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Chandar v Gurbachan Singh Co Ltd [2005] FJHC 33; HBC0009J.97B (22 February 2005)

IN THE HIGH COURT OF FIJI
At Labasa
Civil Jurisdiction

CIVIL ACTION NO. 0009 OF 1997

Between:

RAM CHANDAR aka ANAND
s/o Ram Lakhan
Plaintiff

- and -

GURBACHAN SINGH CO. LTD.
Defendant

Mr. A. Kohli for the Plaintiff
Mr. H. Nagin for the Defendant

JUDGMENT

The plaintiff in this case a long-serving former employee of the defendant company, seeks the return of a sum of $35,000.00 cash which he claims he was fraudulently induced to deposit into the defendant company’s bank account on a promise that the money would be repaid within a month.

In similar vein the plaintiff claims that he executed a ‘sham’ mortgage in favour of the defendant company purporting to secure a loan of $35,000.00 which he neither borrowed nor received and upon the understanding that the above-mentioned $35,000 cash deposit would be refunded to him upon execution of the mortgage. He accordingly seeks an order rescinding the mortgage and an injunction restraining the defendant company from exercising its power of sale under the mortgage.

The defendant company in its original defence denies all allegations of fraudulent conduct in the Statement of Claim and pleads instead ‘that the mortgage executed by the plaintiff represents the sum actually lent and advanced to (the plaintiff)’ and in repayment of which the plaintiff ‘made a total payment in the sum of $1,200 by three instalments’.

By an amended Statement of Claim dated 16th April 1998 the plaintiff sought ‘restitution in the sum of $35,000’ being the amount by which the plaintiff claimed the defendant company ‘had been unjustly enriched’.

The defendant company filed an amended Statement of Defence which was further amended in September 2001 in which it was alleged for the first time, that the plaintiff whilst employed with the defendant company had admitted stealing a sum of $70,000.00 which he agreed to repay by way of an immediate lump sum cash payment of $35,000.00 with the balance ($35,000.00) to be treated as an advance secured by a mortgage granted by the plaintiff and to be repaid by monthly instalments of $300. In this latter regard the defendant company pleads:

‘(v) In accordance with the said Mortgage ...... the plaintiff made payments to the defendant totaling the sum of $1,200.00 and then made no further payments and instituted this action.’

In his reply to the further amended defence the plaintiff denied stealing any money but admits depositing the sum of $35,000.00 into the defendant company’s account as well as executing the mortgage in favour of the defendant company ostensibly ‘upon the inducement of Daya Singh and to appease his sick father Mr. Gurbachan Singh’ and upon Daya Singh’s promise to return the $35,000.00 cash deposit ’upon execution of the said mortgage’.

In response to averment (v) above, concerning the payments under the mortgage, the plaintiff rather revealingly pleaded as follows:

‘he accepts the contents of sub-paragraph (v) and says that of the sum of $1,200 paid, the Defendant returned him $600’.

According to the minutes of a pre-trial conference jointly executed by counsels for the parties the following was agreed:

‘AGREED FACTS

1. The plaintiff was employed by the defendant company ;
   
2. The plaintiff executed a mortgage in favour of the defendant company on the 12th April 1985 (sic) securing an advance of $35,000.00 which mortgage was registered on the 6th day of June 1996.’
   

THE FACTS IN DISPUTE

1. Whether the plaintiff paid the defendant the sum of $35,000.00 on 3rd day of April 1996 or on any other date ?
   
2. Whether the plaintiff was induced to execute the mortgage on the 12th of April, 1996 by any false representation ?
   
3. Whether the sum of $35,000.00 was in fact advanced to the plaintiff on the date of execution of the mortgage or on any other date ?
   

After further minor amendments to the pleadings and several adjournments of the case including a change of venue, the hearing of the case eventually commenced in Suva High Court on 3rd April, 2002. The plaintiff testified and was cross-examined and the case was then returned to the Labasa High Court for continuation on 25th June, 2002 when the plaintiff called a further witness and closed his case.

The defendant company called in its defence Amrit Sen the solicitor who prepared the mortgage document and Daya Singh the managing director of the defendant company. The final defence witness was an Officer of the Bank of Baroda, Labasa Branch where the defendant company’s account was maintained, who had personally attended to the withdrawal of the $35,000 from the plaintiff’s savings account.

The trial eventually concluded on 26th July, 2002 in the absence of a police officer that the defendant company had proposed to call. Written submissions were ordered and eventually filed in September, 2002.

I have carefully refreshed myself from the handwritten transcript of the evidence in this case and considered the documentary exhibits provided to the Court together with counsels comprehensive written submissions.

I have no hesitation in preferring the evidence of the defence witnesses who were measured, honest and forthright and I reject the evidence of the plaintiff which was evasive and contradicted in material respects by the documentary evidence and by his own personal actions.

For example, the plaintiff’s somewhat belated suggestion in cross-examination that Daya Singh regularly cheated the business and had even forged his father’s signature on occasions, is quite inconsistent with the defendant company’s letter to the Bank of Baroda [Exhibit D(7)] dated January 1985 which plainly authorizes Daya Singh to operate the defendant company’s supermarket account on his own without the necessity of a counter-signature. The suggestion, was a bare-faced attempt by the plaintiff to tarnish and discredit Daya Singh who he professed to ‘love so much like a brother’.

I find the plaintiff’s version of the events and the explanations he gave for his actions both incredible and unconvincing and falls well short of discharging the heavy burden of establishing his claim of being the hapless victim of fraud and deception.

I accept and believe the evidence of Amrit Sen as to the circumstances surrounding the preparation of the mortgage document [Exhibit D(2)]. In particular, I accept that the plaintiff was the source of all the details entered on the mortgage and also accept the genuine concern expressed by Mr. Sen to the plaintiff as to why he (the plaintiff) was borrowing such a large sum of money and which the plaintiff curtly brushed aside. Needless to say it was never suggested that details of the plaintiff’s title was known to the directors of the defendant company or that it somehow possessed the plaintiff’s title document. These had to be and were in fact provided by the plaintiff and I so find.

In the face of the plaintiff’s vigorous denials of having stolen any money from the defendant company and his explanation for mortgaging his personal property, stands the undeniable fact that, on his own admission, he willingly co-operated with what might be described as a dishonest scheme of intrigue ostensibly hatched by Daya Singh with the sole purpose of deceiving his (Daya Singh’s) very own sickly father. Coincidentally, by this scheme the plaintiff would be relieved of any admitted defalcations – these are hardly the actions of an honest and loyal servant who was treated ‘like their own child’ and who stood to gain nothing by his complicity.

If, as the plaintiff claims, the mortgage was always meant to be an unenforceable ‘sham’ it stretches credulity that he would personally incur all the fees necessary to have the mortgage professionally prepared and actually registered against his title without first receiving the original cash payment in exchange for it as was promised.

In addition, the plaintiff made four (4) repayments in terms of the ‘sham’ mortgage and on each of the defendant company receipts issued for the payments [Exhibits D(3) to D(5)] the reason noted was NOT, ‘mortgage or loan repayment’ as might be expected, but the rather telling admission: ‘shortfall of money from liquor sales proceeds’.

Likewise the plaintiff’s claim that he withdrew almost all his life savings and deposited it into the defendant company’s account merely on the verbal say so or promise of Daya Singh that the money would be returned after a month without so much as a hint of an ‘admission of dishonesty’ on the part of the plaintiff and without a written receipt or any other documentary record or evidence of the payment or of the subsequent promise to refund it, would test even the most cynical of observers and I reject it.

I am satisfied that the legal principle applicable to the circumstances of this case is conveniently set out in the judgment of Lord Goff of Chieveley in Woolwich Building Society v. I.R.C. (No.2) (1992) 3 ALL E.R. 737 at p.754:

“Where a sum has been paid which is not due, but it has not been paid under a mistake of fact or under compulsion ........ it is generally not recoverable. Such a payment has often been called a voluntary payment and so as (sic) irrecoverable in the following circumstances (a) The money has been paid under a mistake of law ........ (b) The payer has the opportunity of contesting his liability in proceedings, but instead gives way and pays ........ So where money has been paid under pressure of actual or threatened legal proceedings for its recovery, the payer cannot say for that reason the money has been paid under compulsion and is therefore recoverable by him. If he chooses to give way and pay rather than obtain the decision of the court on the question whether the money is due, his payment is regarded as voluntary and so is not recoverable ........ (c) The money has otherwise been paid in such circumstances that the payment was made to close the transaction. Such would obviously be so in the case of a binding compromise ; but even where there is no consideration for the payment, it may have been made to close the transaction and so be irrecoverable. Such a payment has been treated as a gift.”

In the present case whilst there is no documentary or independent proof of any precise shortfall in the defendant company’s liquor store takings or accounts directly attributable to the plaintiff, his voluntary actions, admissions, statements, and behaviour speak volumes of his personal acceptance and responsibility for the same. The plaintiff could have contested his liability for any shortfall in the defendant company’s liquor store takings but he did not. Instead, he chose ‘to give way and pay rather than obtain the decision of the court on the question whether the money is due, his payment is (therefore) regarded as voluntary and so is not recoverable’.

For the foregoing reasons the claim is dismissed with costs to the defendant company to be taxed if not agreed.

(D.V. Fatiaki)
Chief Justice

At Labasa,
22nd February, 2005.