IN THE HIGH COURT OF FIJI
AT LAUTQKA
CIVIL JURISDICTION

ACTION NO. HBC007 OF 2004

BETWEEN

CORINNE CRUICKSHANK
of St. Giles Hill, Winchester, England
PLAINTIFF

AND

SPOR (FIJI) LIMITED
a limited liability Company having its registered
office at Nadi Airport Hanger, Nadi Airport, Nadi
DEFENDANT

Date of Hearing: 14 February 2006
Date of Judgment: 21 February 2006

INTERLOCUTOR RULING OF FINNIGAN J PRE-TRIAL ISSUE

Counsel will note that I have corrected the spelling of the Plaintiff's name, and that spelling will be used hereafter.

This is a Ruling on a pre-trial issue which I directed Counsel to address.

In this action the Plaintiff claims on a written contract called a Lodge Plan Agreement. What she claims is contractual entitlement to a refund of a sum of money in American dollars namely USD25,256 together with interest at 10% per annum for a period of five years as provided in the contract and said to be compound interest, at USD15,419, to a total of USD40,675. There is no dispute that the contract falls within the jurisdiction of this Court.

The Plaintiff claims that this payment became due on or about 25 December 1998.

When she claimed the payment it was not paid. So she also seeks damages.

In 1999 she commenced proceedings in this Registry to wind up the Defendant. In a manner of spewing she succeeded, the Defendant disputed the Petition and on 22 June 2001 she withdrew it. She commenced these present proceedings on 12 January 2004.

The matter came before me on an application by the Plaintiff for Summary Judgment, which I refused in my Interlocutory Ruling on 16 December 2005. In hearing that application I formed the opinion that the Action is overdue for and capable of early resolution.

To that end I directed Counsel to appear before me and argue as a pre-trial issue the interpretation of Clause 7 in the Lodge Plan Agreement, on which the Plaintiff bases her claim far compound interest. Both Counsel made good submissions on this topic orally and in writing. It is of more than passing interest that the difference between the Plaintiff's interpretation (compound interest) and the Defendant's interpretation (simple interest) is the difference between USD40,675 and USD37,884, ie only USD2,791.

The Contract:

The issue for me is the interpretation of a Clause in a document called the "Lodge Plan Agreement". This agreement is contained within a brochure which was given to guests who stayed at a resort on Turtle Island. The brochure itself was entitled "Lodge Plan". The first page of the brochure is headed "Introduction". I shall set out some of that page here:

The Turtle Island Lodge Plan provides you with an opportunity to come back and enjoy our unique Island and its culture, at a significantly reduced cost. It is purchased by people who love the natural beauty of Turtle Island and who want to continue to experience the beauty again and again.

The Lodge Plan was conceived in 1981 to provide an opportunity for Turtle guests to obtain reduced price accommodation for five weeks, together with priority booking rights for their stay on the Island. Since that time many hundreds of our guests have purchased and used their Lodge Plan, either themselves or through family and friends.

Flexibility:

Although the Lodge Plan is for a 35 day period at any time within a five year period, it can be used all at once, or in any sequence of weeks that suit. In the unlikely event that the Lodge Plan is not all used up at the end of the five (5) year period, you have the option, of receiving a full refund on the unused portion, plus compound interest at 10% per annum for that period.

Savings:

………………………………….

Limited Number Of Plans

…………………………………..

Payment:

………………………………….

Plan Attached:

If you are interested why not browse through the attached Lodge Plan Agreement, and then if you have questions about it please see Richard or Greg.

The next page of the brochure sets out the Lodge Plan Agreement.

LODGE PLAN AGREEMENT

THIS AGREEMENT is made on the date set out in the Schedule hereto.

BETWEEN

SPOR (FIJI) LIMITED, being a Company incorporated in Fiji and having its registered office situated at Turtle Island, Yasawas, Fiji and trading as "TURTLE ISLAND LODGE" (hereinafter) referred to as "Turtle" of the one part

AND:

CORINNE CRUICKSHANK
the person named in the Schedule as the Guest (hereinafter referred to as "THE GUEST", which expression shall include the Guest's personal representatives and assigns) of the other part

WHEREAS:
…………………………..

NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:

1. DEFINITIONS
……………………………
"Investment Prepayment Agreement" shall mean this Agreement;

……………………………

……………………………

7. REFUND

In the event that the Guest does not use the full entitlement of Adult room nights prior to the Expiration Date the Guest shall be entitled to make application for a refund of the number of unused adult room nights calculated by multiplying the number of unused adult room nights by the adult room night rate in the Schedule (the refund sum) and adding to the refund sum interest computed at the rate of ten per centum (10%) per annum in arrears and computed annually on the refund sum for a period of five (5) years.

The words I am required to interpret are "............ and adding to the refund sum interest computed at the rate of ten per centum(10%) per annum in arrears and computed annually on the refund sum for a period of five (5) years". Because words are known by the company they keep, or (put another way) words of a feather fly together (noscitur a sociis), I have set out the relevant context including the definition of the agreement upon which Ms Khan for the Plaintiff relies.

In her submission she refers first to the heading "flexibility" (above) which gives the option of receiving a full refund of any unused portion of the amount paid plus compound interest at 10%per annum for the five year period that the money has been deposited. She then refers to the definition section of the agreement which defines the agreement as an "investment prepayment agreement". She thereupon submits that the reference in Clause 7 (above) to interest at 10% per annum computed annually at the refund sum must mean compounded annually.

As the words themselves do not clearly state the interest is compounded she relies on those other two references as showing that compound interest was what the parties intended. Put another way, her submission is that since the money was deposited as an investment and since the interest was to be calculated annually at 10% in arrears and since the introduction in the brochure said that the interest would be compound interest then clearly the parties intended in Clause 7 to provide for compound interest.

There are other ways to approach the interpretation of Clause 7.

Mr Gordon for the Defendant relies on the "parol evidence rule" and submits that only the written words of the contract should be considered since the whole contract is in writing.

If the written words of the contract are capable of yielding a clear meaning by themselves, than I have no doubt that this is the meaning which the Court should give to the words. In the common law jurisdiction there are fundamentally two lines of approach to interpretation of an instrument. The first used to be called the literal approach but it was notified in 1857 to what it is now usually called the Golden Rule. In Grey -v- Pearson (1857) 6 HLC 61, 106; 10 ER 1216, 1234, Lord Wensleydale said:

"I have been long and deeply impressed with the wisdom of the rule, now, I believe, universally adopted, at least in the Courts of Law in Westminster Hall, that in construing Wills and indeed Statutes, and all written instruments, the grammatical and ordinary sense of the words is to be adhered to, unless that would lead to some absurdity, or some repugnance or inconsistency with the rest of the instrument, in which case the grammatical and ordinary sense of the words may be modified, so as to avoid that absurdity and inconsistency, but no farther".

The other fundamental approach is generally called the purposive approach and that is the approach urged on me by Ms Khan. This approach is more suitable for legislation and it seems generally accepted that it may be applied only when an attempt to apply the literal approach has produced an ambiguity or an inconsistency, see Mills -v- Meeking [1990] 91 ALR 16, 30-31, Dawson J.

Conclusion:

So, I start with the literal or golden approach. The words of Clause 7 by themselves have a clear meaning. They are not the same as the words in the introduction, and they may or may not be consistent with the practice of institutions that take money on term deposit. But the agreement is complete within itself, and nothing in it contradicts these clear words. There was no way to compute the capital sum because it was subject to room usage, hence no way to compute the amount of interest until the end of the five year period. When the calculation is made it will obviously be "in arrears". It will be "Interest computed at the rate often per centum (100) per annum. ................................ and computed annually on the refund sum for a period of five (5) years". Without more, it means there will be 10% of whatever remains of the capital sum added for each year of the 5 year period. There is nothing that says the interest will compound. In clear words, Clause 7 provides for simple interest.

The agreement clearly contains all its terms within itself. The introduction which mentions compound interest is clearly dissociated from the agreement by the wording of the introduction itself in the section entitled 'plan attached' (above). Apart from that, the agreement itself has its own heading and states deliberately that it is the agreement between the parties.

For these reasons I uphold Mr Gordon's submissions and hold that the interest to be paid on the refund sum is simple interest at 10% per annum for each of the five (5) years in the agreement.

Ms Khan made submissions about the Plaintiff's substantive claim for compound interest until the date of judgement. These matters are outside the scope of this ruling.

Costs will be the Defendant's costs in the cause. I invite Counsel to chambers with a view to bringing about an agreement on any matter likely to curtail the duration of the trial or to save the costs, pursuant to Order 34 Rule 2(6).

D. D. Finnigan
JUDGE

At Lautoka
21 February 2006