MY Group Ltd v Natural Gift Carrier Ltd [2022] FJHC 41; HBC20.2018 (4 February 2022)

In the High Court of Fiji

At Suva
Civil Jurisdiction

HBC 20 of 2018

MY Group Limited

First plaintiff

Mohammed Yaseen Investments Limited

Second plaintiff

v

Natural Gift Carrier Ltd

Defendant

Counsel : Mr J. Reddy for the plaintiffs

Mr A. Kohli for the defendant

Date of hearing : 14^th and 15^th September,2020

Date of Judgment : 4^th February,2022

Judgment

1. This claim arises from an alleged breach of two Sale and Purchase Agreements, (SPAs) entered into between the parties. The statement of claim states that the first plaintiff agreed to sell to the defendant a Stone Crusher, (Crusher) for a sum of $ 220,000.00. The purchase price was to be paid in installments and by a transfer of an Agreement for lease. The defendant transported the Crusher and installed it at its premises, but failed to pay the purchase price. The plaintiffs seek specific performance, a transfer of the lease and a sum of $200,000.00. Alternatively, damages in a sum of $220,000.00, special and general damages.
2. The defendant, in its statement of defence states that the first plaintiff gave two components of the Crusher and failed to deliver the third component. The defendant has suffered loss of reputation, as it could not met its orders for sand and metals. It has lost approximately $40,000.00 per month from 1^st May,2017. The defendant counterclaims for special and general damages.
   
3. The plaintiff, in its reply and defence to counter-claim states that the defendant was required to remove the third component on 30^th June, 2017, after giving 24 hours notice. The defendant purchased the Crusher on an “as is where is” basis. There was no agreement to repair the third component. The defendant took possession of two components after inspection and reliance on its own skill and judgment. Any loss or damage was caused due to the defendant’s fault and breach of agreement.
   
4. The defendant, in its reply denies the counter claim and joins issue with the counter –claim.
   
5. The hearing
   1. PW1, (Mohammed Yaseen, CEO and Director of the first and second plaintiff companies) in evidence in chief said that the plaintiffs are in the business of quarry operations and manufacturing and supplying ready mix concrete. The parties entered into an initial SPA for the sale of the Crusher. The defendant took two components of the Crusher, but not the third, the sand screening plant. The third component was to be removed by the defendant on 30^th June,2017, with 24 hours notice. The three components are independent of each other. The defendant did not make any payments nor transfer the lease. The lease was to be transferred to reduce the sale price of $220,000.00 by $20,000.00. PW1 said that he did not authorize Sonni Dutt to exchange emails with the defendant.

In cross examination, the attention of the witness was drawn to the provisions of the initial SPA. The plaintiff was required to set up the business of supplying ready mix concrete on the land to be transferred and buy crusher products from the defendant. The monthly installment due was to be deducted from the sale of crusher material. He bought ready mix concrete from the defendant and paid for it. He did not offset the monthly installment of $5000.00, as the defendant informed their Finance Controller that it does not have money. He stopped buying the material, since it was not of good quality.

PW1 denied that he did not make a demand of any of the five installments of $10,000.00 nor take any action against the defendant for the reason that the first plaintiff was using the third component until it gets a new machine. He also denied that the defendant demanded the third component to make sand and make payments to the first plaintiff. The defendant refused to take the third component. The defendant has not lost income, as it was using the first and second components to generate income. It could have made payments to the first plaintiff with the income so generated. He denied that when the defendant went to collect the third component, it found that it was dismantled and lying on the floor. The witness said that Mr Shakheel Hussein of the defendant company never complained that it was not in a proper condition and not the item he purchased. Mr Dutt. General Manager of Metromix, was working with him in October, 2017. He said that Metromix was his company, but has “nothing to do” with the plaintiff’s company.

It transpired that on 9^th October, 2017, Hussein had sent an email to Dutt stating the reason that he did not sign a transfer form nor collect the screening unit,(the third component.) On 19^th December,2017, he sent another email to Dutt stating that the third component was deteriorating daily. Dutt thanked him for the update

Mr Kohli, counsel for the defendant posed the questions as to why the third component was held back for one month and 24 hours notice was required to be given before it was removed, if the defendant was at liberty to remove it at any time.

In re-examination, PW1 said that he did not request his lawyers to send demand notices to the defendant. He did not authorize Dutt to act on his behalf. Dutt did not tell him that Hussein complained that the machines were bad nor that he came to pick the third component. He is unaware of the emails. The defendant did not tell him that the third component was not the item he bought. The machine was sold on an as is where is basis, as provided in the SPA. The plaintiff was unable to set up its manufacturing business, as the defendant did not transfer the land.

2. DW1,(Shakeel Hussein, Managing Director of the defendant company) in evidence in chief said that PW1 showed him three components of the Crusher. The third component was operational at that time. The defendant took the first and second components. The first was operational and the second was for spare parts of the third component.

Mr Yaseen, (PW1) told him that he would give the third component after his new plant arrives from overseas in a month’s time. After a month lapsed, he called Mr Yassen. He said that he needs more time, as his machine had not arrived.DW1 said that he called again and told him that if he does not get the third component, he will cancel the deal. He did not pay the purchase price, as the third component was not given .Mr Yassen did not demand payment. After some time, Mr Yassen told him that he can collect it. When he went to Navua, he found that it was piled with some parts taken out, while other parts were missing. He said that he will not pay the purchase price, as the third component cannot be made operational. The third component is the most important machine, as it can scoop out huge amounts of sand from the river. The defendant had plenty of orders for sand in Labasa, which it could not supply. Its biggest buyer was Pito Industries. It could have sold $ 40,000/ worth of sand a month. Sand is sold between $75 to $ 90 a cubic meter.

In cross-examination, he said that each component performs a different function. The first component was an operational crusher. All three components were operational when he examined them initially. He did not pay the purchase price, transfer the lease nor give 24 hours notice to remove the third component. He waited for three months to retrieve that component, as Mr Yassen said that his machine had not arrived. The deduction of the monthly installment of $ 5000.00 was to start after the land was transferred, The plaintiff set up a plant at the defendant’s quarry. DW1 said that he is deriving income from the first component for the last three years, He used parts from the second component for his old crusher and derived income for over a year . The third component has been idle for 3 to 4 years and is not operational.

In re-examination, DW1 said that the third component was not dismantled. Mr Yaseen told him to leave the third component behind. The first and second have not been transferred to him . Mr Yassen set up a plant for concrete mixing on the plaintiff’s land. Mr Yassen instructed him to liaise with Mr Dutt.

3. DW2,(Pradeep Chand Charan, Director of Ayaans, Civil Electrical & Hardware Supplies, Labasa) in evidence in chief said that he purchased crushed material from the defendant. He bought $ 70,000/ worth of crushed material from the defendant every year. The quality of their material was better than other sources. The defendant always delivered products on time. It transpired in cross examination that this witness did not have any documentary evidence of his business dealings with the defendant.
   

The determination

6. The agreed facts recorded at the PTC, as far as are relevant, read as follows:
   

..the 1^st and 2^nd Plaintiff are related companies and have common shareholders and director..

By an initial Sale and Purchase Agreement entered into by the 1^st Plaintiff and the Defendant (on 31^st May 2017) , the 1^st Plaintiff agreed to sell and the Defendant had agreed to purchase the plant and equipment from the 1^st Plaintiff for a sum of $220,000

The integral terms and conditions of the initial agreement inter alia were:

1. The purchase price for the plant and equipment set was $220,000.00..
2. Payment of the purchase price would be made by the Defendant to the 1^st Plaintiff in accordance with the following schedule:
   1. $10,000.00.. - on or about 31^st July,2017
   2. $10,000.00.. - on or about 31^st August, 2017
   100. $10,000.00.. - on or about 31^st September,2017
   4. $10,000.00.. - on or about 31^st October,2017
   5. $10,000.00.. - on or about 31^stNovember,2017
3. The Defendant would transfer the Agreement for ILTB Lease.. valued at $20,000.00 as part payment of the purchase price of the said plant and equipment within 6 months of the execution of the initial agreement
4. The balance of the sum of $150,000.00.. would be paid by ..monthly installments of $5,000.00 commencing on 1^st March 2018..
5. .. the Defendant dismantled and transported 1^st and 2^nd components only from the 1^st Plaintiff’s premises at .. Navua and installed the same at its premises in Labasa.
6. .. a consequential Sale and Purchase Agreement was then entered into by the 2^nd Plaintiff and the defendant to formalize the transfer of the Agreement for lease ... to the 2^nd Plaintiff as part payment of the purchase price ..
7. That on or about 18^th September 2017,the 1^st and 2^nd Plaintiff through their solicitors served the Defendant’s solicitors with a notice to complete the sale and purchase agreement via email which was neglected and/or not complied by the Defendant.
   

7. The disputed facts are as follows:

Whether there were any prior agreement between the parties before entering into the initial sale and purchase agreements dated 31^st May 2017?

Whether it was agreed that the third component would be delivered on 30^th April 2017?

Whether the 1^st Plaintiff failed to deliver the third component despite numerous requests by the Defendant?

Whether the 1^st Plaintiff promised to have the third component repaired and delivered to the Defendant?

Whether the 1^st Plaintiff has till date failed to deliver the third component to the Defendant?

8. Issues for determination
   1. Whether prior to entering in to the agreement the Defendant had informed the plaintiffs that it intended to purchase the plant and equipment for the purpose of producing sand from its crusher at Vunimoli, Labasa?
      
   2. Whether the defendant is in breach of the initial and consequential sale and purchase agreement dated 31^st May, 2017?
      
   3. If so, whether the Defendant owes the 1^st Plaintiff and 2^nd Plaintiff the amount of $220,000.00 for the breach of the initial and consequential sale and purchase agreement?
      
   4. Alternatively, whether the Plaintiff is entitled to specific performance against the Defendant for the initial and consequential sale and purchase agreement?
      
   5. Whether the Plaintiffs breached any part of the initial and consequential sale and purchase agreements dated 31^st May, 2017?
      
   6. If so, whether as a result of such breach, the Defendant suffered losses and damages?
      
   7. Whether the 1^st Plaintiff is liable for those losses?
9. The plaintiffs claim that the defendant has failed to pay the purchase price for the Crusher. They have lost the use of the Crusher, which was dismantled and released to the defendant. PW1, in evidence in chief said that the defendant took two components of the Crusher, but not the third component.
   
10. The defendant states that it did not pay the purchase price nor transfer the lease, as the plaintiff failed to give the third component on 30^th June,2017.
    
11. Clause 13(a) of the initial SPA of 31^st May,2017, provides that the defendant was to remove the first and second components on execution and the third component “on or about the 30^th June, 2017”. Clause 13 (b) required the defendant to give the plaintiff “at least 24 hours notice” of its intention to remove the third component.
    
12. DW1 said that PW1 told him that he would give the third component when his new plant arrives in a month’s time from overseas. After a month lapsed when he called PW1, he said that he needs more time as his plant had not arrived. Subsequently, in October,2017, when the first plaintiff said it could be collected, the defendant found that it was dismantled with parts missing and non operational.
    
13. PW1, in cross-examination, could not provide any cogent reasons as to why the initial SPA required the defendant to take the third component one month after it collected the first and second components giving 24 hours notice.
    
14. Mr Kohli, in his closing submissions points out that it would not have been in the defendant’s interest to collect the first and second components and make another trip from Labasa to Navua to collect the third.
    
15. I would note that the first plaintiff did not send demand notices to the defendant, although none of the installments were paid. PW1 confirmed in re-examination that he did not instruct his lawyers to send demand notices. Clause 15 of the initial SPA expressly provides that the first plaintiff may proceed with legal action including winding up, if the defendant defaults.
16. It also transpired that the first plaintiff purchased crusher material from the defendant but paid for it, “instead of deduct(ing) its monthly installment of $5000.00..”, in terms of clause 8.
    
17. In my view, the evidence establishes that the first plaintiff had required that the third component be collected later, since it wanted to use it until its replacement arrives. It is for that reason that the first plaintiff neither demanded payment of the purchase price nor deducted the installment due from the sale of material to the defendant.
    
18. It was contended on behalf of the plaintiff that the Crusher was purchased on an as is where basis, as provided in clauses 11 and 12.
    
19. Clause 11 provides that the defendant “ has inspected the (Crusher) and has offered to purchase the same entirely in reliance on its own skill and judgment and not in reliance on any representations, warranties...made by.. the (first plaintiff)”, as acknowledged by the defendant in clause 12.
    
20. DW1 said that the third component was operational at the stage he dismantled the first and second components, but he found it in a bad condition and non-operational when he went to collect it in October,2017. In October,2017, PW1 told him that he could collect it.
    
21. DW1 produced a photograph of the third component in an operational state and the following emails he sent to Mr Dutt, General Manager of Metromix,a company owned by PW1.
    
22. On 9^th October,2017, he informed Mr Dutt, that he did not sign the transfer and collect the screen,(the third component) as it was in a very bad condition. The screen was broken, the wiring board was falling, other parts were lying about, there was no water pump and the five motors he brought, burnt instantly. He said he would sign the agreement only if it was fixed . On the same day, Dutt replied that he will discuss with Mr Aiyub, to list out the things to be done and he would do his best to arrange to fix it.
    
23. On 18^th December, 2017, Dutt replied that Aiyub is back in the country and he will take the message to him.
    
24. On 19^th December, 2017, DW1 informed that nothing has been done and the machine was getting bad day by day, it is better that the deal is cancelled and the old crusher parts taken as it was “no using keeping rubbish”.
    
25. I find that the evidence of DW1 that the third component was in a working condition initially and subsequently in a bad condition and non-operational substantiated by his contemporaneous emails.
    
26. In my judgment, the plaintiffs failed to provide the third component to the defendant in the condition it was at the time of inspection, in breach of the initial SPA.
    
27. The defendant has had the use of the first and second components and admittedly derived income from the same.
    
28. The plaintiffs have claimed special and general damages, but failed to establish their loss. DW 1 was not cross examined on the actual income he received nor did the plaintiffs file a schedule of special damages and establish the value of the first and second components.
    
29. In my view, it would be inequitable for the defendant to continue to have the use of the first and second components
    
30. I make order that the defendant at his cost, deliver the first and second components in working condition to the first plaintiff within 15 days of this Judgment.
    

The counterclaim

31. The defendant, in its counterclaim states that prior to entering into the SPA, it informed the plaintiffs that it intended to purchase the Crusher to produce sand and the plaintiffs knew that the third component was essential for producing sand and metals.
    
32. The defendant did not establish that it was known and communicated to the plaintiffs that it intended to purchase the third component to produce sand and metals.
    
33. In any event, the evidence of the defendant with respect to his business dealings was unsatisfactory.
    
34. The counterclaim is declined.
    
35. Orders
    1. The plaintiff’s claim is declined.
    2. The defendant shall at his cost, deliver the first and second components in working condition to the first plaintiff within 15 days of this Judgment
    100. The counterclaim of the defendant is declined.
    4. I make no order as to costs.
       

A.L.B. Brito-Mutunayagam

Judge

4^th February,2022