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John Beater Enterprises Pty Ltd v Australia and New Zealand Banking Group Ltd [2001] FJHC 141; Hbc0402d.2000s (7 March 2001)

IN THE HIGH COURT OF FIJI
(AT SUVA)

CIVIL ACTION NO. HBC 402 OF 2000S

Between:

JOHN BEATER ENTERPRISES
Plaintiff

and

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
First Defendant

and

HO INVESTMENTS LIMITED
Second Defendant

and

SHAZRAN LATEEF AND HAROON LATEEF
Third Defendants

Ms. R.S. Singh for the Plaintiff
Ms. K. Vuibau for the Official Receiver
S. Parshotam for the First & Third Defendants

DECISION

The First Defendant held a debenture dated 6 January 1993 from the Second Defendant over all its assets and undertakings to secure its indebtedness to the First Defendant.

Among the Second Defendants assets were 2 Hotels, the Kings Hotel at Nabua and the Kings Hotel, Suva both of which had been purchased from the Plaintiff.

In January 1997 an order for the winding up of the Second Defendant was made by this Court. By reason of its debenture the First Defendant was the Second Defendant’s first secured creditor while the Plaintiff was the second.

According to the Plaintiff’s supporting affidavit the Plaintiff wished to obtain priority over the First Defendant and it was agreed that the First Defendant would sell the Plaintiff the debenture for $15,000. Of this sum $7,000 was paid to the Third Defendants on about June 1997.

In about August 1997 the Plaintiff decided not to proceed further with the purchase of the debenture and sought the return of the $7,000. The First and Third Defendants refused.

On 19 September 2000 the Plaintiff commenced these proceedings by way of Originating Summons seeking the following principal declarations:

“(i) that the Defendants are in unlawful possession of the $7,000;

(ii) an order that the Defendants return forthwith the sum of $7,000 to the Plaintiff .....;

(iii) a declaration that the Defendant’s refusal to return the sum of $7,000 is in breach of the principles of resulting trust;”

On 7 December 2000 the parties appeared before me in chambers. Mr. Parshotam advised that his instructions were that there would be substantial issues of fact and that accordingly he would be submitting that the Originating Summons procedure was inappropriate.

On 29 December 2000 an affidavit in answer was filed on behalf of each of the First and Third Defendants. These affidavits were replied to by the Defendants on 6 February 01.

On 28 February 01 at the adjourned hearing Mr. Parshotam filed a helpful written submission. His case was that the nature of the Plaintiff’s claim, essentially for the return of money had and received and the issues of fact revealed by the affidavits together suggested that the Plaintiff’s solicitors had chosen the wrong method of commencing their proceedings.

In answer Ms. Singh cited two local authorities namely Raman Gopal v. Attorney-General 38 FLR 211 and Dharam Singh v Hardayal Singh 40 FLR 156 for the proposition that although one method of proceeding may be more suitable the Court may still decide to allow the action to go ahead under the alternative procedure. She suggested that that I allow these proceedings to continue in their present form.

While I agree with Ms. Singh’s general proposition it does not amount to establishing that a course of action is not open to objection merely because of the procedure used. In my view there are two main problems about using the Originating Summons procedure in this case.

The first is that the exact nature of the Plaintiff’s claim against each of the Defendants is unclear. Although the First Defendant accepts that it was agreed to buy and sell the debenture it says that the Plaintiff’s failure to pay the $8,000 balance amounts to a breach of contract in respect of which it wishes to Counter Claim.

Whether the Second Defendant should be appearing in this matter at all is open to doubt in view of section 229 of the Companies Act (Cap 247).

The Third Defendant admits receiving the $7,000 but says that it did so as agent for the 1^st Plaintiff and that no question of breach of trust arises.

The Plaintiff says that the $7,000 has gone to the Second Defendant (paragraph 32 of the supporting affidavit) but if I understand the Third Defendant’s affidavit correctly then it has been paid to the First Defendant.

As has been seen the Plaintiff seeks a declaration that each of the Defendants is in unlawful possession of the $7,000 but how each can at the same time be in possession is not at all clear. As Mr. Parshotam pointed out no comprehensive written agreement between the parties exists and accordingly the precise nature of the agreement would almost certainly have to be determined by oral evidence with reference to such letters as are on file.

The second difficulty, as it seems to me, is that under RHC O 4 r 1 a claim of this size should ordinarily be commenced in the Magistrates’ Court, not the High Court. Although Ms. Singh struggled valiantly to convince me that complicated questions of equity and trust arise here I am afraid that I cannot see them and incline to the view that contract and restitution are the only legal matters which need to be considered.

As Ms. Singh correctly observed RHC O 15 r 18 is to the effect that proceedings are not open to objection on the ground that all that is being sought is a declaration. The extensive note to the equivalent English rule (RSC O 15 r 16 – 1988 Edn) explains the historical background to this rule. In Fiji there has been a growing tendency to seek declarations that, for example, there has been a breach of contract of that the Defendant has committed some tort. This is not the right way of pleading or proceeding. When a breach of contract is alleged an action should be brought in contract. When a tort is alleged the action should be brought in tort.

I am satisfied in all circumstances that the Plaintiff’s complaint against the Defendants should have been brought in the Magistrates’ Court pleading the appropriate cause or causes of action. It follows that these proceedings in the High Court must be dismissed.

M.D. Scott
Judge

7 March 01