Fiji Development Bank v Wingate Marketing Ltd [2013] FJHC 123; HBC201.2010 (15 March 2013)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 201 of 2010

BETWEEN:

FIJI DEVELOPMENT BANK
a body corporate duly constituted under the Fiji Development Bank Act Cap 214 and having its principal place of operation at 360 Victoria Parade, Suva.

PLAINTIFF

AND:

WINGATE MARKETING LIMITED
a duly incorporated company having its registered office in Suva, Fiji.
1st DEFENDANT

KESONI WAQABITU,
ILISAPECI WAQABITU and
FANE VUNIWAQA all of Suva in Fiji, Company Directors.
2nd DEFENDANTS

BEFORE : Master Deepthi Amaratunga

COUNSEL : Mr. Lajendra N. for the Plaintiff

Mr. Vakaloloma A. V. for the Defendant

Date of Hearing: 28th October, 2011

Date of Judgment: 15th March, 2013

SUMMARY JUDGMENT

1. INTRODUCITON
   

1. The Plaintiff filed this summons for summary judgment for recovery of money granted as a loan for the 1st Defendant. On 11th December, 2009 a winding up order was made in HBE 71 of 2009 against the 1st Defendant and by virtue of Section 229 of the Companies Act the action against the 1st Defendant is stayed till leave of the court is obtained. The Defence filed on 26th October, 2010 superficially admits paragraphs 1 to 15 and also paragraph 17 of the statement of claim. The paragraph 16, 18 and 19 are not denied but state that the 1st defendant went in to liquidation and resulted the default of loan, but only raised concern of a mortgaged property and whether the Plaintiff who was the mortgagee had credited the proceeds of the mortgagee sale. The Defendant by reply to the defence had confirmed the sale of the said property and also crediting the proceeds to the loan account. The Plaintiff filed the summons for summary judgment on 12th July, 2011 and an affidavit in opposition was filed on 25th August, 2011. The 2nd named Defendants sought time to file written submissions on the issue of whether personal guarantees should be stamped and if not whether the Plaintiff is precluded from producing the same in a court of law, and the counsel for the defendants failed to file any submissions on that issue or point to any law for such requirement though sufficient time was granted at the hearing as well as after the hearing.
   

2. LAW AND ANALYSIS
   

2. Section 229 of the Companies Act states as follows:
   

'229. When a winding-up order has been made or an interim liquidator has been appointed under section 236, no action or proceeding shall be proceeded with or commenced against the company, except by leave of the court and subject to such terms as the court may impose.'

3. It is not disputed that a winding up order had been made by the court on 11th December, 2009 and a copy of the said order was annexed to the statement of defence. So, by virtue of the abovementioned provision the action against the Defendant cannot proceed and is stayed permanently till leave is sought. The summary judgment is sought only against the 2nd Defendants though the change of solicitors indicate appearance for the 1st and 2nd Defendants.
   
4. The application for summary judgment is confined to the 1st and 2nd named 2nd Defendants and Order 14 of the High Court deals with application for summary judgment. Order 14, r.1 requires the plaintiff to satisfy the court that the defendant has no defence.
   
5. The no defence position and the obligations that the rules impose on the parties have been examined of authorities. In Pemberton – v – Chappell [1986] NZCA 112; [1987] 1 NZLR 1 at 3 the Court of Appeal said as follows:
   

"In this context the words "no defence" have reference to the absence of any real question to be tried. That notion has been expressed in a variety of ways, as for example, no bona fide defence, no reasonable ground of defence, no fairly arguable defence."

At page 4:

"On this the plaintiff is to satisfy the court; he has the persuasive burden. Satisfaction here indicates that the court is confident, sure, convinced, is persuaded to the point of belief, is left without any real doubt or uncertainty."

And further at 4:

"Where the only arguable defence is a question of law which is clear cut and does not require findings of disputed facts or the ascertained of further facts, the court should normally decide it on the application for summary judgment, just as it will do on an application to strike out a claim or defence before trial on the ground that it raises no cause of action or no defence."

The Court also commented on the position where a defence is not evident on a plaintiff's pleading and said at 3;

"If a defence is not evident on the plaintiff's pleading I am of opinion that if the defendant wishes to resist summary he must file an affidavit raising an issue of fact or law and give reasonable particulars of the matters which he claims ought to be put in issue. In this way a fair and just balance will be struck between a plaintiff's right to have his case proceed to judgment without tendentious delay and a defendant's right to put forward without tendentious delay and a defendant's right to put forward a real defence."

6. A complete defence does not have to be shown by the defendant at the stage when summary judgment is sought: The Cloverdell Lumber Co Pty Ltd – v – Abbott [1924] HCA 4; [1924] 34 CLR 122 at 133 but if the defence is doomed to fail it should not be an obstacle to grant summary judgment for all or some of the claims of the Plaintiff as stated in Order 14 rule 1(1) of the High Court Rules.
   
7. In Fancourt – v – Merchantile Credits Ltd (1983) HCA 25; [1983] 154 CLR 87 the plaintiff had applied for summary judgment pursuant to order 18 of the rules of the Supreme Court of Queensland. The court said (at 99):
   

"The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried.

8. The following passage from the New Zealand Court of Appeal judgment in Doyles Trading Company Limited – v – Westend Services Ltd [ 1989] 1 NZLR 38 at 413 stated
   

"While the desirability of eliminating the frustration and delays which can be caused by unmeritorious or tendentious defence needs no emphasis, it is important to pay proper regard to the defendant's interest and to be wary of allowing the rule to become an instrument of oppression or injustice in the laudable interest of expediting litigation. It is true that "justice delayed is justice denied", but not at the expense of a fair hearing for both parties, unless the court is sure there is no real defence. It is unlikely to reach this conclusion if the affidavits disclose disputed questions of fact, the resolution of which depends on an assessment of credibility or reliability of witnesses." (emphasis added).

9. The Defendants had not denied a single paragraph of the statement of claim and specifically admitted paragraphs 1 to 15 and 17. So the claim of the Plaintiff is substantively admitted by the Defendants. Paragraph 16 of the statement of claim is not denied, but states the reason for default of the loan but the liquidation of the 1st Defendant cannot be used as a defence for the 2nd Defendants who are personal guarantors of the said loan which is admitted in the statement of defence. By way of admission of the paragraph 4 of the statement of claim the Defendants are without any reservation admitted that they were the guarantors for the said loan granted by the Plaintiff.
   
10. The guarantors are liable to the loans in accordance with the guarantees that they signed and the three guarantees are annexed as 'B', 'D' and 'F' to the affidavit in support. The first guarantee marked 'B' was executed on 28th November, 2006 and in bold upper case letters state 'LIMIT OF MY LIABILITY' which indicate that it is a guarantee limited in its liability, but again in a paragraph below stated as follows
    

'The amount of credit provided or to be provided to the Debtor under the Loan Agreement shall be up to a limit of $235,000...... with interest payable at the rate of 10% per centum upto $500,000 and 15.5% per annum on any excess or such other rate as determined under the loan Agreement or any variation thereto.'

11. The paragraph below the 'LIMIT OF MY LIABILITY' is contrary to what had been boldly typed, which denotes an unlimited guarantee if so why it was prominently printed as limit to the liability needed an explanation and it is an arguable issue. The subsequent guarantees also refer to the guarantee dated 28th November, 2006 hence the issue of the guarantee was limited or not cannot be decided on the affidavits alone. The documents of the Plaintiff raises an arguable issue as to the amount higher than $235,000. Whether the guarantee dated 28th November, 2006 is a limited as stated in bold or not cannot be decided at this moment. The statement of claim does not mention about an unlimited guarantee being executed, hence no admission of that fact.
    
12. The Plaintiff in the affidavit in support had submitted the detailed accounts that the Plaintiff maintained for the advancements that it had made, and had substantiated the indebtedness of the 1st Defendant for $405,934.09 but the liability of the 2nd Defendants will not ipso facto decided on the indebtedness of the 1st Defendant, but upon the guarantee documents they have signed. Since the guarantee signed on 28th November, 2006 indicate a limit and subsequent guarantees also refer to the 28th November 2006 guarantee I will limit my summary judgment to the limit of $235,000 as stated as 'limit of my liability'.
    
13. The Defendant had challenged the interest rates that levied against the said loans, but failed to understand that by admission of paragraphs 1 to 15 they had admitted the conditions of the loans which also include the provision for the interest and no objection for the said charge of the interest was ever raised, which the 2nd Defendants are trying to do in the affidavit in opposition to this summons for summary judgment. This has to be considered as an unmeritorious defence.
    
14. The affidavit in opposition has taken a legal issue of validity of a personal guarantee and whether it should be stamped, but despite being granted time for submission on law in that issue had failed to do so. Neither the counsel for the Defendant was able to substantiate the said contention at the hearing nor had he submitted written submissions on that though sufficient time was granted for that. In the circumstances I consider that contention is abandon and or does not have any merit since the party who raised it had failed to substantiate it either at the hearing and or thereafter, by way of written submission though I have permitted to do so.
    
15. Order 14 rule 3 (1) states as follows
    

"3(1) Unless on the hearing of an application under rule 1, either the Court dismisses the application or the defendant satisfies the Court with respect to the claim, or the part of a claim, to which the application relates the there is an issue of question in dispute which ought to be tried or that there ought for some other reason to be a trial of that claim of that claim or part, the Court may give such judgment for the plaintiff against that defendant on the claim or part as may be just having regard to the nature of the remedy or relief claimed."

16. In the circumstances I will grant summary judgment for a sum of $235,000 as stated as a limit to the liability, but would allow the action against the rest of the claim. The delay is regretted.
    

100. FINAL ORDERS
     

1. The Judgment is entered against the 1st and 2nd named 2nd Defendants for a sum of $235,000.00
   
2. Costs of this action is cost in the cause.
   

Dated at Suva this 15th day of March, 2013.

.................................................
Master Deepthi Amaratunga
High Court, Suva