Victory Tours Ltd v Merchant Finance Investment Company Ltd [2016] FJHC 63; HBC204.2012 (8 February 2016)

IN THE HIGH COURT OF THE REPUBLIC OF FIJI
WESTERN DIVISION
AT LAUTOKA

CIVIL JURISDICTION

CIVIL ACTION NO. HBC 204 OF 2012

BETWEEN :

VICTORY TOURS LIMITED a limited liability company having its registered office at Crown Investment Building, Queens Road, Nadi
1ST PLAINTIFF

: MAHABUB MASHUKALI of Sigatoka, Businessman
2ND PLAINTIFF

AND :

MERCHANT FINANCE INVESTMENT COMPANY LIMITED a limited liability company of registered office is at Level 1 91 Gordon Street, Suva.
DEFENDANT

Counsel : Mr Anand Singh for plaintiffs
: No appearance for defendant

Date of Hearing : 17 November 2015
Date of Judgment : 08 February 2016

JUDGMENT

INTRODUCTION

[1] The plaintiffs initiated this action against the defendant and claimed inter alia the value of motor vehicle registration number DI 591 and damage. The claim arises out of alleged fraudulent actions on the part of the defendant.

[2] The matter came on for hearing on 17 November 2015 when the defendant failed to appear to face the trial. Mr A Singh, counsel appearing for the plaintiff made application to strike out the defence and to proceed with the trial. The court accordingly struck out the defence and heard the plaintiff's evidence in the absence of the defendant or its counsel.

[3] At formal proof hearing, Mahbub Mashukali, the 2nd plaintiff gave evidence and produced some documents as plaintiff's exhibits.

FACTUAL MATRIX

[4] The 1st plaintiff, Victor Tours Limited was a limited liability company which has now been wound up by the Official Receiver. The 2nd Plaintiff, Mahabub Mashukali was a Director and Contributory of the 1st plaintiff. The 1st plaintiff owned a Motor Vehicle registration number DI 591 ('the vehicle'). It obtained a loan facility from Merchant Finance Investment Company Limited, the Defendant in August, 2000 and gave a Bill of Sale dated 30th August, 2000 over the vehicle as a security for the loan.The 1st plaintiff defaulted in loan repayment. The defendant issued a Custody Notice to the 1st Plaintiff in January, 2003 and repossessed the vehicle and sold it via Public Auction on 26 March 2003.

[5] A winding-up order was made against the 1st plaintiff by the Suva High Court in June 2002.The 2nd plaintiff's former solicitors wrote to the Official Receiver a letter dated 30th November 2007 for permission to initiate proceedings (the current proceedings) against the defendant.The Official Receiver gave permission to the 2nd plaintiff's former solicitors by letter dated 16th September 2008 to initiate the current proceedings. In September 2012 the plaintiffs filed a Writ of Summons with Statement of Claim indorsed.

PLAINTIFF'S EVIDENCE

[6] The 1st plaintiff gave sworn evidence. In his evidence he stated that, in 2003 had a 4W drive tour operating company. He had lots of hires because of hospitality. He charged $1,300.00 for Island tour. On 28/1/03 he went on fleet picking passengers for Sheraton. On the way they got the vehicle putting out all 6 passengers. He suffered financial repercussion as a result. His company got bad name because of embarrassment. He used to earn $13,000.00 a day. He lost his income for 9 to 10 months. He arranged finance with Colonial Bank to repay the loan arrears. So many people were interested to buy that vehicle. Parmesh said, 'they have already sold the vehicle'. The purchaser was using the vehicle before the sale. The value of the vehicle at that time was $100,000.00. It was sold for lowest price of $20,000.00. He was denied his right to redemption. He incurred capital lost. The company has been wound up. He has consent of the liquidator to proceed the matter.

PLAINTIFF'S DOCUMENT

[7] During the course of his evidence the plaintiff produced the following documents in support of his claim:

1. Consent letter of 26 September 2008 given by official receiver to initiate proceedings-'P/Ex-1'.
2. Letter of offer for car loan of $24,540.00 dated 26 March 2003-'P/Ex-2'.
3. Letter of Withdrawal of Facility dated 2 April 2003-'P/Ex-3'.
4. Vehicle Registration Certificate-'P/Ex-4'.
5. Vehicle Owner History Extract dated 21 September 2010-'P/Ex-5'.
   

ANALYSIS

[8] The plaintiffs claim damages against the defendant. The claim stems from a sale of the vehicle over which the defendant had hire purchase agreement. The defendant repossessed the vehicle for non-payment of installments and sold it at an auction sometime in March 2003. It was sold subsequent to the arrears notice given to the plaintiffs by the defendant. The plaintiffs claim that the sale was done without an opportunity being given to them to pay off the arrears in instalments.

[9] Evidence and documents led in evidence reveal that the cause of action upon which the claim is founded arose sometime in March 2003. The plaintiffs filed the writ of summons and the statement of claim in September 2012. It appears that claim is filed outside the limitation period. The court therefore raised the issue of limitation and asked the counsel to address on that issued. Mr Singh who appeared for the plaintiffs then informed the court that the issue of limitation was raised by the defendant in the course of striking out proceedings and the court has ruled on that issue. He also stated that he will still rely on the written submission he already filed in this regard.

[10] It is true that the defendant had taken the limitation issue in its application to strike out the claim filed under O.18, r.18 of the HCR. In its ruling dated 17 November 2014 the court observed that the defendant has every right to apply to court at the trial to try the issue of limitation as a preliminary.

[11] According to evidence including documents adduced by the plaintiff it appears the claim is statute barred. I would therefore turn to the issue of limitation.

LAW ON LIMITATION

[12] The relevant law that would apply to this action is the Limitation Act. As the claim is founded on simple contract sections 4 (1) (a) is relevant to this case. That section provides:

S. 4 (1) (a)-

'actions founded on simple contract or on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued' (Emphasis provided)

[13] However, section 15 of the Limitation Act provides for postponement of limitation period in case of fraud or mistake. That section, so far as material, provides:

'Where, in the case of any action for which a period of limitation is prescribed by this Act, either-

(a) the action is based upon the fraud of the defendant or his agent or his servant or of any person through whom he claims or his agent; or
(b) the right of action is concealed by the fraud of any such person; or
(c) the action is for relief from the consequences of a mistake,

the period of limitation shall not begin to run until the plaintiff has discovered the fraud or the mistake, as the case may be, or could with reasonable diligence have discovered it:' (Emphasis provided].

[14] The facts stated in the statement of claim and the evidence show that the cause of action relied on occurred more than 6 years before the issue of the writ of summons.

[15] Undoubtedly, the cause action in this case is founded on a simple contract. If so, section 4 (1) (a) of the Limitation Act would apply. Pursuant to s. 4 (1) (a) an action founded on a simple contract must not be brought after expiration of six years from the date on which the cause of action accrued.
[16] The pertinent question is then when the cause of action arose for the plaintiffs to sue the defendant for damage for breach of the contract.

[17] The writ was filed on 21 September 2012. The 1st plaintiff obtained loan from the defendant on 30 August 2000 and gave Bill of Sale. The defendant issued Custody Notice to the 1st plaintiff on 28 January 2003. The plaintiff for one reason or another did not produce the custody notice.The vehicle was sold through auction on 27 March 2003.The writ was therefore issued about 9 years and 5 months from the date of auction sale of the vehicle.

[18] The 1st plaintiff company was wound up in 2002. However, the 2nd plaintiff obtained the Official Receivers permission dated 16 September 2008 to initiate the proceedings.It is to be noted that the 2ndplaintiff had taken some 4 years from the date of grant of permission to issue the proceedings.

ALLEGATION OF FRAUD

[19] The plaintiffs in the statement of claim have pleaded fraud of the defendant or its employees or agents. In his evidence the 2nd plaintiff stated that, So many people were interested to buy that vehicle. Parmesh (Bank Officer) said, 'they have already sold the vehicle'. The purchaser was using the vehicle before the sale. The value of the vehicle at that time was $100,000.00. It was sold for lowest price of $20,000.00. He was denied his right to redemption.

[20] Another germane question that would arise in this cause is that when does the period of limitation begin to run where the action is based on fraud of the defendant.

[21] Section 15 of the Limitation Act provides for postponement of limitation period in case of fraud or mistake. Where the action is based upon the fraud of the defendant the period of limitation shall not begin to run until the plaintiff has discovered the fraud or the mistake, as the case may be, or could with reasonable diligence have discovered it (see section 15 of Limitation Act).

[22] The 2nd plaintiff does not state in his evidence the date when the defendant actually sold the vehicle via auction. All what he says is that, the purchaser was using the vehicle even before the sale, and when he was ready with the money to pay off the arrears and redeem the vehicle, the vehicle was still with the defendant.

[23] The crucial question is that when did the defendant sell the vehicle under mortgage sale. Vehicle Owner History Extract ('P/Ex-5') adduced by the 2nd plaintiff at the trial confirms that the defendant acquired the vehicle on 27 March 2003 and disposed the same on 16 April 2003.

[24] It is clear that the defendant acquired the vehicle on 27 March 2003 and disposed it under mortgage sale on 16 April 2003. Therefore in my opinion cause of action out the mortgage sale accrued to the plaintiff on 16 April 2003.

[25] The 2nd plaintiff received the vehicle owner history extract from Land Transport Authority on 21 September 2010. The 2nd plaintiff could have discovered the fact that the vehicle was disposed by the defendant on 16 April 2003 if he had exercised reasonable diligence in 2003.

[26] The 2nd plaintiff states that the 1st plaintiff company was wound up as a result he could not bring action on behalf of the company without consent of the official receiver. The 2nd plaintiff does not provide the date when the company was wound up. But, nonetheless, he had obtained the official receiver's consent to initiate proceedings on behalf of the wound up company on 16 September 2008. There was no delay on the part of the official receiver in granting the required consent. On 22 August 2008 the 2nd plaintiff requested consent to initiate proceedings. On 16 September 2008 the official receiver granted consent to take legal proceeding in the name of the company (1st plaintiff). It will be noted that the official receiver granted consent to the 2nd plaintiff to take these proceedings within one month of the application.

[27] Surprisingly, the plaintiff had waited some four years even after obtaining the required consent of the official receiver to bring this action against the defendant.

CONCLUSION

[28] In my judgment, the cause of action for breach of the contract arose on 16 April 2003, the date on which the defendant disposed the vehicle to a third party. The 2nd defendant could have discovered this date if he had acted diligently in 2003. He could have obtained vehicle owner history extract in 2003. He could with reasonable diligence have discovered fraud of the defendant, if any, in 2003. Whereas he obtained the vehicle owner history extract in September 2010. This shows that the plaintiff failed to act with due diligence. The period of limitation began to run from 16 April 2003. The 2nd plaintiff had waited till 21 September 2012 to file the statement of claim indorsed on the writ. He should have brought this action within 6 years of the date on which the cause of action accrued i.e.16 April 2003. He has brought this action some 9 years and 5 months after the cause of action accrued. Section 4 (1) (a) of the Limitation Act prohibits an action where it is based on simple contract to be brought after expiration of six years from the date on which the cause of action accrued. The action is brought outside the limitation period. There has been no application before court to seek permission of the court to proceed with the action despite limitation period. The action is statute barred. I dismiss the action accordingly, but without costs.

FINAL RESULT

[29] The final result is that the plaintiff's action is dismissed, but without costs.

............................................
M H Mohamed Ajmeer
JUDGE

At Lautoka
08 February 2016

Solicitors:
For plaintiff: Messrs Singh & Singh Lawyers, Barristers & Solicitors