affidavit, an affidavit sworn by a litigation clerk of the plaintiff was filed. According to the affidavit, the defendant executed the Bill of Sale on 30.09.2011 before a Solicitor and forwarded it to the plaintiff’s office after 21 days.

[12]. According to the plaintiff, the delay in receiving the executed documents from the defendant has resulted the expiration of the Bill of Sale which led the plaintiff to pay prescribed fines and penalties at the Office of the Commissioner for Stamp Duties before the Bills of Sales were stamped and later registered by the Registrar of Titles.

[13]. The Bills of Sale were stamped by the Registrar of Stamp Duties on 20.3.2012 and registered with the Registrar of Deeds on 22.03.2012. Copies of the Bill of sales marked as ‘B’ are annexed to the plaintiff’s affidavit in reply. Pursuant to the clause 7 of the covenant, the plaintiff who is the mortgagee shall have the right to enter the premises of the defendant, seize and sell the chattels in the event of any breach of the covenant by the defendant who is the mortgagor.

[14]. The powers of the mortgagee was stated by Walsh J in Inglis v. Commonwealth Trading Bank of Australia (1972) 126 C.L.R 161 at 164 as follows:

‘A general rule has long been established, in relation to applications to restrain the exercise of a power of sale, that such an injunction will not be granted unless the amount of the mortgage debt, if this be not in dispute, be paid, or unless, if the amount be disputed, the amount claimed by the mortgagee be paid into Court.

The rule, as it affects the exercise by a mortgagee of the power of sale, is stated in the following terms in Halsbury Laws of England 3^rd Edition Volume 27, page 301:

The mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute, or because the mortgagor objects to the manner in which the sale is being arranged. He will be restrained however, if the mortgagor pays the amount claimed into court, that is, the amount which the mortgagee swears to be due to him...”

In my opinion, the authorities, which I have been able to examine establish that for the purposes, of the application of the general rule to which I have referred, nothing short of actual payment is regarded as sufficient to extinguish a mortgage debt. If the debt has been actually paid, the court will not, at any rate as a general rule, interfere to deprive the mortgagee of the benefit of his security, except upon terms that an equivalent safeguard is provided to him, by means of the plaintiff bringing in an amount sufficient to meet what is claimed by the mortgagee to be due.

The benefit of having a security for a debt would be greatly diminished if the fact that a debtor has raised claims for damages against the mortgagee were allowed to prevent any enforcement of the security until after the litigation of those claims had been completed.

In my opinion the fact that such claims have been brought provides no valid reason for the granting of an injunction to restrain, until they have been determined, the exercise by a mortgagee of the remedies given to him by the mortgagee.’

Barwick C.J. ibid at168-169 expressed the same opinion in these words;

‘I have not heard anything, nor been referred to any authority, which causes me in the least to doubt the correctness of the refusal of Walsh J. to grant the interlocutory injunction sought by the appellant or the reasons which he gave for that refusal. I find no need to discuss the arguments offered, and the authorities referred to, by the appellant. Such of them as were relevant are sufficiently answered in his Honour’s reasons.

The case falls fairly, in my opinion, within the general rule applicable when it is sought to restrain the exercise by a mortgagee of his rights under the mortgagee instrument. Failing payment into court of the amount sworn by the mortgagee as due and owing under the mortgage, no restraint should be placed by order upon the exercise of the respondent mortgagee’s right under the mortgage.’

[15]. Therefore, in the present case, the plaintiff as the mortgagee has a right to seize the chattels when the defendant is in default of payment.

[16]. The defendant, through his Solicitor, has informed the plaintiff by a letter dated 23.03.2012, that the defendant was willing to return the secured goods and chattels. A copy of the letter marked as ‘C’ is annexed to the affidavit.

[17]. The plaintiff alleges that the reason for late registration of the said Bill of Sales was caused by the defendant’s negligence and delay on his part in not honouring with dealings almost after one month since the execution of the said Bills of Sale.

[18]. The plaintiff relied on section 98 of the Companies Act. The plaintiff contended that under section 98(2) (c) of the Companies Act, no registration is required under the Bills of Sale Act where the plaintiff is a company which is governed by the Companies Act. For convenience I will reproduce the relevant sections of the Act.

Section 98 of the Companies Act reads:

98.1 Subject to the provisions of this part, every charge created after the fixed date by a company registered in Fiji and being a charge to which this section applies shall, so far as any security on the company’s property or undertaking is conferred thereby, be void against the liquidator and any creditor of the company, unless the prescribed particulars of the charge, together with the original or a copy certified in the prescribed manner of the instrument, if any, by which the charge is created or evidenced, are delivered to or received by the registrar for registration within 42 days after the date of its creation, but without prejudice to any contract or obligation for repayment of the money thereby secured, and, when a charge becomes void under this section, the money secured thereby shall immediately become payable.

2. This section applies to the following charges:-
   

A ......

B .....

100. charge created or evidenced by an instrument which, if executed by an individual, would require registration as an instrument under the Bills Of Sale Act (cap 225)
     

[19]. In deciding the applicability of section 98 of the Companies Act, the following findings by Justice Pathik in Merchant Finance & Company Ltd v. Ali, HBC 63 of 2003 are of much assistance.

‘A bona fide hire purchase contract is not subject to the Bills of Sale Act. (Helmore’s Personal Property and Mercantile Law in New South Wales 9^th Edition at 213)

The Hire Purchaser Agreements in this case are not bills of sale for it is stated in Halsbury 4^th Ed para. 211 Vol. 22 that:

A bona fide agreement in writing for the bailment or sale of goods which are not to become the property of the bailee unless and until the last instalment of the stipulated payment is made, and providing for the right of the owner or seller to retake possession in default of payment, is not a bill of sale, and does not require to be registered under the Bills of Sale Acts. This is because no property is conveyed by such an agreement to the hirer or buyer during the effective currency of the agreement, and, therefore, the hirer or buyer not being the owner of the goods, the licence to seize only empowers the owner or seller to retake possession of his own goods.

These bills of sale are not required to be registered under the Bills of Sale Act and I refer to Halsbury 4^th Ed. Vol. 4 para 655 which states:

Since the courts have held that quite independently of that express exception any instrument of charge or other security issued by a company which requires to be registered in the register of charges maintained by the company is outside the mischief against which the Bills of Sale Acts are aimed.

[20]. In view of the above, I conclude that even if the bills of sales were not duly registered it is not fatal to the plaintiff’s claim.

[21]. In the plaintiff’s affidavit, it has been set out how the plaintiff financed the defendant by way of loans which were secured by a Bill of Sale. The defendant did not dispute that; but, contended that the Bill of Sale was not duly registered and therefore, it was null and void. It is further stated in the defendant’s affidavit that the plaintiff has no right to seize any chattels since the bill of sale was not registered on 21.03.2012.

[22]. However, the plaintiff seized certain items from the defendant but there is no evidence to show that the defendant made any objections for that. Further, the defendant through his Solicitor had informed the plaintiff that the defendant was willing to return the secured goods and chattels.

[23]. It is proved that the defendant is in default of payment, but, has been using the chattels to date and also the defendant has not made any efforts to make any payments in instalments.

[24]. The principles to be followed in considering the granting of injunctions are set out in the leading case of American Cyanamid Co. v. Ethicon Ltd (1975) 1 ALL ER 509

The 3 matters to which the court must address itself in respect of the present application are, per American Cyanamid:

1. Is there a serious question to be tried
2. Is the damage an adequate remedy
3. If not, where does the balance of convenience lie
   

[25]. In the present action, there is cogent evidence that the defendant is in default of payment. The defendant never denied it. Therefore, the plaintiff has a good cause of action and has a real prospect of succeeding on its claim for breach of contract and possession. Hence, it is apparent that there is a serious question to be tried.

[26]. As for damages it seems that damages would not be an adequate remedy for the plaintiff whereas if the plaintiff does not succeed in the substantive action damages would be an adequate remedy for the defendant. Further, the plaintiff has given its undertaking as to damages and also being a lending institution is in a better financial position than the defendant to pay any award of damages if ordered by court.

[27]. The chattels are depreciating in value and since the defendant has been using it despite the default in payment, it is my considered view that the balance of convenience clearly favours the plaintiff.

[28]. Upon consideration of the above I grant orders in terms of the prayer i, ii, iii, iv of the Notice of Motion dated 16.04.2012.

[29]. Costs shall be in the cause.

Pradeep Hettiarachchi
JUDGE