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Merchant Finance & Investment Co Ltd v Extreme Business Solutions (Fiji) Ltd [2023] FJHC 923; HBC01.2014 (12 December 2023)


IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION


Civil Action No. HBC 01 of 2014


BETWEEN: MERCHANT FINANCE & INVESTMENT COMPANY LIMITED, a limited liability company having its registered office at Level 1, Ra Marama House, 91 Gordon Street, Suva, Fiji.
PLAINTIFF


AND: EXTREME BUSINESS SOLUTIONS (FIJI) LIMITED, a limited liability company having its registered office at 34 Knolly Street, Suva, Fiji.
FIRST DEFENDANT


AND: CLARITI (SOUTH PACIFIC) LIMITED, a limited liability company having its registered office at 7th Floor, Ra Marama House, 91 Gordon Street, Suva.
SECOND DEFENDANT


AND: YOGENDRA RAVINDRA SHARMA, a Company Director of 47 Howell Rod, Suva.
THIRD DEFENDANT


AND: GYAN MATI, a Company Director of Auckland, New Zealand.
FOURTH DEFENDANT


BEFORE : Hon. Justice Vishwa Datt Sharma


COUNSEL : Mr. Nandan S. - for the Plaintiff

No Appearance - for 1st Defendant

Mr. Sharma P - for 2nd, 3rd & 4th Defendants


DATE OF JUDGMENT: 12th December, 2023


JUDGMENT


[Preliminary issue, liability, winding up s. 531. consent, loan, guarantee and guarantors]


In the outset, a Plaintiff bank would not accede to approve any application for a loan until there are guarantors who are willing to execute the guarantees and stand the responsibility of paying the debt personally and severally in default of any loan repayment.


Introduction


  1. The Plaintiff filed a Writ of Summons coupled with a Statement of Claim and subsequently files an Amended Writ of Summons and the Statement of Claim on 09th March 2016 and sought for the following orders:
  2. The First, Second, Third and Fourth Defendants subsequently filed their Amended Statement of Defence on 27th April 2016.
  3. Reply to the Amended Statement of Defence was filed on 20th October 2016.
  4. The First Defendant is the Principle debtor and this action was filed to recover the debt in terms of the Loan Agreement(s) between the parties to the proceedings. The company, Extreme Business Solutions Fiji Limited was wound up on 27th October, 2015 vide case no. HBE 30 of 2013. However, on 15th August 2019, the Action against the 1st Defendant was stayed pursuant to Section 531 of the Companies Act 2015 since the company was wound up.
  5. At the time of the commencement of the current substantive [HBC 01 of 2014] on 13th January 2014, the First Defendant was not in liquidation. The claim by the Plaintiff, Merchant Finance & Investment Company Limited was filed against the 1st Defendant – Extreme Business Fiji Limited, 2nd Defendant – Clariti (South Pacific) Limited, 3rd Defendant – Yogendra Ravindra Sharma in his capacity as the Director of the 1st and 2nd Defendants and 4th Defendant – Gyan Mati in her capacity as the Director of the 1st and 2nd Defendants accordingly.
  6. The Plaintiff’s Amended Statement of Claim was filed on 9th March, 2016. It contained total of three (3) Causes of Action:
  7. The three (3) causes of Action arise from the First Defendant’s alleged default for the non-payment of debt in terms of the Loan Agreement of 30th January, 2012.

Preliminary Issues

  1. At the Commencement of the substantive trial on 02 November, 2022, the Defence Counsel raised one (1) preliminary issue as hereunder;
  2. The Defence Counsel’s contention was that the First Defendant was wound up on 27th October, 2015 and Section 531 of the Companies Act, 2015 is relevant in this matter which provides-

Actions stayed on winding up order

531.When a winding up order has been made or an interim liquidator has been appointed under section 537, no action or proceeding must be proceeded with or commenced against the Company, except by leave of the Court and subject to such terms as the Court may impose.


  1. The argument raised by the Defence was that no action against the First Defendant can be proceeded with Except by Leave of the Court or through the Consent of the Liquidator. That the First Defendant should have been summoned to the Court for the trial since the action clearly against the Second, third and fourth Defendants stems from the action against the First Defendant is stayed on 15th August, 2019 pursuant to Section 531 proceedings since the action against the Second, third and fourth defendants cannot be proceeded with.
  2. However, the Plaintiff’s Contention was that there was no need for the First Defendant to be summoned to the Court since evidence will be adduced to the Court during the trial that the debt is owed by the First Defendant and that the said loan from the Plaintiff’s Bank was guaranteed by the Second, Third and fourth Defendants respectively.
  3. The Guarantee that was Exhibited into evidence in Court by [PW2] Josefa Serulagilagi as Exhibits P6 and P8 alia contained the following clauses:

“1. The Guarantor hereby guaranteed the due and punctual payments by the Customer of all sums of money whatsoever under Mortgage Debenture, various Mortgages and Joint/Several Demand Promissory note and Letter of continuing security on which ......(illegible) for the time being be owing or unpaid by the customer to the Mortgagee upon service upon the Guarantor of the Mortgagee’s written request for payment under the hand of any of the officers of the mortgagee or by the Solicitors of the Mortgagee delivered personally to the Guarantor of any one or more of them or left or sent through the post office addressed to the Guarantor or any one or more of them at their place of abode or business or the place of abode or business or any of their last recorded in the books of the mortgagee?


  1. Upon perusal of clause 4 of the said ‘Guarantee’, Second Defendant had agreed that it shall be jointly and severally be liable to the Mortgagee. Therefore, I find that there is no merit in the Defence’s of preliminary issue that the Plaintiff cannot proceed under Guarantee without proceeding with the claim against the First Defendant.
  2. Accordingly, the First Preliminary Issue fails and is dismissed.
  3. The ‘Guarantee’ that was exhibited by PW2, for the third and fourth Defendants dated 14th December 2010 contained respective Defendants as guarantors for the debt not exceeding $1,025,947.33. In clause 8 of the ‘Guarantee’, both Defendants third and fourth defendants had agreed that they shall be jointly and severally liable to the creditor?
  4. The Plaintiffs amended Statement of Claim, causes of action are pleased separately against the Defendants. The Legal impediment to proceed the action or without the First Defendant, Extreme Business Solutions (Fiji) Limited, without leave of the Court in terms of S.531 of the Companies Act 2015, ipso facto is not a bar for the Plaintiff to continue this action against the Second Defendant who provided an ‘unlimited Guarantee’ dated 14th December, 2013, and the third and fourth Defendants who provided a personal guarantee dated 14th December 2014 for the Debt upto $1,025,947.33.
  5. Therefore, the Plaintiff is at liberty to address evidence at the trial proper against the First Defendant in his absence to substantiate the Plaintiff’s statement of claim in particular that the First Defendant had defaulted in making the repayments of the Loan advanced to him by the Plaintiff to the Plaintiff under the contract executed therein of which the First Defendant is aware of and has the knowledge.

Amendment


  1. Whether the Court should have allowed the amendment to an inadvertent typo error in terms of the date in the pleadings. This oral application was made in the midst of the trial, and taking into consideration order 20 Rule 5 of the High Court Rules 1988.
  2. In the present case the Plaintiffs oral application was to amend the inadvertent typo error in the Amended Statement of Claim dated 2nd March 2016 to correctly reflect the date of Execution of the Unlimited Corporate Guarantee’s by the 2nd Defendant from the 14th December 2013 to 14th December 2010 accordingly. This application was made at the end of the Plaintiff’s case wherein the Plaintiff confirmed to Court that it will not call any further witness/evidence and that that was the Plaintiff’s case.
  3. Therefore, the amendment sought was not made before the close of the Plaintiff’s case rather at the end of the Plaintiff case wherein the Plaintiff decided not to call any further evidence but Plaintiff’s case came to a close. For this reason, the Plaintiff’s oral application for amendment as sought therein was disallowed bearing in mind that the substantive action was filed on 23rd June 2014, an amendment already sought thereafter and at the current time sought for a further amendment after a lapse of about 8 years timeframe.
  4. However, the Court noted that the Plaintiff’s amendment sought was an inadvertent typo error in the Amended Statement of Claim dated the 02nd Day of March 2016 to correctly reflect the date of Execution of 2nd Defendant from 14th December 2013 to that of 14th December 2010, an amendment sought to amend the year only, otherwise the date of Execution is confirmed with the unlimited corporate guarantee tendered into evidence as Exhibit ‘P6’ on 02nd November 2022.
  5. After determination of the above preliminary issues, this Court will move to deliberate and determine the substantive issue accordingly.

Analysis and Determination


  1. The Civil standard of proof is the Balance of Probabilities. The onus or burden of proof and standard of proof in civil matters is on the Balance of Probability.
  2. In the case of Nand v Dominion Insurance Ltd [2000] FJHC 167; HBC57.1996 (30 June 2000) (unreported) Justice Pathik said that:

“The Plaintiff has to prove the extent of his loss.” The burden of proof in a civil action is with the Plaintiff and the assessment of loss needs to be proved by the Plaintiff.


  1. The Plaintiff called two (2) witnesses at the Trial and closed its case whilst the Defence chose not to call any witness(s) and closed its Defence Case. Both parties to the proceedings furnished Court with their Perspective Written Submission.

Plaintiff’s Case [PW1]


  1. The First Plaintiff’s witness was [PW1] Bobby Dayal who gave evidence in his capacity as the Divisional General Manager East.
  2. His evidence is summarized as follows:
  3. The Second Plaintiff’s witness was [PW2] Josefa Serulagilagi who gave evidence in his capacity as the Legal Officer of the Plaintiff bank.
  4. His evidence was:
  5. However, although the Defence did not call any witnesses during trial, a written submission was furnished to the Court.
  6. The Defence submitted that –
  7. I have carefully heard and perused the evidence before this Court. It will be noted that the Plaintiff called two (2) witnesses who gave viva voce evidence and was subjected to Cross Examination by the Defence, whereas the Defence thought fit not to call any witnesses. Both parties to the proceedings furnished Court with their respective written submissions.

First Defendant


  1. The three (3) causes of actions against the Second, Third and Fourth Defendants are different and independent of the First Defendant’s Cause of action.
  2. The First Defendant entered into a Loan Contract with the Plaintiff Bank on 30th January 2012 for the total amount of $2,259,967.58 inclusive of all interest.
  3. The First Defendant breached the Loan Contract it had entered with on 30th January 2012 by defaulting in making the repayments as per the Loan Contract resulting in the Plaintiff suffering loss and damages the loan of $2,259,967.58 to the Current stands unpaid.
  4. The First Defendant was wound up by the High Court, Suva vide winding up Action No. HBE 30 of 2013 on 27th October 2015.
  5. Subsequently, on 15th August 2019, the Acting Master ordered that the Action against the First Defendant is stayed pursuant to section 531 of the Companies Act 2015, since the First Defendant Company has been wound up.
  6. The Plaintiff froze the First Defendant’s Loan Account with the Bank on 28th June 2013.

Second Defendant


  1. The Second Defendant executed an unlimited Corporate Guarantee on the 14th December 2010 with the Plaintiff guaranteeing the debt of the First Defendant and was also a continuing guarantee. The Second Defendant had by virtue of the unlimited Corporate Guarantee agreed that it shall be jointly and severally liable to the mortgagee;
  2. Due to the failure of the First Defendant to make repayments to the loan contract which was guaranteed by the Second Defendant, on 20th November 2013, solicitors for the Plaintiff issued a request of payment notice for the sum of $2,007,800.72 to the Second Defendant in respect of the First Defendants outstanding loan debt owed to the Plaintiff. However, the Second Defendant did not adhere to and failed to make any repayments to the Plaintiff;
  3. The Third and the Fourth Defendants on the 14th December 2010 executed a limited Personal Guarantee with the Plaintiff, Guaranteeing the payment of the First Defendant’s loan debt in the sum of $1,025,747.33;
  4. Due to the failure on the part of the First Defendant to make repayments as per the loan contract guaranteed by the Third and Fourth Defendants, Plaintiff’s solicitors on 20th November 2013, issued request for payment from the Third and Fourth Defendants in the sum of $1,025,747.33 in respect of the First Defendants debt owed to the Plaintiff’s Bank. Both Defendants failed to adhere to and/or make the outstanding payments.
  5. The evidence given by [PW1] Bobby Dayal established that the First Defendant was a Borrower of the Plaintiff. He failed to meet the regular repayments as was required of him, owed outstanding debt of $2,259,967.58 and that the First Defendant had failed to pay off its debt which he took under a Loan Contract of 30th January 2012.
  6. Further, the First Defendant was not in a position and/or unable to pay the Debt owed to Plaintiff’s Bank. Hence, the First Defendant was wound up as per Section 515 of the Companies Act 2015.
  7. [PW2], Mr. Josefa Serulagilagi’s evidence before Court established that the First Defendant Company was wound up for owing a debt in Excess of $2 million.
  8. The Directors of the First Defendant were Yogendra Ravinesh Sharma [Third Defendant) and Gyan Mati (Fourth Defendant), who were the two Guarantors and had in fact executed the Loan Contract dated 30th January 2012 and the Common Seal of the First Defendant was affixed to the document.
  9. PW 2 also told Court that as per Clause 3 of the loan contract, the guarantee provided by the Third and Fourth Defendants was a continuing guarantee and explained that a continuing guarantees allowed the lender to continue lending monies and the guarantors are liable for the sum irrespective of whether the lender informed them that more money has been lent or that the outstanding amount becomes higher than at the time the guarantee was given.
  10. The witness [PW2] also confirmed that the Corporate Guarantee given by the Second Defendant was guaranteeing the debt of the First Defendant and was a continuing guarantee.
  11. Clause 2 of the Corporate Guarantee is relevant and reads as follows:

“This Guarantee shall be a continuing guarantee and shall not be considered as wholly or partially satisfied or discharged by any moneys which may at any time or times hereafter be received or applied by the Mortgagee to the credit of any account or the Customer and shall be available as a guarantee for the whole of the sums of money (including all sums of money whatsoever for the time being remaining unpaid on any account or accounts whether now existing or which may hereafter be opened together with interest) referred to in Clause 1 hereof and for the time being remaining unpaid on any account or accounts whether now existing or which may hereafter be opened together with interest) referred to as “the said indebtedness and liability” and not only for so much thereof as is equivalent to any limit hereinafter imposed on the liability of the Guarantor hereunder”.


  1. PW2 also explained and rectified that the amount of $150,000 reflected on the top left-hand corner of the Corporate Guarantee was a mistake and the total sum that the Second Defendant is liable for under the Continuing Guarantee is $2,259,967.68.
  2. PW2 explained that the sum of money demanded was $2,007,800 only as that was the outstanding debt at the time of the demand.
  3. The personal guarantee is a limited guarantee and was executed by the Third and fourth Defendants at $1,025,747.33. Request for payment notice was issued to recover a sum of $1,025,747.33 which was the limited amount.
  4. The second, third and fourth Defendants as Guarantors under the respective instruments of Guarantees, had agreed that they can be sued either jointly and/or severally and are liable for advances and the interest agreed in terms of the Agreement and actions against them can be proceeded without proceeding against the First Defendant.
  5. I therefore find that the Plaintiff has established his case on the Balance of Probabilities and has clearly proved that the Amount of debt still stands owed to the Plaintiff pleaded in the Plaintiff’s Amended Statement of claim against the second, third and fourth defendants filed on 09th March 2016.
  6. As Guarantors under the respective instruments of Guarantees, the second, third and fourth Defendants failed to pay the guaranteed sum despite the request for the payment of the debt sum owed to the Plaintiff.
  7. Accordingly, I enter judgement against the First and Second Defendants jointly and severally in the sum of $2,007,800.72.
  8. Judgment is also entered jointly and severally against the third and the fourth defendants in the sum of $1,025,747.33.
  9. There will be an order for interest on the judgment sum calculated for the time of judgment till full payment of the debt.

Costs


  1. Matter proceeded to full trial with witnesses testifying and written submission filed. It is only appropriate and fair that I order the 1st, 2nd, 3rd, and 4th Defendants to pay the Plaintiff summarily assessed cost of $1,000 each (Total of $4,000).
  2. Bearing above in mind, I have no alternative but proceed to grant the follows orders.

Orders


  1. Judgement is entered against the First and Second Defendants jointly and severally in the total sum of $2,007,800.72 (Two million seven thousand and eight hundred dollars and seventy-two cents).
  2. Judgement is entered against the Third and the Fourth Defendant jointly and severally for the total sum of $1,025,747.33 (One million and twenty five thousand seven hundred and forty-seven dollars and thirty three cents).
  3. Interest (as applicable) on the Judgement sum is granted from the date of judgement till the date of full payment of the debt.
  4. The First, Second, Third and Fourth Defendants to pay a sum of $1,000 as summarily assessed costs each (Total of $4,000) to the Plaintiff within 14 days.

Dated at Suva this 12th day of December , 2023.


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

Vishwa Datt Sharma

JUDGE


CC: Reddy & Nandan Lawyers, Suva
Victoria Chambers, Suva

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