Bianco v Ruggiero [1997] FJLawRp 35; [1997] 43 FLR 229 (12 September 1997)

[1997] 43 FLR 229

HIGH COURT OF FIJI ISLANDS

ALESSANDRO BIANCO

v

GIUSEPPE RUGGIERO & TAEKO RUGGIERO;
& MEDITERRANEAN ISLAND RESORT LTD

[HIGH COURT, 1997 (Lyons J), 12 September]

Civil Jurisdiction

Exchange Control- issue of shares- whether subscriber resident in Fiji- whether issue totally invalid- whether purchase price recoverable- Immigration Act (Cap 88) Sectionamp; 8 (1) (1) - Exchange Control Act (Cap 211tions 10 &20.

A visitor to Fiji purchased shares in a Fiji company. Lay. Later he sought to rescind the agreement andver the purchase price. The High Court examined the relevant statutory provisions and HELD:HELD: (i) that a visitor is not a resident of Fiji while visiting (ii) that whether or not the shares were issued or transferred to the visitor ministerial consent to the sale was not beforehand obtained and therefore the transaction was wholly void and (iii) the parties not being in pari to the ;the visitor was entitoed to a refund.

Cases :

Central Pi gery Co Ltd v. M11 (1949) 7594

ChalmChalmers v. Pardoe [1963] All ER 552

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Green v. Portsmouth Stadium Ltum Ltd [1953] 2 All ER 102

. [1994] EWCA Civ 14; [1995] 3 All ER 669

Kiriri Cotton Co. Ltd. v. Dewani [1961] All ER 177

Mosv. Koffyfontein Mines Ltd [11 Ch 73

Re Fry Fry , Chase National Executoecutors and Trustees Corporation Ltd [

#160; ;d &<; 2 0; 2 All ERll ER 106

Re Transatlantic Life Asse Co. Ltd. [1979] 3 All ER 352

Spitzel v. Chinese Corporation [1899] 80 LT 347 at 351
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C.B. Youn Young for taintiff
A. & for tfendantndants
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The Plaintiffencedenced action by Writ dated the 3rd Augu95 ag the dant font for recovery of monies paid by way of p of purchase of a shareholding, and a loan loan to, the 2nd Defendant Company.

The 1st Defendants alsi reside in Fiji and are the office bearers of the 2nde 2nd Defendant Company.

I will deth one matter tter first, so as to avoid confusion.

As sbe seen, the Plaintlaintiff invested $100,000.00 in the 2ndndant Company. For his investment the Plaintiff received 10,000.00 shares in the 2nd Defendefendant Company. At the time the 1st Defe were the office bearers ofrs of the company. The 1st Defendant, Guseppe Ruggiero, was a Director, and the Defendant Taeko Ruggiero was the company secretary and, as I understand, also a director of the Company if one is to read paragraph 2.1 of the Defence correctly.

At the comment of his shis submission, counsel for the Defendant argued that there was no evidence against the 1st Defendants such as would satisfy the Court that they had incurred any liability to the Plaintiff. As I will explain later on, I consider that as a correct view. So, for ease of understanding, I will hereinafter refer to the 1st Defendant as Ruggerio (collectively) and the 2nd Defendant as Mediterranean.

The Plaintiff next rext returned to Fiji, again on a visitor’s permit on the 9th February 1994. This permit was valid for one month unless extended.

On the 4th March 1994 vhis visitor’s permit was extended until the 9th June 1994.

On the 25th June 1994,Pthe Plaintiff was issued a permit pursuant to Section 8(1) of the Immigration Act (Cap 88). Thision deals wits with permits to reside in Fiji, for work pur or otherwise. It is distinctly different from a permit to visit as issued pursuant to Sect Section 9(1) of the Act.

Theit unection 8(1) was) was twas to expire on the 6th April 1997. In my view, this is the permit that the parties referred to as &#8220rk permit”. This permit carries with it a right to reside in Fiji.

RuggiRuggiero we Italiatalian Consul for Fiji. They also run a resort called the Mediterranean. This resort offers a restaurant and accommodation.

In August 1993, afte aris arrival, the Plaintiff visited Ruggiero’s 17;s resort. He had discussions with the Ruggiero. These discussions centr the Plaintiff investing in Mediterranean, a company set up to establish and run the resortesort and more particularly, a smaller resort situated on an island just off Vuda in Western Viti Levu called Tivua Island.

Taintiff was on holidayliday. He had some money to invest having received it from his late father’s estate. He had some experience in business in the fieldnsurance Brokerage working principally for his late father.ther.

In these discussions, Ruggiero offered the Plaintiff 10,000.00 shares of Mediterranean for the consideration of $100,000.00 (Fijian).

The Plainlikes Fiji. Hei. He does noy he was looking for investment. But at the time (August/Sest/September 1993) he made no firm commitments to invest in Fiji in generaMediterranean in particular.

He returned to hito his home in Europe but kept contact with Ruggiero.

He returned ji, as stat stated, on the 9th February 1994. After further discussions with Ruggiero he decided to invest in Mediterraneanhe tereviously discussscussed.

The meeresolved as foll follows.
“It was unanimouslmously resolved that:

a); &160;ټ &#16>A fu ther000,000 ordinordinary shares be issued to Mr Allessandroandro Bianco at a price of $100,000 (One Hundreusandars),recei whicherebnowledgededged by the company.

b)&#>b) &1600;#160;&#160 &#160 &##160;&#160n coon completipletion of the above transaction, Mr. Allessandro Bianco will be entitled to a share certificate for 10,000 ordinary shares i compepresg 10% of the total registered share capital of thof the come company.pany.

c) ټ&1160; <

Kapadia Singh &amp, Co., Chartered Accountants of Lautoka are hereby instructed to prepare the necessary share allotment documents, share certificates etc to give legal effect to the above transactions. They arther instructed to attend tend to stamping and filing of the necessary documents with the Commissioner of Stamp Duties and Registrar of Companies.”

A share cicate in MeditMediterranean, being No. 3 and dated the 28th February 1994 for 10,000 shares, was issued to the Plaintiff (Exhibit 3).

The Plaintiff furturchaurchased certain items for F$8,200.00 which were provided to Mediterranean for use on its Tivua Island Resort. The monies so expanded were treated as a loan to Mediterranean from the Plai. Exhibit 4 is very clear oear on that. The $8,200.00 was expressed as a loan “with the condition of No Interest, No Term and No Security”. It was, in effect a “pay back when you can” loan.

Ma progressed thereafteeafter according to plan until August 1995 when the Plaintiff had his solicitor write to Ruggiero and Mediterranean seeking to rescind the ment to purchase the shares and, as well, demand repayment ment of the loan. The Plaintiff’s reasons for this appear to relate to matters centred on his personal life which, in my view, have little relevance here.

The Defendants of course resisted this.

The Plaintif17;s argumergument is a very narrow one. He says that at the time of purchase of the shareswas a non-resident of Fiji and thus the agreement to purchase the shares (security) was cons contrary to Section 10 of the Exchange Control Act (Cap 211).

are sore some prme pree preliminary matters which need to be disposed of.

Firstly, it i in disputispute that at the time of the transfer of the shares (25th February 1994 - 28th February 1994) there existed no approor the issuing of those shares as envisaged in Section 10 of the Act. This approval was obts obtained on the 20th September 1995 (See Exhibits 9, 10 and 11) one month after the letter from the Plaintiff’s solicitors (Exhibit 5) which no doubt, drew this to the Defendants’ attention.

Secondly, at theencemencement of the Defendants’ case, the Defendants were granted leave to add to paragraph 11 of the Notice of Defence the following:-

&#822ther and/or inor in the altive if the issue of the 10,e 10,000 shares in the 2nd Defendant Company was without the permission of the Reserve Bank of Fiji and/orcontrary to the Exchange Control Act, the Plaintiff was in pari delecto and the Plaintiff is not entitled to the refund of the purchase price of the said shares.”

The Plaintas allowed toed to reply in terms as follows “Plaintiff claims he was not pari delecto and that he is entitled to the refu $100,000.00”

Thiras I have said, Def, Defence Counsel submitted that that the Plaintiff had not made out a case against Ruggiero. I will deal with that submission now.

Iview the submission (ton (thirdly above) is correct. On the evidence (and in fact it is not even pleaded) I can find no cause of action against Ruggiero in their personal capacity. As I understhe evidence, they acted ated at all times in the capacity of office bearers of Mediterranean. There is no evidence that they acted improperly in that capacity such as would remove from them the protection of the Corporate veil. In acting as they did, they acted for and on behalf of the Company (Mediterranean) for which the company must bear the liability of those actions.

dingly the Plaintiffff’s case against Ruggiero is dismissed.

The only cause of n hern here is the Plaintif17;s cause of action against Mediterranean.

Section 10 (1) of#160;<160;160;

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“E cept with the permission of the minister, no person sin Fiji issue any security rity or, whether in Fiji or elsewhere, issue any security which is registered in Fiji, unless the following reqents are fulfilled , that ihat is to say:-

(a0; &#160 &#160therithe person to whoo whom the security is to be issued nor the person, if any, for whom he is to be a nominee is resident outside Fiji, and

;

b)҈ ;ټ&#the prescprescribscribedribed evid evidence ence is pris produced to the person issuing the security as to the residence of the n to whom it is to be issued and that of the person, if any, for whom he is to be a nomineeminee..”

The Plaintiff&;s argumergument is that as a non-resident, the Minister’s permission was needed before the issue of the Share Certificateno such permission was obtained prior to the issue of the security, this cannot now be reme remedied by subsequent approval or, alternatively, it has not been subsequently approved.

Coently, it is argued, ued, the share issue is illegal: it should be rescinded and the monies returned to the Plaintiff.

Sn 10 (1) of the <160;ExchaExchange Control Act is quite clear. If a p is a is a non-resident, permission must be granted beany sty can be issued.sued. Mediterranean’s Counsel arguesrgues that, taking the term “resident” at its normal meaning, laintiff was in fact resideesident in Fiji in or about February 1994. He was, it is argued, living here, day to day. He intended, it is argued, to remain. This, it is submitted makes him “resident here” for the purposes of Section 10 (1).
Immigration Act (Cap 88). 88). To dorwise, ise, it is argued, is to make a nonsense of the provision for it would allow a person to fly into the country, stay a week, purchase securities and then . The whole point of the provision, that of having some cone control over foreign ownership of locally issued securities, would thus be defeated.

I agreh Counsel for ther the Plaintiff. The term “resident” must take for its meaning, that definition attributed to it under the provisions of the Immigration Act (Cap 88).

ctioe 2 of the

“Residwith itth its grammatical variation means residence in Fijih is not unlawful under anyr any of the provisions of this Act.”

Thus by definition, to be a resident of Fiji, a cn of another country (such such as the Plaintiff) must have a permit to reside issued pursuant to Section 8 (1) of the Immigration Acon Act.

In February 1994, the tlaintiff did not have suchdency - he only had a visitor’s permit issued under Section 9. He was not a resident dent at the time, however, for the Immigramigration Act, or, as I see it for the purposes of the Exchange Contro>
Whilst the general preference of the Court is to give words to their natural meal meaning, in this instance the meaning of “resident” must be restricted by the definition in the Immigration Act. The Plaintiff was here as a visitor. If his permit at the time has not been extended and eventually he had nen granted the permit to reside and work, he would have beee been here illegally and liable for deportation.

In fact, asad the DefenDefendants’ material, as much as admitted.

In paragraph (c) of the Minutes of the Meeting of the February 1994 (Exhibit 2) the need to get a work permit (and consequential residency) is acis acknowledged. That, to my mind, acknowl the Plaintiff’s non-resident status and the Defendanendants’ knowledge of it.

Toind, it is clear that that Mediterranean, in issuing the securities (for shares) to the Plaintiff on or about the 28th February 1994 did so knowing that the Plaintiff was not a resident in Fijd so without the Minister&#ter’s permission; and in so doing, was in breach of Section 10 of the Exchange Control Act.

The above applies, if in fact the shares were “i” as opposed to transferred. The distinction is perhaps pedantic, academic and, as itas it turns out, arguably unnecessary but ompleteness I should cover it.

In the normal smal sense of a company’s business, the term “issued” can be somewhat confusing. In Ford Principles of Company Law para 806 the learned author says:-

&;The word ̶ue&ssue̶” is a difficult term and it is capable of meaning different things. In Mosv. Koffyfontines u>&# u>&#1911] 1 1] 1 Ch 73 at 84, Farwell LJ said:
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“Thee three sree step steps with regard to new capital; first icreated; till it is created the capital does not exist at a at all. When it is created it may remain unissued for years ... When it iued it may be issued on sucn such terms as appear for the moment expedient.Next comes allotment. To take the words of Stirlimg J,in Spitzel v. Chinese Corporation [1899] 80 LT 347 at 351), he says: &;What isat is an allotment of shares? Broadly speaking, it appropriation by the direcdirectors or the managing body of the company of shares to a particular person.”

Di, in&Central Pral Piggeriggery Co Ltd v. McNico11 (1949) 78CLRat 599, after cter citing that statement referred to anothening of the word “issue”. He said:

&#8peaking gene gene generally the word “issue”&#1ed in relation to shares mees means, where an allotment has taken place, that the shareholder is put in control of the shares allotte221;

This This wouldr whur when his name was d on the regisregister of members or some other step was take by which the title derived from the allotment would be made complete.”

Perhaps it istting hair hairs, but to my, the transfer of shares taes takes place when one shareholder, having previously had shares issued and allotted to him or her, sellsransfers all of that allotment or part thereof to a third pird party. Ford covers this distinction in paragraph 1119 but there is no need for me to go into that at any depth. In any event, Section 11 of the Exchange Control Act (without setting it out in full), enacts a similar provision for the transfer of shares as Section 10 does for the issue of them. Irrespective of whether it was an issue of shares or a transfer which the Plaintiff took, the law would, in my view, be the same.

The evidence befe was awas a little vague as to whether it was a transfer of the shares or an issue of the shares. The Certificate (Exhibit 3), ly in the panel indicating share numbering on the left hand side thereof indicates an issueissue of further shares from 80,001 to 90,000 to accommodate the Plaintiff’s the purchase.

In contrast, the letter from the FTIB of the 12th September 1995 (Exhibit 9) although secondary evidence, indicates a transfer of part of Ruggiero shareholding to the Plaintiff.

I note Exhibit 9, whippt approval to issue the securities retrospectivectively appears to be the intent to this spondence, it inaccurately tely reflects the agreement. The Plaintiff was to get 10,000 shares not a 10% shareholding as is shown in this letter. Accordingly I do not place much value on Exhibit 9. It appears to me to be an “after the event” attempt to obtain the required permission rather than accurately reflecting the agreement.

I alte that paragraph (aph (a) of the Minutes of Meeting (Exhibit 2) refers to “shares to be issued”, thus, on balance, I accept that an “issue&#8of shares is applicable and not a “transfer”. O1;. On balance therefore, Section 10 is the applicable Section although, for completeness Section 11 should not escape reference.

Given that there has been a breach of Section 10, Counsel for the Plaintiff put the transaction is thus invalid. He referred the Court to Re Transatlantfe Assuransurance Co. Ltd.<160;[1979] 3 All ER 352, a decision in Chancery of Mr. Just Justice Slade.

In Re Tranntic, Mr. Jus. Justice considered the effect of Section 8 (1) of the Exchange Cone Control Act 1947 (UK).

The factual sion, at leat least on tucialts, was similar to the case herein in that shareshares were were issued to a non-resident without the consent of the Treasury as requby the appropriate Section, Section 8 (1).

Secr>Section of the Enhe English Act almost mirrors the Fiji equivalent save for what could be called local variations.

Justice Sladd that a br a breach of Section 8 (1) (Section 10 in Fiji) red the transaction invalidvalid. His Lordship held that shares were securities and as required by the legislation (See also y, Chational Executorsutorsutors and Trustees Corporation Ltd [19 All ER 106 at 112 and Rand Re Transatlantic at p.356).
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Having satisfied himself that Section 8 (1) (Section 10 of Fiji) Slade J. reasoned thad that a breach rendered the transaction id by reference to Section 1ion 18 of the English Act.

Thivalent of Section 18on 18 is found in Section 20 Cap. 211.

Section 20 (Section 18 UK) reads:-

“-&#1>- The title of any peto a to a securit which he has given value olue on a transfer thereof, and the title of all persons claiming through or under him, shall, notwithstanding the trr, or any previouevious transfer, or the issue of the secursecurity, was, by reason of the residence of any person concerned other than the first-mentioned person, prohibited by the provisions of this Act relating to the transfer or issue of securities, be valid, unless the first-mentioned person had notice of the facts by reason of which it was prohibited.

(2)- Witprejudice tice to the provisions of subsection (1), the Minster may issue a certificate declaring, in relation to a security, thy acts done before the issue of the certificate purporting to effect the issue or transfer sfer of the security, being acts which were prohibited by this Act, are to be, and are always to have been, as valid as if they had been done with the permission of the competent authority, and the said acts shall have effect accordingly. ( Amended by Legal Notice 112 of 1970).

<- Nothing in this secs section shall affect the liability of any person to prosecution for any offence against this Act.”<160;
Mr. Justice Slade reasoned at p.355:-

&#8220y judgment cont counseounsel for the company is correct in submitting that this section, by necessary inference, presupposes that the purported issue of a security in manner prohibited by the Act is wholly invalid. Were Were this not so, I could see no point in the provisions of S.18 (1) which, when applicable, by their terms operate to validate the title to such a security of a person who has given value on taking a transfer thereof. Were this not so, I could likewise see no point in the provisions of S. 18(2) which empower the Treasury to issue a certificate, inter alia, retrospectively validating acts purporting to effect the issue of a security in manner prohibited by the 1947 Act. The very use by the legislature of the phrase “purporting to effect”, in S.18(2), in my judgment further illustrates that the acts which purport to effect the issue in a prohibited manner do not in fact operate to effect that issue ab initio. In these circumstances, on a bare reading of the Act, I would conclude that the purported issue of 200,000 ordinary shares by the company in March 1974 wholly invalid and void.”

Then, refe to R;Re Fry, the only previously decided case in UK on Section 8, His Lordship said at p. 357:-

“Thsoning of g of Romer J in Re u>, mutatis dis, jud judgment, supporupports the conclusions, which I would havd have reached in its absence, that the relevant issue of the 200,000 shar LACO wholly invalid alid and void and that it operated to confeconfer on LACOP no title whatever to any such shares, either at law or in equity.”

I haosely read Mr. Just Justice Slade’s judgment and consider it to represent a correct view of the effect of a breach of Section 8 (1) (UK), consequently it thus a correct approach to adopt in respect of a breach of Section 10 (1)the Fiji equivalent.

In my judgment, relying heavily on the reasoning of Mr. Justice Slade, I consider that, in breach of Section 10, the issue of shares to the Plaintiff by Mediterranean must be treated as wholly invalid and void. Thus noe to the shares can be conf conferred on the Plaintiff at law or an equity.

Before movinconsider ther the effects of this finding of invalidity, and the submissions of Counsel in respect thereof, I feel I must look at the question of retrospective val of the issue.

Neithe0;Re Fry&#/u>&#/u> nor&#1>Re Transatlanticc offerassistance on this pois point. Retrospective approval, although clearly an option of the parties, was not effected prior to the rulings in those cases.
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e matter now befo before the Court, neither Counsel argued gued on this point and nor is it pleaded. The point is however raised in the evidence.

On theence before me, tme, the Plaintiff, through his solicitor, raised the issue of non-compliance with Section 10 in the correspondence of the 10th August 1995. It appears this may have galvanised Mediterranean into action. Exhibits 9, 10 and 11 show that Mediterranean applied to the FTIB and the Reserve Bank for approval under the Exchange Control Act for 10,000 share to be issued to the Plaintiff.

On the 20ptember 1995, 995, the Reserve Bank, for and on behalf of the Minister, granted approval (Exhibit 11).

Although it does ay so,y so, I am prepared to accept in the circumstances, tproval was granted as appliapplies to Section 10 of the Act.

e issue of 10,000 shareshares was decided by Mediterranean e 25th February 1994 and acnd actually effected on the 28th February 1994, (Exhibit 2 - the Minutes and Exhibit 3 - the Shares), suchoval is obviously retrospecospective.

Section 20 of the nge Cnge Control Act falls to be considered.

Section 20 eads:-
&#br>

‘Ttle of any any person to a security for which he has given value on a transfer thereod thee of all persons sons claiming through or under him shall, notwithstanding that the transfeansfer, or any previous transfer, or the issue of the security, was, by reason of the residence of any person concerned other than the first-mentioned person, prohibited by the provisions of this Act relating to the transfer or issue of securities, be valid, unless the first mentioned person had notice of the facts by reason of which it was prohibited.”

My understanding of this sub-section is that it applies to further transfers beyond the initial transfer or issue. That is, in this instance, if the Plaintiff, not having notice of theingement of Section 10 or 11, has transferred his shares toes to another party, Section 20 (1) could be used to validate the transfer notwithstanding the initial imperfection. In my judgment, Section 20 (1) is not relevant to the argument before me.
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In my view, this Section is directly relevant. It gives the Minister the power to validate what was previously invalid - in other words, it gives the Minister the power, obviously onication&#160 (my eis) to val retrosptrospectipectively, a transaction previously invalid on account of a breach of Section 10 (or any other Section) ofExchaontrol Act.

On the face hibit 9bit 9bit 9, 10 and 11, this could have been then the case. I emphasise “could have been”.

As I read Sn 20 (2), it), it must be encumbent on the Applicant for Minister’s approval thereunder, to give the Minister the full details of the transaction sought to be validated. The party applying must inform the Minister of the invalidating factors before seeking his indulgence under Section 20 (2). To not do so would not be obtaining a validation under the Section.

On readihibits 9, 10 an10 and 11, there is reference to previous correspondence and facsimile from Mediterranean to the FTIB and the Reserve Bank. This correspondence were not placed before me as evidence so I have no way of knowing if what was sought by Mediterranean was merely an approval to issue securities to a non-resident or, retrospective approval/validation under Section 20 (2). In my Judgment the greater probability is the former, not the latter. I consider that if Mediterranean had sought retrospective validation under Section 20 (2) the Reserve Bank would have specifically referred to that Section when giving its eventual approval. There is no such reference in the correspondence.

Fur if there was such vuch validation, I would have expected a Certificate declaring the same, to issue in accordance with the sub-section.

I am thus,prepao acceptccept Exhibits 9, 10 and 11 would operate as a as a retrospective validation.

Asnsequence of this fins findthe transaction between the Plaintiff and Mediterranean must remain as invalid and of no efno effect in law and equity. Thus no titlehe shares can be conferred on the Plaintiff.

A
As to ffect of sucf such invalidity, Counsel for Mediterranean submitted that, as the invalidity sprang from non-compliance with a statute, the whole transaction is null and void ab initio and illegd thus the contract betweentween the Plaintiff and Mediterranean, being an illegal contract is unenforceable. Relying on decision such as Chalmers v. Pardoe<160;<160;[1963] All ER 552 and Kiriri n Co. Ltd. v. Dew. Dewani [1961] All ER 177 (Prouncil), Cousubmithe ps e ps were were in pain pari delicto and thus, as the illegal tgal transaction was an executed transaction, the Plaintiff could not recovr>
Counsel for the Plaintiff refutes this by sayinsaying that the parties were not in pari delicto. His argument is based on the supposition that for this to apply, both parties must be guilty of committing the breach. This is not the case here, he argues, for it was Mediterranean’s obligation and responsibility alone to meet the requirements of Section 10. And the onus is on the Defendant, Mediterranean and as this action is fundamentally one for monies had and received, Counsel says that these monies are recoverable at Common Law.

In Lord Denning&#82disc discussion of “in pari delicto” in Kiritton, His Lordshordship (on behalf of the whole Privy Council) established the following principles:-

60;&##160;; ʔ In0; In respect of mistakl at law, the true propopropositiosition is that no man can excuse himself foing uty by saying he did not know the law on the matter;

ii))&##10;&#160 ټ Monies paid under a mistakistake at law, by itself and nothing more, cannot be recovered back;

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“#8220;If there is something more in addition to a mistake of law - if thersometin thendant&#82conduct which shows that, of , of the tthe two ofwo of them them he is the one primarily responsible for the mistake then it may be recovered back. Thus, if as between the two of them the duty of observing the law is placed on the shoulders of the one rather than the other - it being imposed on him specially for the protection of the other - then they are not in pari delicto and the money can be recovered back: see b160;by Lord ield. Likewiseewise, if the responsibility for the mistake lies more on the one than the other - because he has misled the other when be ought to know better - then again they are not in pari to and the money can be rece recovered back: see Harse v. Peafe Assurancerance Co., by Romer, L.J. These propositions are in full accord with the principles laid down by Lord Mansfield relating to the action for money had and received.”
&#1r>It is the finding of this this Court that the onus of complying with Section 10 is solely on Mediterranean. If Mediterranean does not seek the Minister’s permission, then the Plaintiff cannot do it by operation of Section 10 alone. Further, Exhibit 2, indicates that Mediterranean instructed its Accountant Messrs. Kapadia Singh & Co. to attend to all the necessary matters relevant to a share issue. This must have included the obtaining of permission under Section 10 (See Exhibit 2 para (c)). This alone is evidence that, by referring to the need of a work permit in paragraph (c), that Mediterranean and its Accountants were, as I have previously found aware, of the Plaintiff’s non-residential status.

Theial phrase in the Prhe Privy Council judgment in Kiriri Cotto is as s as follows:-

<220;Thus, if as betwebetween the two of them the of observing the law is placed on the shoulders of the one one rather than other it being imposed on him especially for the protection ofotheren they are not inot in parn pari delicto and the money can be recovered back see Brown v. Mo/u> (by ;(by Lord Mansfield).”

Although noty develdeveloped, this was the argument for Counsel for the Defendants. He argued, in ipati such cases as Hughes v. Assett Maengemengement Co. Pty Ltd. [ 3 All All ER 669 may be y be raised by the Plaintiff, that the benefit of Section 10 does not fall to any individual but to the benefit of the nation as a whole. Section 10 he argued, is des to prevent a risk of uncheunchecked foreign takeovers with the consequential national detriment of an outward cash flow of profits to foreign residents. Counsel gave no authority for this proposition. Counsel may have benefited from developing the argument further by reference to such cases as Green v. Portsmouth Sm Lium Ltd [1953] 2 All ER 1ourt of Apof Appeal) which is referred to in the Kiriri Cotto case.
In G#8217>s case, ase, the Court of Aedgreed Parker J. (the Jthe Judge at first instance) that in an acan action for monies had and received, the monies are recoverable at common lawhe pa are n pari delicdelicto. Hto. How the Court of Appeal differed from from Parker J. was that they considered that the effect of the statute under review was not to confer a benefit on the Plaintiff such that a civil action would lie, but to create a means of regulating racecourses which could only be enforced by criminal proceedings (See particularly Denning L at p.104 and Hodson LJ at pp 104 and 105).

In my opinio Exchange Cnge Control Act and Section 10 (1) in particular, gives rise to both a criminal prosecution and a civil remedy.

On reading Section ), i2), it appears to me that a civil action can be brought by an individual caught in the position of the Plaintiff, to enforce the Company or party issuing the security, to apply to the Minifor retrospective permissioission.

Section 20 as a wholebvs obviously enacted to prevent a non-resident, who has paid good consideration for security, from being left empty handed because the person or corporation issuing or transferring the securid failed to observe the oble obligations of Section 10 or Section 11.

It must thus be fu stat stated that if the Plaintiff (as then beneficiary of the transfer or issue) can take civil action to enforce the right to get title to the security, the cse must apply as a matter of the Plaintiff’s electionction. That is to say that the Statute confers a right to civil enforcement which by definition, and at election, must include a remedy for monies had and received as well as for enforcement of the contractual terms.

If Iorrect in this, the, then as per the Privy Council’s decision in Kiriri Cotton, theenvidence before me must lead to a finding that the parties were not in pari delicto.

Thas a mistake at law ilaw inobserving the requirements of Section 10.

The Defendant, Medineananean, is thes the party primarily responsible for thisake. The obligation to obtain permission to issue the secursecurity is its sole responsibility under Section 10.

(2) ټ0;;16or the it ofothofothery - the pthe purchaurchaser oser of thef the secu security rity - to ensure that he or she gets what they have bargained for - this grise forcement by civil action.
Re F> and&#160 Re Transatlantic
Accordingly, in my judgment, a mistake has been made but between the two of them, the duty of observing th is p on toulderslders of Mediterranean rather than the Plae Plaintifintiff - and this duty is imposed on Mediterranean for protection of the Plaintiff, inter alia - then the parties are not in pari delicto and the money can be recovered (to paraphrase Lord Denning).

As this is fundamentally an action for monies had and received, the Plaintiff should succeed in his action for return of the $100,000.00 (One Hundred Thousand Dollars) paid in February 1994.

If I am wrong in thie sthe situation remains that the issue of the 10,000 shares to the Plaintiff was invalid thus the share registry of Mediterranean reflects an incorrect number ares properly issued. Of the 90,000 share issued (see ExhibExhibits 2 and 3), only 80,000 shares have been correctly issued (perhaps by way of example, I should also note that this would also reflect an inaccuracy in the issued share capital of Mediterranean some $100,000 (One Hundred Thousand Dollars).

In&#160e Transatlantic, Slade J. was confronted with this position. He was asked to make a declaration by way of an order for rectification under Section 116 of the Companies Act 1948 (UK).<160;
Slade J. made an oran order for rectification of the share registry to reflect the true position resulting from his finding of an invalid issue of shares due to the breach of Section 80 (1).

In so doing, His hip exip expressed the view that if rectification is made, repayment to the Plaintiff, as ancillary relief flowing therefrom, would have the Court’s approbr>
Section 116 (UK) is identical to Section 120 o120 of the Companies Act (Fiji) Cap 247. This leaves open the argument that the Plaintiff may well be able to bring an action based on the finding herein of an invalid issue, under the Companies Act and obtain a refund of monies paid. This is of course not the cause of action pleaded herein, but for completeness it is worth mentioning even only if academic purposes only. It does of course support, in a peripheral sense, that a breach of Section 10 of the Exchange Control Act does not necessarily preclude repayment of the monies.

As far as tan of $8,2008,200.00 is concerned, the law is quite settled. One simply cannot have a loan with no terms for repayment. That would be a gift. This is not a giftis a loan for an indeterminate term.

My undersnderstandi thef the law is that the term can be defined by reasonable notice of demand for repayment given to the borrower from the lender.

I consider the letter ef the 10th August 1995 to reasonable notice of demandemand for repayment of the $8,200.00. As such it determines the time of the loan which thereafter fell foryment. In my judgment, Mediterranean must repay the loan anan and I will order it to do so.

In all I find for the Plaintiff.

I order that:-

160;#160;

1. ;ټ By way way of decf declaration, the issue ofes of the 28th February 1994 be declared invalid.

2. #1660;&##10;& Th0; That Medt Mediterranean repathe Piff tm of $1of $100,0000,000.00 0.00 (One Hundred Thousand Dollars). Interest on this amount is to be at 9.5% per annum from the day of thmenceof thion until reil repaymepayment.

3. &##10;&&#160t Meat Mediterriterranean do repay to the Plaintiff the sum of $8,200 (Eight Thousand and Two Hundred Dollars). In accordance with the terms of the loan, no interest would attach to It cbe arthat inat interesterest shot should apply from the date of commencement of this action, but in the exercise of my discretion, I feel it more equitable to order that no interest accrue on the sum of $8,200 (Eight Thousand and Two Hundred Dollars) if it is repaid within 28 days from the date of delivery of this judgment. Thereafter (subject to any orders of another court) interest should accrue on the Judgment sum of $8,200.00 (Eight Thousand and Two Hundred Dollars) at the rate of 9.5% per annum until payment.

4. ـ &##160; T60; The Plaintiff tiff is entitled to his costs on a party-party basis to be taxed or agreed.

5. ҈ T60; That the Plaintiff’s action against the 1st Defendant Ruggiero be dismissed. I make no order as to costs on that matter. As I see it both Defendants were acted for by the same solicitors and it would possio sep each Dach Defendefendant&#ant’s costs independently. The greater probability is that the costs incurred by Ruggieros were for the exactly same things and on the same matter as Mediterranean.

I do so order.
;
;
(Judgment for the Plaintiff).

(