Glenelg Ltd v Bosher [2015] FJHC 553; HBC92.2013 (24 July 2015)

IN THE HIGH COURT OF FIJI AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO: HBC 92 of 2013

BETWEEN:

GLENELG LTD
Plaintiff

AND:

THERESA BOSHER
Defendant

COUNSEL: Mr. N Prasad for the Plaintiff
Ms. S. Kunatuba for the Defendant

Dates of hearing: 2nd, 3rd & 4th June 2015
Date of Judgment: 24th July 2015

JUDGMENT

[2] The plaintiff instituted this action by filing originating summons. However, the Court has later allowed the parties to adduce evidence on matters of fact which they are at variance.

[3] It is common ground that the representative of the plaintiff company Cecilia Laisani Keil is a director of the plaintiff company and that she on its behalf entered into the agreement dated 07th October 2003 with the defendant. The said agreement is attached to the affidavit of the plaintiff marked as "B4".

[4] By the said agreement of lease the plaintiff who is the registered owner of the property in Certificate of Title bearing No. 16799 (A1) situated at No. 24, Brewster Street, which contained a wooden dwelling house, leased to the defendant for a period of twenty years commencing from 01st November 2003 for a monthly rental of $ 400 for the first two years and at the rate of $ 500 from the beginning of the third year. In the same agreement the defendant agreed to lend $ 150,000 to the plaintiff company, to be repaid within twenty years in $ 600 monthly instalments and the rentals derived from renting out the Brewster Street premises was agreed to be set off against the loan.

[5] The plaintiff came to Court complaining that the defendant had acted in violation of the said agreement in that, the defendant has neglected and/or failed to maintain the house and as a result it is in a dilapidated condition which needs immediate attention. The representative of the plaintiff company in her affidavit also averred that the repairs, according to the report attached to the summons, would cost $ 86,250.

[6] On behalf of the plaintiff its representative Cecilia Laesani Keil, testified at the trial. The learned counsel for the plaintiff led her through the affidavits, the documents annexed to her affidavits and the agreement (B4). In her evidence she referred to clause 1.VII of the agreement and stated that she, by her letter dated 22nd October 2012 (C8), inquired from the defendant as to how much money she owed the defendant but the defendant did not reply to the letter and she stated further that the defendant did not allow her to inspect the house.

[7] In cross-examination the learned counsel for the defendant referred to two more letters dated 29th November 2012 and 31st December 2012 marked as "C9" and "C10" respectively and questioned the plaintiff's representative whether she was aware of the reason for the defendant's failure to answer the said letters and her answer was in the negative. The explanation offered by the defendant that she did not reply to these letters since they were not written on company letterheads is unacceptable.

[8] The plaintiff called the person who prepared the estimate for the repairs and the site inspection report. Witness Bissun Prasad is a company director, a Quantity surveyor and an assistant architect. He gave evidence explaining the status of the Brewster Street property at the time he went for the inspection. According to him the house was about 50 years old and the estimated cost of the repairs is $ 86,250. Neither the qualifications of this witness nor his report on the condition of the house and cost of the repairs were challenged by the defendant.

[9] The defendant states that the plaintiff failed to repay the loan as agreed. It is her position that the balance amount due on the loan must be calculated with interest at the rate of 10% per annum on the reducing balance after taking into account the amount received by way of rent for the Brewster Street property which according to her calculation is $14400 (TB 8). On this basis the defendant in her affidavit dated 03rd December 2013 claimed that $ 282,262 is due and owing from the plaintiff. In her affidavit dated 08th May 2014 she averred that the amount due from the plaintiff was not $282,262 but $312,929.23 as shown in the document marked "TB 8". In her evidence too, the defendant maintained this position.

[10] The defendant has very clearly stated in her affidavit that she is prepared to leave the Brewster Street property and hand it back to the plaintiff if the amount claimed by her is paid.

[11] While denying the averments in the affidavit of the plaintiff's representative dated 05th April 2013 the defendant averred in her affidavit dated 03rd December 2013 that due to certain acts of harassment by the plaintiff's representative Cecilia Laisani Keil it became near impossible for anyone to live in that house and the tenants who were in occupation also left and since then there were no tenants. The defendant referred to in her affidavit and also in evidence to the following acts of harassment;

1. The action bearing No. 19 of 2011 against her which was dismissed with costs (TB 2).
   
2. The plaintiff requested the Water Authority of Fiji to disconnect the water supply without any bills pending and she had to seek assistance from the Prime Minister's office to get the water supply reconnected. The letter issued by Prime Minister's Office is attached to the defendant's affidavit Marked as "TB 3".
   

100. The plaintiff filed a caveat which was later withdrawn by her.
     

[12] The defendant also stated in her evidence that she spent $ 15,000 to repair this house and for that she spent her share of the proceeds of the sale of a house which belonged to her husband and admitted that in terms of the agreement it was her responsibility to repair the house. However, in further cross-examination the defendant said that repairing the house was the responsibility of the plaintiff and again she said that she was supposed to repair it. It is her evidence that she had documents to establish that she spent $ 15,000 to repair the house but all the documents were destroyed by floods and that she has no other evidence.

[13] To testify on her behalf the defendant called Mr. Francis Sokonibogi who is the brother of both the defendant and the plaintiff's representative. He was, admittedly, responsible in preparing the agreement in question. It was his position that the interest component was not included in the agreement because it was an interfamily transaction. This witness testified that it was on his advice the defendant agreed to enter into this agreement and there was no discussion between the parties as to charging of interest but anyone acts in violation of the agreement is liable to pay interest. It is his contention that since the plaintiff came to court without first adhering to the conditions laid down in clause 6 of the agreement she is liable to pay interest. This witness also testified on the alleged harassments by Cecilia Laisani Keil.

[14] It is common ground that at the time of entering into the agreement sued upon there was no understanding between the parties that the defendant could charge interest on the loan and also that the agreement does not contain such a clause. However, paragraph 3 of the defendant's affidavit dated 3rd December 2013 reads as follows;

.......... I further say that the loan agreement attracted an interest of 10% on the reducing balance which the plaintiff company's representative Cecilia Laisani Keil has not taken into account.

[15] In the same affidavit the defendant states that the balance loan is calculated on 10% interest on the reducing balance. In her affidavit of 08th May 2014 the defendant states that she disputes the calculation for the reason inter alia, that 10% interest on reducing balance of the loan is not included.

[16] On a careful consideration of the above depositions in the affidavits of the defendant it becomes clear that she is not certain on what amount she claims interest that is whether on the entire sum given to the plaintiff or on the balance sum payable.

[17] At the commencement of the trial the learned counsel for the plaintiff raised an objection to the claim of the defendant for interest on the loan granted to the plaintiff on the ground that making a claim outside the agreement between the parties violates the parol evidence rule.

[18] If there be a contract which has been reduced into writing, verbal evidence is not allowed to be given of what passed between the parties, either before the written instrument was made or during the time that it was in a state of preparation, so as to add or to subtract from or in any manner to vary or qualify the written contract.[1]

[19] In this regard the learned counsel cited the decision in the case of Bacchus Marsh concentrated Milk Co. Ltd. v. Joseph Nathan & Co. Ltd.[2] where it was held that the Court is bound to give effect to the document which the parties meant to be the final and complete declaration of their relations.

[20] The parol evidence rule is in any event subject to numerous exceptions. It does not apply where the evidence establishes the existence of a collateral contract or where it can be shown that the document was not intended as a complete record of the contract terms (a typical case is where the contract is partly in writing, partly oral), or where its existence or operation was dependent on some prior unexpected stipulation, or that it was procured by misrepresentation or was tainted by illegality, or that it disguised the true nature of the transaction.[3]

[21] The learned counsel, apart from the grounds set out above, submits that parol evidence can be adduced to establish the existence of an implied term based upon some custom or trade usage.

[22] In the instant case the defendant has not been able to prove that her claim for interest comes within any of the exceptions referred to above. According to the defendant it was their brother who was responsible in drafting this agreement. His evidence was that since the plaintiff came to Court in violation of the condition contained in clause 6 of the agreement the defendant is entitled to recover interest.

[23] Clause 6 of the agreement is to the effect that if any dispute arises out of it, the same shall be settled by the parties before instituting proceedings in Court. This clause does not even remotely suggest that if the plaintiff who is the debtor institutes proceedings in a Court of law without first referring the dispute for a settlement she becomes liable to pay interest to the defendant.

[24] As admitted by the parties this is a transaction entered into between two members of the same family and the understanding was to provide the plaintiff with a financial facility.

[25] While agreeing that there is no provision for interest in the agreement the learned counsel for the defendant submits that the fact that the representative of the plaintiff company and the defendant are sisters is immaterial and the loan attracts interest.

[26] The learned counsel in this regard relied on the provisions of section 3 of the Law Reform (Miscellaneous Provisions)(Death and Interest) Act (Cap 27) where it provides as follows;

In any proceeding tried in the Supreme Court for the recovery of any debt or damage the court may, if it thinks fit, order that there shall be included in the sum for which judgment is given interest at such rate as it thinks fit on the whole or any part of the debt or damage for the whole or any part of the period between the date when the cause of action arose and the date of the judgment. (Emphasis is added).

Provided that nothing in this section:

(a) shall authorise the giving of interest upon interest; or

(b) shall apply in relation to any debt upon which interest payable as of right, whether by virtue of any agreement or otherwise; or

(c) shall affect the damages recoverable for the dishonour of a bill of exchange.

[27] It is the submission of the learned counsel for the defendant that this is a debt due to the defendant and the above provisions confer discretion on the Court to give interest on the entire sum given as the loan. The provisions of section 3 of the Law Reform (Miscellaneous Provisions)(Death and Interest) Act confers discretion on the Court to give interest on the amount for which the judgment is given. In terms of section 3, interest can only be awarded for the period between the date when the cause of action arose and the date of the judgment and not from the date of the agreement as shown by the defendant in her summary of account (TB 8) tendered along with her affidavit of 08th May 2014.

[28] For the reasons aforementioned I am of the view that the defendant's claim for interest on the entire loan must necessarily fail.

[29] The learned counsel for the defendant also submits that the defendant seeks restitution based on unjust enrichment. It is her submissions that if the interest is not granted the plaintiff will be unjustly enriched. In this regard the learned counsel cited various authorities. However, before considering the relevance of these authorities to the facts of the case at hand the Court must consider the principle of unjust enrichment and its applicability.

[30] Unjust enrichment is an equitable principle that no person should be allowed to profit at another's expense without making restitution for the reasonable value of the property, services or other benefits that have been unfairly received and retained.

[31] Although the unjust enrichment doctrine is sometimes referred to as a quasi-contractual remedy, unjust enrichment is not based on an express contract. Instead, litigants normally resort to the remedy of unjust enrichment when they have no written or verbal contract to support their claim for relief. In such instances litigants ask a Court to find a contractual relationship that is implied in law, a fictitious relationship created by courts to do justice in a particular case.

[32] Unjust enrichment has three elements. First, the plaintiff must have provided the defendant of something of value while expecting compensation in return. Second, the defendant must have acknowledged, accepted and benefited from whatever the plaintiff provided. Third, the plaintiff must show that it would be inequitable or unconscionable for the defendant to enjoy the benefit of the plaintiff's action without paying for it.

[33] In the instant case there is no question that the defendant lent the plaintiff money and the plaintiff was benefited by it. The plaintiff has never refused to pay the balance due to the defendant on the loan. In fact plaintiff requested the defendant provide her with accounts so that she could settle whatever was due to her although she refused to respond. The plaintiff and the defendant are governed by the terms of the agreement sued upon. The defendant, when she agreed to advance $ 150,000 to the plaintiff chose not to charge any interest mainly on the ground that this is a transaction between two sisters. Now, the defendant cannot be heard to complain that the plaintiff will be unjustly enriched if she does not pay interest on the amount so advanced. In view of the grounds aforementioned I am of the view that the principle of unjust enrichment has no application to the facts of this case.

[34] The learned counsel for the defendant submits that the responsibility to maintain the Brewster Street house was on the plaintiff in terms of clause 5 of the agreement. For the convenience of reference I will reproduce the said clause below;

[35] THE LESSOR will throughout the term pay for keep and maintain:

• (a) the premises and buildings of which the premises form part insured for their full insurable value or at the lessor option their replacement and reinstatement value (including the cost of demolition, removal of debris and architects and other professional fees) against loss damage or destruction by fire.
  

[35] On a careful consideration of this clause it appears that the plaintiff has been entrusted with the task of insuring the property against any damage caused to it by fire. This clause does not have the effect of placing any responsibility on the plaintiff to repair the damages caused by fair wear and tear. That responsibility has been placed on the defendant by clauses 8 and 10 of the agreement, which read as follows;

8. THE LESSEE shall keep the said property and surrounds in good and tenantable repair and condition having regard to the legal requirements under the Act pertaining to his undertaking.

10. THE LESSEE shall promptly attend to those repairs and damages to the premises necessitated by fair wear and tear, damage by fire, earthquake, storm or hurricane or other inevitable accident or by causes not attributable to the use of the premises by the tenant or the occupant.

[36] The defendant in her evidence admitted that according to the terms of the agreement she is responsible for the maintenance of this property. When the evidence of the defendant is considered as a whole it appears to the Court that either she was not aware of most of the terms and conditions of the agreement or she pretended not to know exactly what is contained in the agreement. Although the defendant testified that she spent $ 15000 for the repairs of this house in view of the fact that she has taken contradictory positions in this regard the court is unable to act on her statement alone and conclude that she has in fact repaired the house.

[37] Although the defendant was bound to recover part of the loan instalment by renting out this house she has failed to honour her part of the agreement. It is the position of the defendant that due to the acts of harassment, referred to above in this judgment, it was near impossible to give the Brewster Street property on rent. All these harassments complained of by the defendant have been committed in the year 2011. However, according to the defendant's own accounts [TB 8] she had not rented out this house after the year 2006, for which the defendant has failed to give any reason.

[38] The evidence of Mr. Sokonibogi is that the defendant could not give this building on rent because of the condition of the house. According to him it was very old and was in a dilapidated condition but it is evident that he and certain other people were in occupation of this house. It is also important to note that the age and the condition of the house should have been considered by the defendant before entering into the agreement and not many years later.

[39] The plaintiff has regularly paid the loan instalment up to 31st August 2014. The amount due for the said period by way of instalments was $ 26000 and the amount recoverable by way of house rentals was $62600, the total of which is $ 88600. The amount paid by way of loan instalments and rent from the Brewster Street property is $ 61400. After deducting the bond held by the defendant at the execution of the agreement which is $ 800, the balance sum due is $ 60600. According to the evidence of Mr. Bissun Prasad the repair cost of the house is $ 86650 which the plaintiff is entitled to recover from the defendant. After setting off the amount required for the repairs against the balance sum due on the loan the defendant is liable to pay the plaintiff $ 25650.

ORDERS.

(i) The defendant shall handover the possession of Brewster Street property to the plaintiff.

(ii) The defendant shall pay $ 25650 to the plaintiff with interest on the said sum in terms of section 4 of the Law Reform (Miscellaneous Provisions)(Death and Interest) Act (Cap 27) as amended by Decree No. 46 of 2011.

(iii) The defendant shall pay the plaintiff $ 1000 as summarily assessed costs.

Lyone Seneviratne
JUDGE

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^[1] Goode on Commercial Law 4^th Edition at page 101
^[2] (1919) 26 C.L.R. 337
^[3] Goode on Commercial Law 4^th Edition at page 102