Vinod Patel & Co Ltd v Waqabitu [2019] FJHC 309; HBC189.2012 (21 February 2019)

IN THE HIGH COURT OF FIJI AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 189 of 2012

BETWEEN:

VINOD PATEL & COMPANY LIMITED

PLAINTIFF

AND:

SILIKA WAQABITU

DEFENDANT

BEFORE:

Hon. Justice Kamal Kumar

COUNSEL”

Mr E. Narayan for the Plaintiff

Ms N. Raikaci for the Defendant

DATE OF HEARING:

20 September 2016

DATE OF JUDGMENT:

21 February 2019

JUDGMENT

Introduction

1. On 10 July 2012, Plaintiff filed Writ of Summons with Statement of Claim claiming $60,458.22 under a guarantee given by Defendant to Plaintiff on account of Central City Hardware Limited (“CCHL”).
2. On 22 November 2012, Defendant filed Statement of Defence.
3. On 15 April 2015, (after a lapse of almost two and half years) Plaintiff filed Reply to Defence.
4. On 17 April 2015, Plaintiff filed Summons for Direction and on 2^nd June 2015, Order on Summons for Direction was made.
5. On 7 August 2015, Plaintiff filed Affidavit Verifying List of Documents (“AVLD”).
6. On 19 August 2015, Defendant filed AVLD.
7. On 1 October 2015, Plaintiff filed Minutes of Pre-Trial Conference.
8. On 7 October 2015, Plaintiff filed Copy Pleadings.
9. On 20 September 2016, Trial was held and this matter was adjourned for Judgment on Notice.
   

Background Facts

10. CCHL had a credit account with Plaintiff for purchase of building materials pursuant to Credit Application dated 18 February 2011 (Exhibit P1).
11. On 30 June 2011, CCHL issued cheque for the sum of $50,000.00 (Fifty Thousand Dollars) in favour of Plaintiff which cheque was dishonored on presentation.
12. On 22 July 2011, Defendant executed a Guarantee on account of CCHL with the Plaintiff.
13. On 29 February 2012, a Winding-Up Order was made against CCHL in Winding-Up Action No. 88 of 2011, an application of CCHL’s creditors which was supported by Plaintiff (Exhibit P3).
14. On or about 25 June 2012, Plaintiff filed Proof of Debt with Official Receiver.
    

Issue for Determination

15. As stated by the parties in Minutes of PTC the issue for determination is whether Defendant is liable under the Guarantee dated 22 July 2011, and whether the said Guarantee has been revoked.
    

Documentary Evidence

16. Following documents have been tendered in evidence:-

Exhibit No.	Document
P1	Photocopy of Plaintiff’s Confidential Account Application Form completed by CCHL dated 18 February 2011, with Personal Guarantee of Sushil Chand Sharma dated 25 February 2011, on account of CCHL
P2	Photocopy of Dishonoured Advice in respect to CCHL’s Westpac Cheque No. 1377 dated 30 June 2011, for $50,000.00
P3	Photocopy of Notice of Intention to Support Winding-Up Petition against CCHL by Plaintiff in Winding-Up Action No. 88 of 2011
P4	Photocopies of Proof of Debt and General Proxy dated 25 June 2012 by Plaintiff in respect to CCHL
P5	Photocopy of Plaintiff’s Confidential Account Application Form dated 22 July 2011, for CCHL with Personal Guarantee of Silika Waqabitu, Defendant dated 22 July 2011.

17. Plaintiff called Mua Panapasa its Legal Officer (PW) as its only witness.
18. PW during examination in chief gave evidence that:-

(i) On or about 18 February 2011, CCHL applied for credit account to purchase good which was approved to a limit of $70,000.00 (Seventy Thousand Dollars);

(ii) On 30 June 2011, CCHL made payment of $50,000.00 (Fifty Thousand Dollars) by cheque which cheque was dishonored;

(iii) On 22 July 2011, Defendant executed a Guarantee on account of CCHL and copy of the Guarantee was provided to Defendant;

(iv) Winding-Up Order was made against CCHL in Winding-Up Action No. 88 of 2011;

(v) In order to have Guarantee discharged Guarantor will need to submit Application for discharge which is submitted to Credit Department for approval;

(vi) In this instance no application for discharge of Guarantee was made by Defendant;

(vii) CCHL owed Plaintiff $60,458.22 and this is the amount Defendant is supposed to pay Plaintiff under the Guarantee;

(viii) Read Clause 9 of the Guarantee which is as follows:-

“9. I will pay you on demand all costs, expenses and liabilities that you incur in connection with this guarantee and indemnity the actual or attempted exercise or enforcement of powers or remedies under this guarantee or any other security of document held by you and your administration costs and legal fees actually incurred by you.”

(ix) Read Clause 12 of the Guarantee which is as follows:-

“12. Any demand made upon me shall be deemed to be duly made if the same is personally served on me or posted to the postal address given by me here above.”

19. During cross-examination PW:-

(i) Stated that Credit Application of CCHL is dated 18 February 2011, and is for $70,000.00 (Seventy Thousand Dollars);

(ii) Stated that Page 4 of the Application is Personal Guarantee and Sushil Chand Sharma is named as Guarantor;

(iii) Agreed that CCHL was making progress payment and it made payment of $50,000.00 by cheque dated 20 June 2011, which was before Defendant executed the Guarantee;

(iv) Stated that the amount stated on Page 3 of Guarantee is $60,458.22;

(v) Stated that Defendant signed the contract of Guarantee on page 5 of Application which was before Winding-Up Order was made against CCHL on 29 February 2012;

(vi) Stated that the Credit Application Form filled by CCHL was the Form filled for Credit Application;

(vii) Stated that CCHL Application for Credit was approved by Plaintiff upto a limit of $70,000.00 (Seventy Thousand Dollars);

(viii) Stated that no amount is written on page 8 of the Credit Application’

(ix) Agreed that the credit provided is not to exceed the approved credit limit;

(x) Read clause 6 of Guarantee which is as follows:-

“6. I guarantee that the Customer will pay you all amounts payable in compliance with your requirements and if he does not I will pay you the same and interest and costs provided the total does not exceed the maximum agreed amount whenever you demand it from me.”

(xi) Agreed that amount of credit limit is not specified;

(xii) When it was put to him that, when Defendant filled Guarantee Form she did not know CCHL was Wound-Up he stated that at that time there was not Winding-Up;

(xiii) Stated that it is his belief that Sushil Chand Sharma applied to be discharged as Guarantor and it is on this basis that Defendant applied to be the Guarantor;

(xiv) Stated that he does not have Application for Discharge by Sushil Chand Sharma;

(xv) When it was put to him that Sushil Chand Sharma did not apply he stated that he did apply;

(xvi) Stated that amount on Page 8 of the Application for Credit is $70,000.00 (Seventy Thousand Dollars);

(xvii) Agreed that Application was approved by Plaintiff’s Chief Financial Officer on 14 March 2011, and from that day CCHL began to take goods on credit;

(xviii) Stated that when CCHL applied for increase in Credit limitation consent was not sought and that CCHL was asked to provide a Guarantor;

(xix) Agreed that once Plaintiff is satisfied with credit worthiness of Applicant and Guarantor, the Application is then approved;

(xx) Agreed that Defendant’s consent was not obtained for increase in credit limit.

20. In re-examination PW stated that the Credit amount is $70,000.00 and debt owing is $60,458.82 which did not exceed amount Guaranteed by Defendant.
    

Court’s Analysis and Finding

21. Court after analysing the pleadings, evidence and submissions makes following finding of facts:-

(i) Plaintiff provided goods on credit to CCHL;

(ii) CCHL paid $50,000.00 to Plaintiff by its cheque dated 30 June 2011, which cheque was dishonored on presentation (Exhibit P2);

(iii) Sushil Chand Sharma executed Personal Guarantee on account of CCHL (Exhibit P1);

(iv) On 22 July 2011, Defendant executed Personal Guarantee in favour of Plaintiff (Exhibit P5).

(v) Winding-Up Order has been made against CCHL and it owes Plaintiff $60,458.22;

22. At paragraph 4 of the Statement of Claim Plaintiff pleads as follows:-

“4. The Plaintiff claim is for the sum of $60,458.22 (Sixty Thousand Four Hundred Fifty Eight Dollars and Twenty Two Cents) being the price of goods sold and delivered by the Plaintiff to Central City Hardware Limited during July 2011, the payment of which was guaranteed by the Defendant by letter to the Plaintiff dated 22^nd July 2011.”

23. Defendant at paragraph 3 of her Statement of Defendant pleads as follows:-

“3. That in response to paragraph 4 of the Claim, the Defendant state that she has no means of verifying the same as she was neither the purchaser nor the guarantor of the alleged purchase.”

24. Consideration for the Personal Guarantee given by Defendant in favour of Plaintiff (Exhibit P5) provides as follows:-

“IN CONSIDERATION of you supplying goods and/or services on credit from time to time, at your discretion based upon the Account Application form dated ..... to M/s Mr Ajesh Kumar Sharma son of Rajeshwar Prasad of Nakasi hereinafter together with his executors, administrators and assigns called the “Customer” DO HEREBY GUARANTEE to you to pay all the monies due by the Customer together with interest thereon at 18 percent per annum AND HEREBY AGREE AS FOLLOWS:....”

1. My Liability under this guarantee shall be the sum of $70,000.00 or an amount outstanding from customer whichever is higher.
2. This guarantee shall be a continuing guarantee and shall continue until all amounts payable under the credit facility granted to the debtor has been paid in full.
3. You may at any time or times at your absolute discretion and without giving any notices whatsoever to me refuse further credit or supplies of goods and services to the customer.
4. I am responsible for making any investigation into the creditworthiness and position of the Customer and co- Guarantor.
5. I am fully liable jointly with any Co - guarantors and separately on my own.
6. I guarantee that the Customer will pay you all mounts payable in compliance with your requirements and if he does not I will pay you the same and interest and costs provided the total does not exceed the maximum agreed amount whenever you demanded it from me.
7. a.) I will, as a separate and independent obligation as a principal debtor, indemnity you up to the maximum amount against all losses you may suffer it for any reason the Customer does not pay you any amount due to you or if the customer becomes insolvent.

b.) If the customer is insolvent, your losses and my liability will include the loss of any monies you pay to the Official Receiver and any costs incurred in the insolvency.

c.) I will indemnify you up to the maximum amount against any loss you may suffer if the customer does not pay you any amount which he owes you or if you or if you are prevented from recovering any amount which he owes you by the intervention of any legal rule or if the customer is affected by any legal limitation, disability or incapacity.

8. This document shall remain you property. And this guarantee shall be enforceable not withstanding that any other negotiable or other instrument, security or contract.
25. Personal Guarantee given by Defendant is to guarantee payment for supply of goods and services by Plaintiff to Ajesh Kumar Sharma and not to CCHL.
26. No evidence has been provided by Plaintiff that Ajesh Kumar Sharma owed any money to Plaintiff. In fact Plaintiff clearly states at paragraph 4 of the statement of claim that, their claim against Defendant is for monies owed by CCHL.
27. It is surprising to note that this fact to it was not addressed by Counsel for the parties when Plaintiff led the evidence and when they made final submissions.
28. Counsel for Defendant also failed to put this fact to the Plaintiff’s witness during cross-examination.
29. In view of what has been stated at paragraphs 24 to 26 of this Judgment Plaintiff’s claim is to be dismissed.
    

Costs

30. Court takes into consideration that trial lasted for few hours only, both parties filed submissions, Defendant failed to bring to Court’s attention that the Guarantee given by Defendant to Plaintiff was not for goods supplied to CCHL but to Ajesh Kumar Sharma.
    

Order

31. This Court orders as follows:-

(i) Plaintiff’s claim is dismissed and struck out;

(ii) Each party to bear their own cost of this proceedings.

...........................

K. Kumar

JUDGE

At Suva

21 February 2019

PATEL SHARMA LAWYERS for the Plaintiff

RAVONO & RAIKACI LAW for the Defendant