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High Court of Fiji |
IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION
HBC 215 of 2015
BETWEEN:
SAMUEL SEN of Otahuhu, Auckland, New Zealand and RS Promotions Limited
PLAINTIFFS
A N D:
GAURANG PATEL trading as G6 Events of Drasa Avenue, Lautoka
DEFENDANT
Appearances:
Mr J. Sharma for the Plaintiff
N/A for the Defendant
Date of Formal Proof: 14.11.2019
Date of Ruling: 27.04.2020
FORMAL PROOF RULING
INTRODUCTION
[
THE AGREEMENT
“Samuel Sen of RS Promotions Ltd having its registered office at P.O Box 22792, Otahuhu, Auckland New Zealand” ......AND G6 EVENTS a company incorporated under the Companies Act having its registered office on Suite 1, level 2, Victoria Parade, HFC Building, Suva......”
THE COMMON SEAL OF G6 EVENTS LIMITED was hereunto fixed in our presence and we certify that we are the proper officers of the said company by whom and whose presence was affixed said seal is to be affixed to documents by the company.
Signature
_______________ Director
Common Seal of G6
__________________
THE BARGAIN
| $66,000.00 | To be paid upon signing of the contract |
| $59,400.00 | To be paid 30 days prior to the show |
| $6,600.00 | To be paid 7 days before Artist flies to Fiji |
THE ALLEGED BREACH
And I sent him pictures of the posters. The audios which was audios and videos for the New Zealand show as I needed details for Fiji Show. And he kept on going he will do the deposit. A common practice my Lord in this field is until unless the deposit is done we do not release any script, audios, postage information and we stick with that policy.
....... But meanwhile my Lord, I have already paid the artist in India otherwise we will get no scripts my Lord. And I kept on emphasizing on him about the deposit.
..... Patel said that; “I will arrange the accommodations, the venues”. He still agreed to do the show at National Gymnasium and then kept on going that he is out of country. He is here, there. That’s why we kept the message via viber. He is in Columbo and it kept on going till April. We had phone conversation as well my Lord. In April I told him I am coming to Fiji my Lord. And I tried arranging a meeting with him at his office in Tappoo City. He kept on going, “See you in Suva at 3.00pm”. And when I called him up, went to Suva, he didn’t show up. He said he had some commitments my Lord. And then he went to Hong Kong my Lord and this is in April. So just one month before the show he still confirmed that he is going to go with the show. Then I tried to meet him in Fiji again. And then kept on texting him about the money.
....That I am flying out of Fiji. He gave me the contacts for people for sponsorship as on the thing. As he said he is out of country. That some conversations we had over the phone and he gave me all the details. Then he said; “Can you send me the total costs”. He said; “Because I am busy but I will still go ahead with the show”. Then I gave him the total cost as per tax my Lord. While it was happening I thought to help him out. I get all the details. I have got FBC to work and give details, offer and everything. He even asked me for the bank details with the code and stuff which I photo took and sent it. That’s on the end of April. Then I sent him the accounts details as well just to be sure. Then he promised that I will get it back on Monday and the show is on May. As you see there is a conversation mentioning Raj bhaiya. That’s the person who introduced me. It kept on going. We knew nothing was going to happen because I had to do that 30 days prior to the show payment. That’s when started to organize because I had already made the payment. When Monday came nothing happened. And as you can see after that he stopped messaging me. That’s when we realized and then we started to promote the show ourselves my Lord because otherwise I could have per contract, it could have be a disaster to myself my Lord and the industry.
......................................................................................................
G-6 NOT INCORPORATED UNDER THE COMPANIES ACT (CAP 247)
ISSUES
ANALYSIS
I am afraid that before 1972 the common law had adopted some fine distinctions. As I understand Kelner v. Baxter ......it decided that, if a person contracted on behalf of a company which was nonexistent, he himself would be liable on the contract. Just as, if a man signs a contract for and on behalf ‘of his horses,’ he is personally liable.
4. Kelner v. Baxter [1866] UKLawRpCP 97; (1866) LR 2 CP 174 was cited as an authority for the proposition that there is a rule of law to the effect that where a person contracts on behalf of a non-existent principal he is himself liable on the contract. But we find it impossible to extract any such proposition from the decision.
OR
-
(iii) is there anything in the written instrument inconsistent with the conclusion that the defendants should be bound personally?
"I do not myself think that Kelner v. Baxter [1866] UKLawRpCP 97; (1866) LR 2 CP 174 or any of the cases cited affords any assistance in the present case. Where A, purporting to act as agent for a non-existent principal, purports to make a binding contract with B, and the circumstances are such that B would suppose that a binding contract had been made, there must be a strong presumption that A has meant to bind himself personally.
Where, as in Kelner v. Baxter [1866] UKLawRpCP 97; (1866) LR 2 CP 174 , the consideration on B's part has been fully executed in reliance on the existence of a contract binding on somebody, the presumption could, I should imagine, only be rebutted in very exceptional circumstances.
But the fundamental question in every case must be what the parties intended or must be fairly understood to have intended. If they have expressed themselves in writing, the writing must be construed by the court. If they have expressed themselves orally, the effect of what they have said is a question of fact - a question for the jury, if there is a jury" (1950) 80 CLR, at pp 323, 324 . (at p56)
We should add that we fully agree with the observations of Fullagar J. in Summergreene v. Parker [1950] HCA 13; (1950) 80 CLR 304 concerning the basis of the decision in Kelner v. Baxter [1866] UKLawRpCP 97; (1866) LR 2 CP 174 .
‘In my opinion, unfortunate though it may be, as the company was not in existence when the contract was signed there never was a contract, and Mr Newborne cannot come forward and say: ‘Well, it was my contract.’ The fact is, he made a contract for a company which did not exist.’ The contract purported to be a contract with the company and it was not relevant that, as was the case, it was a matter of indifference to the purchasers whether they contracted with the company, or with Mr Newborne personally.
[7] It is the other matter relied on by the first appellant that calls for closer consideration. It is that, at the time the agreement for sale and purchase was made on 29 March 2004, the respondent had not been incorporated. Indeed, so far as the material goes, there is nothing to suggest that the respondent has even now been registered and incorporated as a legal entity. From this it is evident that as a matter of law the respondent had no existence and so on 29 March 2004 was incapable of being a party to the contract that is claimed to constitute the ground for lodging and maintaining the disputed caveat.
[8] There are two decisions of authority to that effect. The first is that of the English Court of Appeal in Newborne v . Sensolid (Great Britain) Ltd [1954] 1 QB 45. It was a case of a written offer to sell the defendant 200 cases of cooked meat on terms set out in a document which was subscribed “Leopold Newborne (London) Ld.” followed by the signature of Leopold Newborne. His name appeared elsewhere on the document as one of the directors. It later turned out that at the time the agreement was made by completion by the defendant of the acceptance slip attached to the letter, Leopold Newborne (London) Ld. had not been incorporated by registration as a limited liability company. An attempt was then made to substitute Leopold Newborne in place of Leopold Newborne (London) Ld as the plaintiff in proceedings to recover damages for non-acceptance of the goods.
[9] In affirming the decision of Parker J. dismissing this claim, Lord Goddard CJ in the Court of Appeal said ([1954] 1 QB 45, 51):
“The company makes the contract. No doubt the company must do its physical acts, and so forth, through the directors, but it is not the ordinary case of principal and agent. It is a case in which the company is contracting and the company’s contract is authenticated by the signature of one of its directors. This contract purports to be a contract by the company; it does not purport to be a contract by Mr Newborne.”
The result, his Lordship said, was that because the company did not exist, there never was a contract, and Mr Newborne could not come forward and say there was a contract with him. With this Morris and Romer LJJ agreed, the former saying that both the signature on the document, and the document itself, were a complete nullity.
[10] The decision in Newborne v . Sensolid was followed by the High Court of Australia in Black v. Smallwood [1966] HCA 2; (1966) 117 CLR 52. The facts were similar to those of the present case in that the two plaintiffs sought specific performance of a contract to sell made under the name Western Suburbs Holdings Pty Limited. The contract was signed under that name by both plaintiffs described as “directors”, although the company had at that time not been incorporated. The action by the two individual signatories failed because they were not parties to the contract, which professed to be made on behalf of a company that did not then exist.
[11] When one turns to the correspondence in the present case, it is clear that the principle of those two decisions must govern this. The letter of offer dated 29 March 2004 is on letterhead showing the offeror to be “Sunrise Corporation Limited”, of P O Box 1921, Nadi, Fiji. It is subscribed “Yours faithfully, Sunrise Corporation Ltd.”, and signed “P Singh Executive Consultant, Head Office, Queen Street, Nadi.” The offer is made by a non-existent corporation and purports to be authenticated by the signature of someone acting as executive consultant to that non-existent corporation.
[12] The real estate agent Prime Properties in its letter dated 29 March 2004, communicating the offer to the appellant Rajesh Prasad simply adopted the form in which the written offer itself was cast. As well as enclosing a copy of the offer, it described the buyer’s name as “Sunrise Corporation Limited” and its “executive director” as Mr Ramend Charan. The “company”, it said, was willing to buy the property for $670,000.00.
[13] The problem of exactly who the appellant was dealing with became even more acute for the respondent’s solicitors in drawing up the caveat dated 23 April 2004. In the end, it was expressed as follows:
“I Ramend Prasad Charan......of Nadi, Businessman as Managing Director and agent of Sunrise Corporation Limited claiming an estate or interest as purchaser by virtue of agreement dated 19 March and 29 March.......”
[14] The signature of R P Charan is then declared to have been made in the presence and to be that of Suresh Chandra ”as Managing Director and agent for Sunrise Corporation Limited a limited liability company having its registered office at Nadi, the Caveator....”
[15] It is, of course, impossible to reconcile these conflicting statements or contentions, for that is what they really are. To sustain the caveat, there must be a contract for sale and purchase. There can be no contract with Sunrise Corporation Limited, because it did not exist at any relevant time. There can be no contract with either P Singh, calling himself Executive Consultant, or with R P Charan as Managing Director, because neither of them professed to buy and because a person cannot be a consultant to or director of a non-existent corporation. As individuals neither of them can claim an interest in the land by virtue of any contract with Mr Rajesh Prasad as the owner of the land.
[16] It was nevertheless submitted by Dr. Sahu Khan that the description Sunrise Corporation Ltd. was simply the name under which Ramend Prasad Charan and Praveen Singh carried on an enterprise or partnership business. There is an affidavit from Mr Charan which disposes (para.5) that the respondent plaintiff “has never claimed that it was incorporated as a company or registered as such....” That is, inconsistent with the jurat completed by Suresh Chandra, solicitor, in deposing to the signature on the caveat of R P Charan as being that of the Managing Director of Sunrise Corporation Limited “a limited liability company – having its registered office at Nadi....” It is also inconsistent with the description throughout the material of the respondent as a “Corporation.” No one suggests that it is possible in Fiji to attain corporate status or limited liability except under and by virtue of statutory authority. No such authority is identified or relied on here.
[17] The same paragraph (para.5) of Mr Charan’s affidavit goes on to say that the respondent is a “business entity” and enterprise, of which he and Praveen Singh are the partners “and an application has been made for registration of the business as a limited liability company.” This is reminiscent of a passage in the separate reasons for judgment of Windeyer J. in Black v. Smallwood [1966] HCA 2; (1966) 117 CLR 52, at 64, where his Honour said:
“Questions such as are now before us have frequently arisen in America. The answer has in some jurisdictions been supplied by legislation; in others by the adoption of a rule that “organizers of corporation who transact business in the corporate name before its organization has been completed will be deemed partners operating under the corporate name as a trade name......”
This is essentially what Dr. Sahu Khan is contending for in the present case. However, Sir Victor Windeyer went on to add in that case, “But we have no such rule.”
[18] Sir Victor Windeyer was there speaking of Anglo-Australian law; but there is no reason to suppose that the law of Fiji is in this respect any different. Plainly that is so if the matter is considered, as it must be, according to the ordinary rules of offer and acceptance. The meaning and effect of the offer must be determined objectively from the words used in making it. The respondent’s offer purported to emanate from an entity calling itself Sunrise Corporation Limited. It did not affect to come from a partnership or firm comprising one or both of two individuals, Singh and Charan, whose signature or signatures on that or any other document served the purpose only of authenticating what purported to be a subscription of the offer of 29 March 2004 in the name of the corporation itself. Since the corporation did not exist at that date, the supposed offer was a nullity and incapable of acceptance to produce a valid contract for purchase of the land sufficient to support a caveat by either or those individuals.
[19] Counsel for the respondent also contended that the personality of the purchaser was something that would or could be resolved at settlement or completion when the identity of the transferee would be determined by the parties or their solicitors. Adopting that approach would involve making a new contract, being either one with a corporation that did not exist when the supposed contract was made on 29 March 2004, or with some other person or entity. That would not be the contract which the caveat was lodged to protect or is capable of protecting.
[20] As a final submission, counsel for the respondent pointed out that the Companies Act (Cap. 247) does for certain purposes recognize and in s. 358 defines the concept of an “unregistered company.” Section 358 says that it includes any partnership, association or company, with certain exceptions. The specified exceptions include:
“(b) a partnership, association or company which consists of fewer than 8 members and is not a partnership, association or company formed outside Fiji.”
[21] It follows that the partnership, if any, alleged to subsist between Singh and Charan is not an “unregistered company” within the meaning of this provision. Those two are, if anything, a partnership, association, or company formed, not outside but within Fiji. In any event Part IX, of which s.358 forms a principal provision, is directed to “Winding up of Unregistered Companies.” Winding up the business enterprise of Messrs. Singh and Charan is not something that any one is seeking to achieve here.
[25] The result is in our view that there was and is no valid contract or other ground on which the caveat could have been lodged or can be maintained in this case.
CONCLUSION
...................................
Anare Tuilevuka
JUDGE
Lautoka
27 April 2020
[1] Lord Denning MR summarized Kelner (supra) in Phonogram Ltd v Lane [1982] 1 QB 938, [1982] QB 938 as follows:
I am afraid that before 1972 the common law had adopted some fine distinctions. As I understand Kelner v. Baxter ......it decided that, if a person contracted on behalf of a company which was nonexistent, he himself would be liable on the contract. Just as, if a man signs a contract for and on behalf ‘of his horses,’ he is personally liable.
[2] The Court said as follows:
In [Kelner] it appeared from the contract itself that the defendants had no principal; they had purported to enter into a contract on behalf of the "proposed Gravesend Royal Alexandra Hotel Company", and the fact that they had no principal was obvious to both parties. But it was not by reason of this fact alone that the defendants were held to be liable; the Court proceeded to examine the written instrument in order to see if, in these circumstances, an intention should be imputed to the defendants to bind themselves personally, or, perhaps, to put it in another way, whether, the intention being sufficiently clear that a binding contract was intended, there was anything in the writing inconsistent with the conclusion that the defendants should be bound personally.
[3] They said:
8. These reasons lead us to the respectful conclusion, not only that we should follow the decision in Newborne v. Sensolid (Great Britain) Ltd. (1), but also that the decision in that case was correct. We would dismiss the appeal. (at p61)
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