Benaia v Khan - Judgment [2005] KIHC 49; 15-05 (18 July 2005)

IN THE HIGH COURT OF KIRIBATI
CIVIL JURISDICTION
HELD AT BETIO
REPUBLIC OF KIRIBATI

High Court Civil Case No. 15 of 2005

Between:

TEIWAKI BENAIA
Plaintiff

And:

BOB AND JOHN KHAN T/A KHANS SHIPPING CO. LTD
Defendants

For the Plaintiff: Ms Taoing Taoaba
For the Defendants: Mr Glenn Boswell

Dates of Hearing: 28 & 29 June 2005

JUDGMENT

The plaintiff and defendants or more accurately their company, Khans Shipping Co. Ltd – I shall regard the company as the defendant and Bob and John Khan, two of the directors, as the agents of the company - entered into an arrangement with the plaintiff to charter a vessel, MV Cagidonu, belonging to the defendant. The defendant is a company incorporated in Fiji and the arrangement was made there but it was intended that the ship be used in Kiribati waters. I have called it “an arrangement” because of the unsatisfactory state of the evidence which left in doubt what the terms of the contract were and when it was made.

Part of Exhibit P3 is a document with the words “Charter Party Agreement for Vessel MV Cagidonu” on the front page. At the top of the second page is “This charter party agreement made this 21^st day of October 2003”. Yet the parties agree it was signed in June 2004! Even more curious is the font in which it is typed. All but the final page is in what (in my lack of knowledge) I describe as cursive: the final page is in print – quite distinct from the preceding pages. Moreover the page before the final page has not been filled: there is space left towards the bottom of it. The execution of the agreement, signatures and stamps of the parties, could in part at least have been on that page. The parties did not initial earlier pages. One is left with the uneasy feeling that the final page may have been taken from another document. Why and to whose advantage this may have been is unknown. The suspicion is strengthened by the evidence of Mr and Mrs Benaia, both of whom say that there were two agreements: the first brought to their house in Suva by the Khan brothers and which both Mr and Mrs Benaia signed (this agreement is not in evidence) and the second one executed in the Khans’ solicitors office: only Mr Benaia signed that one. I just don’t know. What a muddle! To decide the issues in the case I shall assume that the agreement between the parties is contained in P3, the document bearing date 21^st October 2003 but which the witnesses say was signed in June 2004.

Neither plaintiff nor his wife were good witnesses but I prefer their evidence to that of Mr Bob Khan. I believe they honestly tried to tell events. They did not do it very well, were mixed up, contradicted themselves but the outline of what they were saying is clear. They thought they would get possession of the ship soon after payment of $20,000 (being two payments of $10,000 each made respectively on the 3^rd and 21^st October 2003). Mr Bob Khan had told them repeatedly that everything was based on trust. They never did get the ship.

Mr Khan was an even less satisfactory witness. I do not trust his evidence. He had a (long) answer to everything, exculpating himself, his brother and their company: it was seldom a direct answer to the question he had been asked.

Although he is I-Kiribati the plaintiff has apparently spent a lot of time in Fiji. He described himself as not employed. He seemed naive in business matters and with no clear recollection of the detail of events. His wife, Veronika, who was his partner in this transaction (the $20,000 the subject to the claim were her life’s savings) is more alert. She confirmed the outline of her husband’s evidence. The defendant is an experienced businessman from Fiji. I prefer the plaintiff’s version of events to that of the defendant.

As for the other witnesses for the plaintiff, Nei Teretia Moutuar did not take the plaintiff’s case further. I accept the evidence of Mr Rutiano Benetito who was for some time the defendants agent in Kiribati until he and the two Khan brothers had a falling out.

According to the charter agreement, the arrangement between the parties was for the plaintiff to charter MV Cagidonu for five years. A FJ$35,000 “non-refundable” deposit was to be paid followed by four monthly payments of $10,000, three monthly payments for $12,5000, thereafter from February 2005 $15,000 per month. There were other stipulations. Mr Boswell described the agreement in his Opening as an “agreement, simple but robust”. I doubt that the plaintiff had much idea of it. He and his wife were being guided by Bob Khan. Bob Khan kept on saying they could alter the terms later.

Bob Khan took the plaintiff to the office in Suva of the lawyer acting for the defendant. At that meeting which lasted, Khan said, 30 to 40 minutes, the plaintiff was presented with the charter party agreement, invited to read and sign it. The plaintiff was not given a copy. Doing the arithmetic roughly the plaintiff undertook for the charter of MV Cagidonu to make payments totalling nearly one million Fijian dollars. A huge liability! A commitment like that was something which required the most careful consideration by the plaintiff after having independent legal (and perhaps accounting) advice. Yet after only a few minutes perusal he had signed it.

Things went wrong. The plaintiff or rather his wife in October 2003 made two payments of $10,000 towards the deposit. They expected to have the ship within two weeks after. They did not get it. Just what the problem was is unclear: probably the defendant did not have the ship seaworthy. When it did finally come to Kiribati in September 2004, according to Mr Benetito, “We had to do major repair”. There were negotiations with various people for its use. It made a voyage with a cargo of much needed rice from Fiji and later it was chartered by the people of the village of Tekarakan on Marakei.

The defendants promised in the latter half of 2004 to repay the FJ$20,000. In a fax (Exhibit P2) prepared in Mr Benetito’s office, dated “9/17/2004” John Khan wrote, “....we could have spoken to Mr Teiwaki Benaia and arrangement made for the company to refund his deposit. Mr Teiwaki Benaia has already paid the full deposit of the said vessel in Fiji; he had done a part payment and came across some financial difficulties which has us waiting for some time now”. In a fax (Exhibit P1) dated “12/16/2004” addressed to “Mr and Mrs Teiwaki Benaia” John Khan wrote “As per our verbal discussion this morning I would like to advise you that in order to amicably solve your matter regarding your deposit for the vessel M.V. CAGIDONU I would need at least three weeks”. Bob Khan in evidence acknowledged the promise to repay but always, he said, something cropped up which meant the promise could not be honoured at that time. Finally, he said, the Khans changed their minds about repayment when the plaintiff had the vessel arrested in Betio: they would leave to the court to decide.

I am not sure of the legal significance of the promises to repay, especially as on 13^th December John wrote a letter to “Teiwaki & Veronica Benaia” “terminating your agreement as of today 13^th day of December 2004. Your deposit of FJ$20,000 is now forfeited ..........”

Of one thing I am sure: before the plaintiff entered into a binding arrangement and signed any agreement he should have had independent advice. The circumstances in which the plaintiff signed may not have amounted to duress or even to undue influence but it was unconscionable to have had the plaintiff sign an agreement in the circumstance in which he did. I have already described the plaintiff as naive in business matters. Of the agreement the plaintiff said:-

Signed at lawyer’s office: put in front of me. I had a glance – casually not carefully: they did not explain. The clerk asked if I had read through it and I said I had but I had only skipped through it.

Mrs Benaia admitted they “were ignorant – not very familiar with legal business”.

Equity should interfere: the agreement shall be set aside. I am reinforced in this conclusion by the promises of refund but I do not base my decision on them.

The agreement dated 21^st October 2003 (Exhibit P3) is set aside. There will be judgment for the plaintiff for the equivalent in Australian dollars of FJ$20,000 with interest. The counterclaim for $108,041.99 with interest is dismissed.

On the first day of the hearing the defendants paid into court $17,000 upon receipt of which I rescinded Commissioner Bruce’s order of the 10^th May arresting MV Cagidonu. There is therefore money available to satisfy the judgment with interest and, if an order be granted, for costs. Any balance is to be returned to the defendants.

I shall hear counsel as to the terms of the order I should make.

Dated the ......................... day of July 2005

THE HON ROBIN MILLHOUSE QC
Chief Justice