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Fantasy Company of Fiji Ltd v Thompson [2005] FJHC 281; HBC0132.2004l (17 February 2005)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC0132 OF 2004L

BETWEEN:

THE FANTASY COMPANY OF FIJI LIMITED
Plaintiff

AND:

EDWARD HENRY THOMPSON
1st Defendant

AND:

JAI PRASAD f/n Deo Prasad
2nd Defendant

AND:

THE RESERVE BANK OF FIJI
Nominal Defendant

Counsel for the Plaintiff: Mr. S. Maharaj
Counsel for the 1st Defendant: Mr. J. Sharma
Counsel for the 2nd Defendant: Mr. R. Singh
Counsel for the Nominal Defendant: Mr. Scott with Mr. Mishra

Date of Hearing: 8 February 2005
Date of Judgment: 17 February 2005

JUDGMENT

There are before the court, two summonses for determination. The first is a summons filed on behalf of the “Nominal Defendant” on the 11^th July 2004 seeking that the plaintiff’s claim against it be struck out pursuant to Order 18 Rule 18.

The 1^st defendant seeks similar relief in his summons filed on the 2^nd September 2004.

The 1^st defendant relies on his affidavit sworn on the 2^nd September 2004.

The plaintiff relies on an affidavit of Abbas Ali sworn on the 1^st October 2004.

The plaintiff and the nominal defendant both filed and relied on written submissions supported by oral submissions and the 1^st and 2^nd defendants’ counsel gave oral submissions to the court.

Background

The plaintiff by Originating Summons filed on the 14^th May 2004 seeks orders that might be summarized as:

1. A declaration that the Exchange Control Act permit issued to the 1^st defendant by the nominal defendant for the issue of shares in the plaintiff to the 1^st defendant be declared null and void.
   
2. A declaration that the nominal defendant cancel/revoke the permit.
   
3. A declaration that the plaintiff owes only $80,000.00 to the 1^st defendant.
   
4. A declaration that the 1^st and 2^nd defendants have conspired and colluded together fraudulently to find unsubstantiated claims against the plaintiff.
   

The Originating Summons is supported by an affidavit of Abbas Ali sworn on the 14^th May 2004. The dispute between the plaintiff and the 1^st and 2^nd defendants is a dispute as to the shareholding and operation of the plaintiff. The 1^st and 2^nd defendants are shareholders in the plaintiff company.

The plaintiff has abandoned the fourth prayer in the Originating Summons. This abandonment comes in paragraph 7 of the affidavit of Abbas Ali sworn on the 1^st October 2004.

The “Nominal Defendant” Summons

Order 18 Rule 18 enables the court at any stage of proceedings to order any pleading to be struck out or amended if inter alia it discloses no reasonable cause of actions. The plaintiff’s counsel in submissions acknowledges that the Originating Summons and supporting affidavit do not disclose a cause of action against the “Nominal Defendant” but he submits that it is there to enable orders to be sought requiring the Reserve Bank of Fiji to do certain things and in particular to cancel the permit issued to the 1^st defendant pursuant to the Exchange Control Act.

There are no allegations of negligence on the part of the Nominal Defendant or that it acted fraudulently or colluded with the 1^st and/or 2^nd defendant.

I find that there is no reasonable cause of action against the “Nominal Defendant”. Whilst other matters were raised on behalf of the “Nominal Defendant” as to the appropriateness of the Originating Summons for these proceedings and the use of the terminology “Nominal Defendant”, it is not necessary to decide these issues to dispose of the Nominal Defendant’s summons.

The 1^st Defendant’s Summons

The plaintiff submits that the 1^st defendant should not be heard on the summons as the document does not disclose the order pursuant to the High Court Rules under which relief is sought. In the course of the hearing, I indicated that I rejected the submission and allowed the matter to proceed relying on Order 2 Rule 1 of the High Court Rules.

The 1^st defendant submits that the plaintiff alleges fraud and therefore the proceedings must be commenced by Writ of Summons.

The plaintiff contends that it can rely on Order 20 or Order 28 Rule 8 of the High Court Rules to proceed with the claim.

Order 5 Rule 2 provides:

“Subject to any provision of an Act, or of these Rules, by virtue of which any proceedings are expressly required to be the ........otherwise than by Writ, the following proceedings must, notwithstanding anything in Rule 4, be begun by Writ; that is to say, proceedings –

(a) .........
(b) in which a claim made by the plaintiff is based on an allegation of fraud;
(c) ......”

The plaintiff submits that as relief is sought pursuant to the Exchange Control Act, it can rely on Order 5 Rule 3 to bring the action by Originating Summons.

Order 5 Rule 3 provides:

“Proceedings by which an application is to be made to the High Court or a Judge thereof under any Act must be begun by Originating Summons except whereby these Rules or by or under any Act the application in question is expressly required or authorized to be made by some other means.

This Rule does not apply to an application made in pending proceedings.”

As there is no cause of action shown pursuant to the Exchange Control Act, this submission must fail.

The 1^st defendant refers the court to Re 462 Green Lane, Ilford Gooding v Borland [1971] 1 All E.R. 315 at page 316 Ungoed-Thomas J. said:

“There is nowadays a provision in RSC Order 28 Rule 8, that in any matter begun by originating summons, where it appears to the court that it should be continued as if it had begun by writ, the court may order the proceedings to continue as if the matter had been so begun. Normally, in the case of a plea of non est factum in general, its continuation as though it had begun by writ would fall within the court’s discretion under Order 28 Rule 8. However RSC

Order 5, Rule 2 (so far as material in the present case), provides that proceedings in which a claim made by the plaintiff is based on an allegation of fraud must be begun by writ.

It appears that, in this case, there is a claim based on an allegation of fraud and nonetheless because that allegation is an alternative allegation. It is an allegation relied on although relied on in the alternative. It seems to me that Order 5, Rule 2, places a case so based outside the scope of Order 28 Rule 8. Otherwise Order 5, Rule 2, seems to be a pretty futile provision. And Order 5, Rule 2, should, on account of its more specific terms, be preferred to Order 28, Rule 8, and thus Order 28, Rule 8, should be read as referring exclusively to matters outside the scope of Order 5, Rule 2, i.e. what Order 28, Rule 8, provides is that the court may order proceedings to continue as if the case had been begun by writ, but cannot order that the proceedings should be, or be treated as, proceedings begun by writ, and therefore cannot order the proceedings so to continue if they could not have so begun.”

Whilst acknowledging that this court is not bound to follow a decision of the Chancery Division, High Court of England, it is persuasive and can be taken into account when exercising the discretion given to the court in Order 18 Rule 18. In any event, I concur with His Lordship.

It follows therefore that the Originating Summons must be struck out.

Conclusion

The plaintiff’s Originating Summons and supporting affidavit show no cause of action as against the Nominal Defendant and accordingly by virtue of Order 18 Rule 18, the Summonses against the Nominal Defendant must be struck out.

The plaintiff’s Originating Summons relying on allegations of fraud is in breach of the requirements of Order 5 Rule 2(b) which require such a claim to be brought by way of writ. Order 28 Rule 9 is not available to remedy a breach of Order 5 Rule 2(b) and accordingly, the Originating Summons against the 1^st and 2^nd defendants must be struck out.

Orders

1. The Originating Summons is struck out.
   
2. The plaintiff is to pay the defendants’ costs including the Nominal Defendant’s costs.
   

JOHN CONNORS
JUDGE

At Lautoka
17 February 2005