National Bank of Fiji Asset Management Bank v Tuirobe [2000] FJLawRp 32; [2000] 1 FLR 85 (12 May 2000)

[2000] 1 FLR 85

IN THE COURT OF APPEAL OF FIJI

NATIONAL BANK OF FIJI ASSET MANAGEMENT BANK

v

SAILOSI KAILOMA TUIROBE

Court of Appeal Civil Appellate Jurisdiction
Reddy, Casey, Thompson, JJ
12 May, 2000
ABU0079/98S (on appeal from HBC 511/97)

Mortgage - security for advances to partner to start up business - appeal against High Court judgment

The bank retained a certificate of title to the respondent's property as a third party security for a loan to a Jone Raikabula and refused to release it until payment of the debt. The High Court ordered release of the title, finding that the respondent intended to assist a partnership, not Raikabula alone, and that the Bank acted without authority in treating the title document as security for advances made to Raikabula alone.

Held - The Bank acted without authority in using the title as security for an overdraft when in fact it was required to finance a partnership. The assumption that Raikabula's account was recognized by the Bank as a partnership was not correct.

No cases referred to in judgment

Hamendra Nagin and Shaireen Begum for the appellant
Sevuloni R Valenitabua for the respondent

12 May, 2000.

JUDGMENT

Reddy, Casey, Thompson, JJ

In this appeal by the Bank against Scott J.'s judgment of 12 October 1998 there is a dispute over the Bank's right to retain the certificate of title to the respondent's property deposited with it. The Bank treated it as security for a loan to one Jone Raikabula trading as Bulls Building Contractors, now bankrupt and owing over $7000, and it refused to release the title until payment of the debt. In proceedings issued by the respondent His Lordship ordered its return, finding that he had not authorised the Bank to use it as security for advances to Raikabula alone, but to a partnership comprising the latter and the respondent's nephew, Etuate Seru, intending to trade as Bulls Building Contractors.

The respondent deposed that he had written to the Bank on 23 January 1992, exhibiting a copy of the letter as follows:-

Block 4,

Flat 1,

Nairai Road

RAIWAI

23rd January, 1992

The Manager

National Bank of Fiji

SUVA

Dear Sir,

RE: LOAN APPLICATION FOR BULLS' BUILDING CONTRACTORS

I, Sailosi Kailoma of the above address, am hereby authorising Bulls' Building Contractors to have my land at Lot 27 D.P. 3660, Aideny Road, Raiwaqa, mortgaged by your Bank so as to secure a loan of which they have been requesting with you.

Their current effort to raise some money so as to boost their company has come to my knowledge and I am supporting them and I would like to see them stand on their own two feet and run their Company.

I have known them for the last 15 years and from what I have seen of their work, have promised to support them in whatever way I can.

I do hope your organisation could kindly reconsider their application and help them out to start their own business.

((Sgd) Sailosi Kailoma)

He wanted to help his nephew, who was going into partnership with Raikabula to construct a house for the Housing Authority. Raikabula had an account with the Bank in his own name, trading as Bulls Building Contractors, and it required security for any advance. Seru gave evidence that they spoke to a bank officer (Mataitoga) explaining what they proposed. He delivered his uncle's letter and title, and said they opened an account for Bulls Building Contractors, with both of them as signatories. However, he discovered later that the Bank had made the advances to Raikabula's personal account which he operated without reference to him, and the Bank refused to let him see it or to give him any details. When the respondent heard about this he wrote to the Bank on 23 March 1992 withdrawing his mortgage and support. At that time Raikabula's account was about $5000 overdrawn.

Evidence was given on behalf of the Bank by a loans officer who had to rely on somewhat incomplete records because the officer who dealt with the matter was no longer available. It is quite clear from his evidence that the only account for Bulls Building Contractors was that conducted by Raikabula personally. Scott J. accepted Seru's evidence of the dealings with the Bank and held that it had acted without authority in treating the title document as security for the advances made to Rakabula.

The appeal to this court was advanced on the basis that His Lordship erred in not recognising Raikabula as a partner of Bulls Building Contractors, and thus able to operate the firm's account to which the Bank had properly made advances in accordance with the respondent's letter of authority. However, as we have pointed out, the assumption that Rakabula's account was recognised by the Bank as that of the partnership between him and Seru is simply not correct. Scott J. accepted Seru's evidence to the effect that the Bank knew his uncle was offering the security for an advance to the partnership only, which confirms what the uncle said in his letter of 23 January referring throughout to the proprietors of Bulls Building Contractors in the plural.

We are satisfied His Lordship was correct in his overall assessment of the evidence and agree with his conclusion that the Bank acted without authority in using the title document as security for the overdraft in Raikabula's account, when the loan officer admitted that the security was required to finance a partnership.

Result:

The appeal is dismissed with $350 for costs and disbursements to the respondent.

Appeal dismissed with costs and disbursements to the respondent.

Marie Chan