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German Football Archive Ltd v National Bank of Fiji [1993] FJHC 8; Hbc0255d.92s (28 January 1993)

IN THE HIGH COURT OF FIJI
At Suva
Civil Jurisdiction

CIVIL ACTION NO. 255 OF 1992

Between:

GERMAN FOOTBALL ARCHIVE LIMITED
(hereafter referred to as GFA Ltd.)
Plaintiff

- and -

THE NATIONAL BANK OF FIJI
(hereafter referred to as NBF)
Defendant

Mr. M. Raza for the Plaintiff
Mr. A.R. Matebalavu for the Defendant

RULING

On the 22nd of May 1992 the plaintiff company issued a Writ of Summons out of the High Court claiming various declarations and orders against the defendant bank. On the same day the plaintiff company filed a motion for an injunction against the defendant bank seeking to restrain the defendant bank from exercising its powers under a mortgage and debenture (hereafter referred to as the 'security documents') which the plaintiff company had given over its land and assets as security for financial assistance provided by the defendant bank.

The plaintiff company is seeking the injunction on various grounds including the following:

(1) failure on the part of the defendant bank to make a 'demand' in terms of the security documents;

(2) failure to provide an inventory of the chattels seized in the purported exercise of powers under the security documents; and

(3) wilfully and unlawfully destroying assets of the plaintiff company.

The defendant bank for its part asserts that a proper 'demand' was made on the plaintiff company in terms of the 'security documents' and denies any duty to furnish the plaintiff company with an inventory of the items seized.

Needless to say the defendant bank vehemently denies destroying any of the plaintiff company's assets.

For the purposes of this application it is necessary only to brief outline the facts of the matter.

The plaintiff company was first incorporated in October 1989 after receiving FTIB approval for its business. It is concerned in the compilation and publication of various books and other printed materials principally dealing with European football history including the World Cup and other lesser publications.

In order to facilitate its publications the plaintiff company has acquired and maintained an extensive collection of archival materials which comprised computer discs, video films, books, photographs, newspapers magazines and other printed materials.

In order to house its records and build a business premises the plaintiff acquired a block of land at Koronivia near Nausori in May 1990. The land was later mortgaged to the defendant bank in return for financial assistance provided to the plaintiff company to develop its business and premises. By way of a further and collateral security the plaintiff company gave a debenture mortgage to the defendant bank over all its assets and undertakings.

In late 1990 the managing director of the plaintiff company who might be safely considered to be its sole driving force and owner went to Europe to attend to company business. Whilst there he was involved in a motor vehicle accident and suffered serious injuries.

The seriousness of the managing director's condition was communicated to the defendant bank in a letter on the plaintiff company's letterhead dated the 28th of February 1991. The contents of the letter bears repeating. It reads:

"The managing director of GFA Ltd. had an accident in West Germany. Unfortunately the accident left him paralysed. Now no one is able to lead the company, because only he have got the power of attorney and the ability to do this. So we are compelled to close the Fiji branch of our company and to leave the country."

It subsequently turned out that the above letter was issued somewhat "prematurely" as the managing director fully recovered from his injuries. By then however the defendant bank had already entered into possession of the plaintiff company's business premises at Koronivia, seized its assets, and even disposed of some.

Furthermore on the 20th of May 1991 the defendant bank issued instructions to its solicitors to take what ever steps were necessary to recover the plaintiff company's outstanding indebtedness to the bank which was then in excess of $92,500.

From the foregoing it is clear that events were overtaking the somewhat belated advice to the defendant bank of the managing director's recovery. When this latter event occurred is not entirely clear but the medical certificates of the managing director giving him a clean bill of health (so to speak) are dated September and October 1991 respectively.

Then in September 1991 the managing director's son came to Fiji to assess the situation and allegedly learnt that some of the plaintiff company's archival materials had been destroyed by employees of the defendant bank. After numerous unsuccessful attempts an incomplete inventory of the plaintiff company's assets which were seized by the defendant bank was compiled.

Needless to say the plaintiff company claims that it is entitled to an inventory of all the assets seized which the defendant bank denies.

Both the mortgage and debenture are before the Court and both expressly provide that the moneys or indebtedness secured under them shall be payable "on demand".

In this latter regard the plaintiff company in the affidavit of its managing director denies having received any written notice or demand from the defendant bank either at its postal address or business premises at Koronivia nor at its registered office at the offices of its accountant at 21 Des Voeux Road, Suva.

The defendant bank for its part has annexed to the affidavit of its Manager Lending, a copy of a written 'demand notice' headed REGISTERED MAIL and dated the 26th of March 1991. It is addressed to:

"The Managing Director,

German Football Archives Ltd.,

P.O. Box 1512,

NAUSORI."

No effort however has been made (having regard to the plaintiff company's assertions) to adduce some evidence to prove that the notice was in fact posted or returned undelivered.

It is noteworthy that the 'security documents' both provide inter alia that service of a 'demand' may be effected by post. Furthermore Clause 17(e) of the debenture provides inter alia that no 'demand' is required:

"(e) If the Mortgagor ... shall without the consent in writing of the Bank signed by any officer of the Bank cease or threaten to cease to carry on its business."

In my view there can be no doubting from the above that there exists serious questions of fact and issues of law to be determined by the Court at the hearing of the substantive action. Not the least of which is the question of the "demand notice" and the duties of a 'mortgagee in possession' which the defendant bank undoubtedly is at the present moment.

Then there is the argument that the plaintiff company's claim can be adequately met by an award of damages in the event that the defendant bank is held liable for negligently destroying valuable assets of the plaintiff company.

This later argument however fails to recognise the unique and vital nature of the archival records maintained by the plaintiff company for its business operations. The fact that they are in the German language renders their saleability and value to the defendant bank even more limited. Needless to say there is no suggestion of the defendant bank continuing to run the plaintiff company's business which can only be described as of a highly specialised nature with a restricted clientele.

In the circumstances I do not accept that damages is an adequate remedy for the plaintiff company. Equally there can be no doubting that the plaintiff company has and is in default of its loan repayments to the bank since about January 1991 other than a stopped payment in the sum of Dm20,000.

I turn next to the question of the 'balance of convenience' in this case and having regard to the above factors including the recognised duties of a 'mortgagee in possession' and the nature of the business and assets of the plaintiff company and its willingness to deposit the sum of $50,000 into Court I am firmly of the view that it is not only convenient but also just to return the plaintiff company's business premises and assets to it so as to enable it to continue its operations whilst awaiting the outcome of this action.

Needless to say in the event that the defendant bank wishes at any time hereafter to exercise its powers under the 'security documents' it will need to issue and serve a fresh demand notice upon the plaintiff company.

I am hopeful however that commercial sense will prevail in the present circumstances and am confident that the parties can with a little effort reschedule the plaintiff company's loans to their mutual benefit and satisfaction.

Accordingly the plaintiff company is granted the following injunctions:

"(1) the defendant be restrained by itself its servants or agents or otherwise howsoever until further order from exercising all or any of its powers under registered mortgage No: 287383 and/or Debenture Deed dated 28th June 1990 in so far as the same relates to a demand or default arising out of the circumstances of Civil Action No. 255/92; and

(2) that the defendant give to the plaintiff company or its authorised representatives vacant possession of the land and building comprised in C.T.7708 situated at Koronivia and all assets and chattels of the plaintiff company of which the defendant stands seized as a mortgagee in possession."

The above injunctions however are conditional upon the plaintiff company paying into Court for payment out to the defendant bank the sum of $50,000 within 14 days of the date hereof.

(D.V. Fatiaki)
JUDGE

At Suva,
28th January, 1993.

HBC0255D.92S