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SB Holdings Ltd v Khan [1993] FJHC 58; Hbc0428j.92s (20 July 1993)

IN THE HIGH COURT OF FIJI
At Suva
Civil Jurisdiction

CIVIL ACTION NO. 428 OF 1992

Between:

S.B. HOLDINGS LIMITED
Plaintiff

- and -

1. MOHAMMED HAMID KHAN
s/o Mohammed Aziz Khan
2. MOHAMMED AZIZ KHAN
s/o Amir Khan
Defendants

Mr. H.M. Patel for the Plaintiff
Mr. A. Kholi for the Defendants

JUDGMENT

This is an application by the plaintiff company under Order 14 of the High Court Rules for summary judgment on the ground that the defendants "do not have a valid defence or any defence to the plaintiff's claim".

At the hearing of the application counsel for the defendants failed to appear nor have the defendants filed any affidavit in reply to the plaintiff company's supporting affidavit. That is not the end of the matter however as both defendants have filed a Statement of Defence.

The plaintiff company's claims very briefly is that it lent $6,000 to the first defendant and it now seeks recovery of the principal sum together with interest thereon. The basis of its claim against the second defendant who is the first defendant's father, is a written guarantee.

It is necessary to consider the Statements of Defence in order to decide whether or not the defendants have an arguable defence to the plaintiff company's claims or have raised an issue or question which ought to be tried.

In this regard the first defendant states "... The condition precedent to the agreement was that the Plaintiff would employ the first defendant as a crusher operator at the rate of $150.00 per week and the sum $6,000 would be repaid by deduction of $50.00 per week" and further "... that the plaintiff company was contemplating purchasing a crusher and had agreed to hire the services of the 1st defendant as the operator. However the dealing failed and the Plaintiff failed to hire the 1st defendant as the operator."

The second defendant in somewhat similar vein "... says that it was a condition precedent to the signing of the guarantee that the plaintiff company would employ the 1st defendant on full time crusher operator" and which it failed to do.

It is common ground that the money was lent and taken by the 1st defendant (See: Annexure 'B' to the plaintiff's affidavit). Equally it is undisputed that the lending agreement and the guarantee were both reduced into writing and forms annexures "A" and "C" to the affidavit of the director of the plaintiff company filed in support of the application.

It is noteworthy that the 'lending agreement' (if I may call it that) contains the following clauses:

"(2) The above said loan ($6,000) will be refunded in accordance with direct deductions from Mohammed Hamid (1st defendant) wages weekly, sum stated as $50.00; and

(3) The above said Mohammed Hamid (1st defendant) will be employed by S.B. Holdings Ltd. (plaintiff company) as full time employee with an weekly wages of $150.00 per week;"

In similar vein and perhaps reinforcing the "source" of the repayment monies the 1st defendant in his loan application:

"(undertook) to pay the sum of $6,000 for loan taken from S.B. Holdings Ltd. amount to be paid from weekly wages $50.00 per week."

I note that the plaintiff company's letterhead describes it's general business activities as Earthmoving and Civil Engineering and more particularly as suppliers of, amongst other things, "crushed metal and crusher dust".

It is clear that the "source" of the repayment instalments is and formed an important part of the 'loan agreement' between the 1st defendant and the plaintiff company. It is equally clear that the plaintiff company not only agreed to lend the 1st defendant the money but also to provide him with employment at a fixed weekly wage from which the repayments were to be deducted weekly at a fixed rate and although the plaintiff company claims that the 1st defendant failed to work for it, as agreed, that is denied by the 1st defendant in his Statement of Defence.

From the above it is clear that the question of the employment of the 1st defendant is a material issue which fundamentally affects both his liability and ability to repay the loan. This cannot be resolved on the present state of the evidence and pleadings and accordingly the plaintiff company's application must be and is hereby dismissed.

As for the second defendant the Memorandum of Guarantee upon which the plaintiff company's claim is based is directed:

"To: VUNIMOLI SAWMILL LTD."

and purports to guarantee "... the payment of all monies ... due ... in respect of all goods and services" supplied at the 1st defendant's request up to a total value of $6,000.

No mention is made of the plaintiff company by name or as being the supplier of the "goods and services" (whatever that may mean in the present context), further no mention is made of any loan transaction, nor is the guarantee countersigned or witnessed by the plaintiff company or its representative. Indeed there is no direct or clear evidence linking the 'loan agreement' to the guarantee or for that matter the plaintiff company to Vunimoli Sawmill Ltd.

In the circumstances I am not satisfied that the Memorandum of Guarantee is enforceable by the plaintiff company against the 2nd defendant (as opposed to Vunimoli Sawmill Ltd.) and accordingly the plaintiff's application against the 2nd defendant is also dismissed with costs to the defendants to be taxed if not agreed. The action is to follow its normal course.

(D.V. Fatiaki)
JUDGE

At Suva,
20th July, 1993.

HBC0428J.92S