IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No: HBC 359 of 2005L

BETWEEN:

CREDIT CORPORATION (FIJI) LIMITED
Plaintiff

AND:

VASEMACA RATU
1st Defendant

AND:

VASEMACA RATU as executrix of trustee of the estate of RATU KINI BOKONAQIWA (Deceased)
2nd Defendant

FINAL JUDGMENT

Of: Inoke J.

Counsel Appearing: Ms R S Singh-Devan for the Plaintiff
Ms T Draunidalo for the Defendants

Solicitors: Neel Shivam for the Plaintiff
 Pillai Naidu & Assocs. for the Defendants

Date of Hearing: 9 and 26 October 2009
Date of Judgment: 23 December 2009

INTRODUCTION

[1]	This is a claim by the Finance company, “Credit Corp”, for moneys due under Asset Purchase Agreements (“APAs”) entered into between the company and the Defendants, Ratu Kini and his wife Vasemaca Ratu. Ratu Kini died subsequently and this claim was issued against Vasemaca Ratu personally and as the executrix and trustee of Ratu Kini’s estate.

[2]	Mrs Ratu’s Defence was simply that “they were never appraised of the matters contained in the Asset Purchase Agreements apart from being asked to sign the same.” 

[3]	Mrs Ratu also filed a Counter-claim based on allegations that the APAs were unenforceable and that Credit Corp repossessed the vehicles under the Agreements unreasonably and sold them in breach of the duty owed by Credit Corp to her thereby causing her loss and damage of exactly the same amount claimed in the Writ.

[4]	Although no Reply and Answer to Counter-claim was filed, because of the way the Counter-claim was pleaded it was not necessary to file it.

THE AGREED FACTS

[5]	The PTC Minutes listed the agreed facts as follows:

2.1	The Plaintiff is a limited liability company and is engaged inter alia in the business of supplying financial credit in return for securities.

2.2	The first Defendant was a customer of the Plaintiff.

2.3	That the Defendants executed several asset purchase agreements particularised as:

APA	Commence-ment date	Hirers	Description of goods hired	Total hire amount	
Account No. 67108	23/02/00	Ratu Kini Bokoniqiwa & Vasemaca Ratu	Hyundai H100 GLS Van, DO 737	$47,268.00	
Account No. 67355	09/03/00	Ratu Kini Bokoniqiwa & Vasemaca Ratu	Toyota Landcruiser 4.2L, DP074	$161,994.00	
Account No. 67611	30/3/00	Ratu Kini Bokoniqiwa & Vasemaca Ratu	Mitsubishi Pajero DC 166	$38,988.00	
Account No. 68056	19/05/00	Ratu Kini Bokoniqiwa & Vasemaca Ratu	Mitsubishi Pajero DQ 212	$111,840.00	
Account No. 69856	30/12/00	Ratu Kini Bokoniqiwa & Vasemaca Ratu	Hyundai H100 GLS Van, DO 737	$43,668.00 (Rewrite of account no. 67108)	
Account No. 69864	30/12/00	Ratu Kini Bokoniqiwa & Vasemaca Ratu	Mitsubishi Pajero DQ 212	$115,872.00 (Rewrite of account no. 68056)	
Account No. 69831	30/12/00	Ratu Kini Bokoniqiwa & Vasemaca Ratu	Toyota Landcruiser DP 074	$168,000.00 (Rewrite account no. 67355)	

2.4	That the Defendant repossessed the three vehicles being DP 074, DO 737 and DC 166.

2.5	That tender notices were advertised for the three vehicles in the Fiji Times on the 17th August 2002, 21st August 2002 and 23rd August 2002.

2.6	That the repossessed vehicles were sold through private sale for the following amounts:

(i)	DP 074	-	$71,710.00

(ii)	DO 737	-	$20,000.00

(iii)	DQ 212	-	$55,000.00

THE EVIDENCE AT THE TRIAL

[6]	The hearing took two days. The first witness called for the Plaintiff was its Manager for the Western Division at the time. He had been with Credit Corp since 1998. His duties were to oversee and supervise the company’s business in the West which included financing and collections. He remembers the defendants, Vasemaca Ratu and Ratu Kini. When he took over from his predecessor, they were already customers in the company’s books. His evidence was that:

“When I came in, there was a change in the vehicles so I had to rewrite the security; a new amended agreement to cover the new cars; I was involved in that; whilst the account is current, the security needs to be changed so we have to get a payout figure of the current account and then transfer it to the new account, then rewrite the security.

I witnessed their signatures. I briefed the defendants; explained the agreement; they were hirers and we were owners until they pay us off; I explained in Fijian; they then signed the document; signed at their residence; they had an option to come to our office but they wanted me to come to their residence that is why I went there; I have no doubt that the defendants understood the documents;

The Consumer Credit Act Certificates signed by the defendants stated that the vehicles were to be wholly used for commercial purposes and not for personal, domestic or household use; I believe the defendants were running a tourism business and the vehicles were to be used for that purpose. The defendants were partners in that business.

The defendants wanted to change the older units (vehicles); we had to make three changes to upgrade the units giving them problems.”

In cross-examination, he said:

“I did not go through the Agreements with the defendants because it would take two to three days to do that and I did not think it was necessary because they had gone through the previous agreements and this was only rewrites; but I did highlight to them the need for them to understand; we do not have any file notes on the first lot of executed documents; I did not ask them about their level of education; we had a clear understanding because they have been through this before; the normal thing we do is to ask if they have questions; I am not sure if I told them to get a lawyer.”

In re-examination, he confirmed:

“Both parties agreed and wanted the documents signed; I believe they understood the essence of the agreements; we both agreed that they needed to upgrade; they did not ask any further questions.”

[7]	The second witness for Credit Corp was the company’s legal executive who had held the post for the last 9 years. Her duties were conveyancing and debt recovery and included preparing documentation such as APAs, loan agreements and bills of sale. She knew the defendants as customers:

“They first became customers in November 1997; they came to Credit Corp to seek finance to buy vehicles; we provided finance for them;

We have to look at the credit history of the customer; for business people we want cash flows and bank statements and then we assess their eligibility; they were running a hostel on Mana Island – Ratu Kini’s Hostel; the owner was Mana Rose Company Ltd; incorporated on 1/7/95; the shareholders are the defendants – 1 share each;

We prepared the APA signed by Ratu Kini on 7/11/97; I don’t know who witnessed the agreement; either the customer comes to our office to sign or our marketing officer takes it to him to sign; the APA was accompanied by a letter dated 4/11/97 requesting Ratu Kini to execute the agreement and return it for settlement with the first installment and confirmation of insurance cover; it was followed by a letter dated 11/11/97 explaining how much and when to pay monthly and that the vehicle remained the property of Credit Corp until such time the account is paid in full; it’s a hire purchase agreement which has the terms, interest rates, etc, signed by the customer; this account was paid off and the defendant took another vehicle from us;

It was in February 2000; that was for the purchase of a Hyundai H100 GLS van registration DO737 under the APA and CCA Certificate signed by both defendants on 10/02/00; witnessed by one of our staff members; a copy was sent to the defendants under cover of the usual letter dated 23/02/00 telling them how much to pay monthly and that the vehicle remained the property of Credit Corp until payment of the account in full; the full hire amount was $47,268; monthly repayment of $1,313 from 23/02/00 to 23/01/03; and account number 67108 was created for this purchase the agreements were signed on 10/02/00 and settlement took place on 23/02/00; they had enough time to come to us and find out if they do not agree with the terms;

Account 67108 was re-written into another account – 69856; accounts are re-written when they fall into arrears; we rewrite into a new account to clear off the arrears; we liaise with the customer on a new repayments and only when they agree that we rewrite; we ask for new cash flows; the defendants fell into arrears here; the new account is rewritten on terms according to what they agree; this account was rewritten under APA and CCA Certificate executed by the defendants on 18/12/00; for the same vehicle DO737; amount of rewrite from Account 67108 was $32,825 to new total amount was $43,668; repayment now reduced to $1,213 from 30/12/00 to 30/11/03 – new account number 69856; the APA was sent to the defendants under cover of the usual letter dated 14/12/00 requesting that the defendants sign it and return with the first installment and confirmation of insurance cover – the letter also stated that: ‘for further clarification, you may contact us on telephone 724766’; a copy of the executed APA was later sent to the defendants under cover of a standard letter dated 30/12/00.

The witness also gave evidence on similar transactions in respect of three other vehicles: Toyota Landcruiser DP074, Mitsubishi Pajero DC166 and Mitsubishi Pajero DQ212.

For DP074, Credit Corp approved finance for the purchase of the Landcruiser from Asco Motors on 02/03/00; the APA and CCA Certificate were signed by both defendants on 06/03/00 for account number 67355; the total amount financed was $161,994; repayments of $3,857 per month from 9 March 2000 to 9 August 2003; a copy of the executed APA was sent under cover of the standard letter dated 09/03/00;

The account fell into arrears of $15,610 and was rewritten into another account 69831 in December 2000; the APA and CCA Certificate were sent to the defendants for execution under cover of the standard letter dated 14/12/00; the APA and Certificate were signed on 18/12/00 for rewrite amount of $118,325 and total amount financed of $168,000; monthly repayments reduced to $3,500 from 30/12/00 to 30/11/04; a copy of the executed APA was sent to the defendants under cover of the standard letter dated 30/12/00.

For DC166, the Asco Motors quotation was for $40,000; the APA and Certificate were signed on 24/03/00 for account number 67611; total amount financed was $38,988, monthly repayments of $1,083 from 30/03/00 to 28/02/03; a copy of the executed APA was sent to the defendants under cover of the standard letter dated 30/03/00.

DC166 was later traded in for the purchase of a new Pajero DQ212 and so account 67611 was subsequently rewritten into a new account, number 68056, in May 2000 together with the finance for the new purchase; the APA and Certificate were sent for execution by the defendants under cover of the standard letter of 27/04/00; they were executed on 01/05/00 to finance the total amount of $111,840 with repayments of $2,330 per month from 19/05/00 to 19/04/04; a copy of the executed APA was sent to the defendants under cover of the standard letter of 19/05/00.

This account too fell into arrears and was rewritten into account number 69864 in December 2000 also; the APA and Certificate were sent to the defendants under cover of the standard letter of 14/12/00 for execution; they were executed on 18/12/00 to finance $115,872 with monthly repayments of $2,414 from 30/12/00 to 30/11/04; a copy of the executed APA was sent to the defendants under cover of the standard letter dated 30/12/00.

The 3 accounts after rewriting were 69831, 69856 and 69864.

No repayments were received for account 69856 after March 2000 so the vehicle was reposed and sold in August 2002 and the amount credited to the account.

Her further evidence was that:

On 20 October 2000, Credit Corp wrote to Ratu Kini reminding him that insurance premiums due to Dominion Insurance for the vehicles were outstanding and requested him to regularise it by 24 October 2000. He did not regularise it but instead wrote acknowledging that his accounts were in arrears and sought more time to settle because he had managed to secure a $250,000 loan but it had been held up because of delays in the documentation. The letter stated: “I intend to settle all my outstanding arrears once I have received the approved funds from my bank.”

Credit Corp sent a letter of demand on 1 December 2000 for total arrears of $29,906 for accounts 67108, 68056 and 67355. Ratu Kini replied with a letter of the same date enclosing a cheque for $10,000 and stating:

“I kindly request you to consider the re-structure of my entire accounts to include the $19,906 which is still in arrears and extend my terms of payment from the current 3 years to 3 years and seven (7) months and to commence the new payment structure at the end of this month, (December 2000). I further request that if you could kindly lower my monthly payments for the Toyota Land Cruiser (Reg. No: DP074) to $2,000.”

It was after this letter that the defendants’ accounts were rewritten.

The accounts went into arrears after the rewrite.

On 3 April 2001, Credit Corp authorised a bailiff to repossess and seize the Land Cruiser DP074, Hyundai van DO737 and Pajero DQ212 to be held by the company until payment of arrears of about $14,500 within 21 days, failing which the vehicles would be sold. This was followed by a letter from Ratu Kini dated 10 April 2001 asking for a final payout figure of all his accounts for payment by Merchant Bank of Fiji Ltd. Merchant Bank also wrote to Credit Corp on 20 April 2001 confirming that they were in the process of taking over the defendants’ company debt and asked for a payout figure to the end of April. Credit Corp replied on the same day with the payout figures to 25 April 2001.

Merchant Bank did not pay out the defendants accounts. Ratu Kini wrote to us on 21 May 2001 explaining why. He put the blame on the management of the Bank “who have hoodwinked me with false promises in regard to the taking over of my total debt owing to your bank”. The letter also spoke very highly of the Western Manager “who went out of his own way to assist me in the re-structuring of my accounts, especially with the $29,900 in arrears and also reducing my monthly payment which has given me and my company a great relieve (sic).” Ratu Kini went on to say in the letter:

“I promise and undertake that I will always be an honest customer with your bank and I assure you that I will always fulfill my financial commitment as stipulated in all the agreement between my company and your financial institution.”

On 13 May 2002, Credit Corp sent another request for payment of arrears of $19,706 by 20 May 2002. Ratu Kini replied on the next day with a request for a breakdown of payments and the information was faxed to him on the day after.

The 3 vehicles were repossessed in June 2002.

Credit Corp sent a letter of demand to the defendants for the sum of $91,200.12 being the amount due and owing under the APAs 69831, 69856 and 69864 dated 30/12/00. We did not receive a reply to this demand.

The 3 vehicles were advertised for sale by written tender in the Fiji Times on 17, 21 and 23 August 2002. We did not receive any tenders for any of the vehicles because they were not in good condition. So we sold them through private sale. Customers inspected the vehicles and made offers and if we agreed the vehicles were sold.

DO737 was sold to Safeway Electric for $18,181.82. DP 074 was sold for $71,710.00. DQ212 was sold for $55,000.00.

All payments were credited to the respective account. The outstanding balances are the amounts claimed in this action.

The defendants business had 8 different accounts with us since 1997. They never complained that they did not understand and there is nothing in the files that say that they did not understand. They only raised this after these proceedings were issued in December 2005.

[8]	In cross-examination, she agreed that the standard letters did not explain the APAs but the letters did ask the defendants to come back to Credit Corp if they did not agree and the defendants had sufficient time to do that if they needed clarification. It was put to her that Credit Corp knew in December 2000 that the defendants could not repay the loans and she answered that that was the reason the accounts had to be rewritten. She was questioned along the lines that Ratu Kini did not sign the letters of 1/12/00, 10/04/01 and 21/05/01. In re-examination she clarified that there was no reason to suspect that Ratu Kini did not sign those letters. The signatures on all the documents looked the same.

[9]	The third witness for the Plaintiff was called under subpoena. She was the accountant for the defendants. Her evidence was of limited use because she only came into the picture from 2005 onwards after the Resort changed its name from Ratu Kini’s Hostel to Ratu Kini’s Dive Resort. It is still owned by the same owners but is now run mainly by someone else. However, her evidence in respect of Vasemaca Ratu’s involvement in the business was that she would come to the island and enquire about occupancy rates. They would speak in English. Vasemaca Ratu did not play a major role in the Resort but she has major interests in two cane farms, one in Sabeto and another somewhere else. They did not discuss financial information, rates or loan conditions or repayments. All they discussed were occupancy rates. That was the extent of the plaintiff’s evidence.

NO CASE TO ANSWER

[10]	 At the end the plaintiff’s case, Ms Draunidalo moved that there was no case for the defendants to answer.

[11]	I disagreed and ruled against her. I was of the opinion that the plaintiff had shown a case where the defendants knew what they were signing. They have had a history of financial dealings over several years and over several accounts.

THE DEFENDANTS’ CASE
 
[12]	The evidence in chief of Ms Vasemaca Ratu for the defendants was very brief:

“I am 69 years old. I was educated to Form 4 level at the Mission College. I am a director of Mana Rose Company Ltd. Ratu Kini and I were the directors. He was my husband. He was the main person that ran the business. “I sign whatever he tells me to sign”. I signed the APA for DO737 on 10/02/00. I do not recall if someone from Credit Corp was there when I signed. I cannot remember if someone from Credit Corp explained the document. I also signed the Certificate. I just signed because my husband told me to sign it. My husband’s level of education is class 4.

In cross-examination, she said:

I can read in English and some I can understand. I can read “Mana Rose Company Limited” and that is my signature. I don’t understand what the certificate of incorporation is but that is my signature and my husband’s. I don’t recall signing but that is my signature.

I know how to run a business. I manage two cane farms.

I did not refuse to sign any of the documents even though I did not understand what they were saying.

I made no enquiries about the accounts with Credit Corp after my husband’s death.

I agree that the vehicles were advertised. I did not attempt to find buyers at higher prices.

Credit Corp did not pressure me into signing the documents. It was my husband that did. He did not tell me what the documents were.

In re-examination, she said:

My husband died on 18 December 2003. My accountant and my nephew ran the company.

This evidence was objected to but I allowed it subject to cross-examination by Counsel for the Plaintiff.

ANALYSIS OF THE EVIDENCE

[13]	Her answers to questions as to the reasons why she signed the documents or her understanding were given after a long pause and without eye contact. She cannot recall receiving the demand letter of 12 July 2005 or any of the letters for that matter. She is now 69 years old and would have gone to school in the 1960s. A student at that time to reach Form 4 level of education is a bright student. I do not accept that Ms Ratu is as ignorant or illiterate as she makes herself out to be. She is not lacking in management skills having admitted to managing two cane farms and I have no doubt that she understands the meaning and effect of the APAs.

[14]	I find the witness Ms Vasemaca Ratu unreliable and therefore reject her evidence that she did not understand what she was signing or that there was a need for an explanation. I also reject her evidence that she signed simply because her husband asked her to sign. The need to seek independent legal advice is a matter for her and her husband. They chose not to do so. Credit Corp should not be blamed for their choice.

[15]	On the other hand, the first two witnesses for the plaintiff gave their answers in a straight forward and non hesitant manner. I prefer their evidence and therefore find that there was no need to explain the APAs in a detailed way to the defendants. It was sufficient for the Manager Western to explain the APAs in the general way that he did. Ratu Kini made it very clear in his letters that he had no misunderstanding of the agreements. Ms Vasemaca Ratu can read and understand English and I think that she is of a high enough level of education to be able to read and understand the APAs. Both she and her husband had ample opportunity to seek clarification if they required it. There had been a long history of association and at no time did they complain of lack of explanation or understanding.

[16]	If the pressure to sign was brought to bear on her by her husband, which I do not accept was the case, that was a matter between the two of them and Credit Corp, as the innocent party, should not be penalised for it.

THE DEFENCE OF NON EST FACTUM

[17]	In Habib Bank Ltd v The Charcoal Chicken Ltd [2004] FJHC 276; HBC0175.2001 (30 January 2004), a case with facts not dissimilar to the facts in this case, Singh J rejected the defence of non est factum and said this:

I shall deal with the issue of non est factum first. Non est factum is commonly pleaded in situations where it is sought to invoke the equitable jurisdiction to set aside a transaction on grounds that it was an unconscionable bargain. However non est factum is a common law rule and generally applies to –

“(a) comparatively rare class in which a man’s faculties whether from age or natural infirmity or drink or any other cause, are so defective that he really does not know what he is doing – that his mind does not go with the deed. In such a case his instrument is void even at law – non est factum”. Blomley v. Ryan (1954) 99 CLR 362 at p. 401 Fullager J.

Because non est factum renders a contract void, third parties cannot derive any rights under it. Ms Hewitt alleges that she was acting on advice of John Low who told her that she had to sign certain business documents and that the solicitors told her nothing and she was not explained the contents of the documents. In short she did not know what the documents were.

I do not believe that Ms Hewitt was totally ignorant of the nature of documents she was signing. She had signed a power of attorney in Papua New Guinea which she said she read herself and understood. She was shown the guarantee during cross-examination and she conceded that the lawyer might have explained but she did not understand. She admits therefore that the solicitor witnessing the documents was present; the plaintiff may be a puppet on a string of John Low but there is no suggestion that the solicitor too was being dictated to by John Low. I find that the documents were signed by Ms Hewitt after they were explained to her and she knew they related to the business of Charcoal Chicken Limited in which she had a vested interest. This is not a case of non est factum.

[18]	In Petelin v Cullen [1975] HCA 24; (1975) 132 CLR 355 (17 July 1975), the High Court of Australia allowed the defence of non est factum to stand and explained it as follows:

11.	The principle which underlies the extension of the plea to cases in which a defendant has actually signed the instrument on which he is sued has not proved easy of precise formulation. The problem is that the principle must accommodate two policy considerations which pull in opposite directions: first, the injustice of holding a person to a bargain to which he has not brought a consenting mind; and, secondly, the necessity of holding a person who signs a document to that document, more particularly so as to protect innocent persons who rely on that signature when there is no reason to doubt its validity. The importance which the law assigns to the act of signing and to the protection of innocent persons who rely upon a signature is readily discerned in the statement that the plea is one "which must necessarily be kept within narrow limits" (Muskham Finance Ltd. v. Howard (1963) 1 QB 904, at p 912) and in the qualifications attaching to the defence which are designed to achieve this objective. (at p359)

12.	The class of persons who can avail themselves of the defence is limited. It is available to those who are unable to read owing to blindness or illiteracy and who must rely on others for advice as to what they are signing; it is also available to those who through no fault of their own are unable to have any understanding of the purport of a particular document. To make out the defence a defendant must show that he signed the document in the belief that it was radically different from what it was in fact and that, at least as against innocent persons, his failure to read and understand it was not due to carelessness on his part. Finally, it is accepted that there is a heavy onus on a defendant who seeks to establish the defence. All this is made clear by the recent decision of the House of Lords in Saunders v. Anglia Building Society (Gallie v. Lee) [1970] UKHL 5; (1971) AC 1004, esp. at p 1019 . 

13.	Before the learned judge no reference was made to that decision. This omission may explain why his Honour did not deal with the element of carelessness. However this may be, the Court of Appeal overruled his decision on the ground that absence of carelessness was a necessary or material element in the making out of the defence and that on the facts the appellant was careless. (at p360)

14.	It is now settled beyond any shadow of doubt that when we speak of negligence or carelessness in connexion with non est factum we are not referring to the tort of negligence but to a mere failure to take reasonable precautions in ascertaining the character of a document before signing it. The insistence that such precautions should be taken as a condition of making out the defence is of fundamental importance when the defence is asserted against an innocent person, whether a third party to the transaction or not, who relies on the document and the signature which it bears and who is unaware of the circumstances in which it came to be executed. It is otherwise when the defence is asserted against the other party to the transaction who is aware of the circumstances in which it came to be executed and who knows (because the document was signed on his representation) or has reason to suspect that it was executed under some misapprehension as to its character. In such a case the law must give effect to the policy which requires that a person should not be held to a bargain to which he has not brought a consenting mind for there is no conflicting or countervailing consideration to be accommodated - no innocent person has placed reliance on the signature without reason to doubt its validity. (at p360)

15.	On this analysis the element of carelessness has no relevance for the present case. As the learned judge found, the appellant's belief that the document was a receipt was inspired by the agent's representation that the document acknowledged the payment of the sum of $50. It is scarcely to be conceived that the respondent was unaware of what his agent said and did; but even if he was not informed by the agent he must take responsibility for his action. Consequently as against the appellant, the respondent is not to be considered as an innocent person without knowledge or reason to doubt the validity of the appellant's signature. (at p360)

16.	There are other reasons why it would be inappropriate to treat the respondent as an innocent party. It became apparent to Mr. Clements when the original option was negotiated that the appellant had little appreciation of English and no capacity to understand the option agreement. Indeed, Mr. Clements advised him to consult a solicitor. The appellant's difficulties in reading and understanding must have been present to Mr. Clements' mind when the extension was signed; yet he contented himself with a demand that the document be signed and omitted to give an explanation of its character. (at p361)

17.	The matters to which we have referred would in any event support the independent conclusion that there was no carelessness on the part of the appellant. He could not read English; it was beyond his capacity to understand what the document provided. He was therefore faced with the choice of relying on what Mr. Clements said or of incurring the expense and inconvenience of taking it to a solicitor for advice. Vis-a-vis Mr. Clements and the respondent, he was justified in relying on what he was told by Mr. Clements. After all, Mr. Clements had previously advised him to consult a solicitor when that was necessary; on this occasion no such advice was given; nor did he give any indication that the document granted rights additional to those previously conferred. (at p361)

18.	The other element in the defence which requires to be mentioned is the necessity that the appellant should show that he believed the document to be radically different from what it was in fact. Once it is accepted that the primary judge could properly find that the appellant believed it to be a receipt, this point of contention disappears from the case. The respondent urged that the evidence was so slight as not to overcome the "heavy" onus which rested with the appellant. The existence of that onus unquestionably was present to the mind of the primary judge when he came to assess the credibility of the appellant. But once he accepted the appellant's evidence the question of onus in our opinion was set at rest. (at p361)

APPLICATION TO THE FACTS

[19]	The facts in the present case as I have found above are radically different from those in Petelin v Cullen (supra). Clearly in my view, the defence of non est factum had not been made out.

OTHER DEFENCES

[20]	Having found that the defence of non est factum does not apply to this case, the defences based on misrepresentation or breach of the Fair Trading Decree also fail. This is a case completely different factually from Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 (12 May 1983).

[21]	I also find that there is no evidence to suggest that Credit Corp sold at undervalue or did not take reasonable steps to ensure that the vehicles fetched the proper price. There is no duty in Credit Corp to ensure that the “best” price was obtained, as pleaded in the defence. The duty is as set out in Whittaker v National Bank of Fiji Ltd [2009] FJHC 180; HBC155.2009L (31 August 2009):

[16]	Kay J in Warner v. Jacob (1882) 20 Ch D 220, at 224 said:

"...a mortgagee is strictly speaking not a trustee of the power of sale. It is a power given to him for his own benefit, to enable him to better realize his debt. If he exercises it bona fide for that purpose, without corruption or collusion with the purchaser, the court will not interfere even though the sale be very disadvantageous, unless the price is so low as in itself to be evidence of fraud."

[17]	This statement was cited with approval by the Privy Council in Haddington Island Quarry Company Limited v. Hudson [1911] AC 727 @ 729, an appeal from the Court of Appeal of British Columbia. Subsequent cases and legal writers have referred to this rule as the "good faith" standard. 

[18]	What is meant by ‘good faith’? Isaacs J in Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676 at 699-701 said:

"But what is included in ‘good faith’? Lindley LJ in Kennedy v. De Trafford [1896] 1 Ch 762 at 772 said: ‘It is not right, or proper, or legal, for him, either fraudulently, or willfully, or recklessly, to sacrifice the property of the mortgagor’. Lord Herschell in the House of Lords ([1897] AC 180 at 185) said that was all included in good faith.

[22]	The defence and counter-claim therefore fail.

THE AMOUNT CLAIMED

[23]	The amount demanded by Credit Corp in its letter to the defendants of 12 July 2005 was $91,200.12. I do not accept that Ms Ratu or the management of the Resort did not receive it. The letter was sent to the same Post Office box as that appearing on the Resort’s letter head. The amount demanded was not challenged by the defendants at all. I therefore accept the claim as proven.

DEFAULT INTEREST

[24]	Credit Corp also claims interest at the default rate of 25% pa under the APAs from 12 July 2005 until full payment. I recently dealt with such a claim in Credit Corporation (Fiji) Ltd v Khan [2009] FJHC 203; HBC334.2000L (11 September 2009). I only allowed default interest from the date of default to the date the vehicle was seized. I take the same approach here. I take the starting date as the date the APAs were rewritten, i.e. start from January 2001. Between then and the date the vehicles were repossessed, Credit Corp gave the defendants some breathing space to refinance with Merchant Bank. That failed and the vehicles were eventually repossessed in June 2002. I will therefore allow default interest on the amount claimed for 18 months which I calculate to be $91,200 x 25% x 18/12 = $34,200.

INTEREST UNDER THE ACT

[25]	I make no award for interest under the Law Reform (Miscellaneous Provisions)(Death and Interest) Act as I think Credit Corp is sufficiently compensated by the default interest award. 

WHO IS THE PROPER DEFENDANT?

[26]	There is one matter which Counsel should have addressed this Court on and that is: who is the proper defendant? Although the directors and shareholders of Ratu Kini’s Hostel were the defendants in this action, it is clear from the evidence and the way the parties conducted this case, that the proper party to the APAs was the business: Ratu Kini’s Hostel. All of Ratu Kini’s letters to Credit Corp were under the letter head of "Ratu Kini’s Hostel". The evidence of the defendants and the Companies Office documentation show that the business was owned by Mana Rose Company Limited of which the defendants were the directors and two shareholders of equal shareholding. The business changed its name later to Ratu Kini’s Dive Resort but ownership remained with the defendants.

[27]	It is also clear from the evidence that the APAs were entered into for the benefit of the business and the motor vehicles were bought for use in the business and not for the defendants’ personal use.

[28]	Order 15 r 6 of the High Court Rules 1988, so far as relevant, provide as follows:

6(1)	No cause or matter shall be defeated by reason of the misjoinder or non joinder of any party; and the Court may determine the issues or questions in dispute so far as they affect the rights and interests of the persons who are parties to the cause or matter.

(2)	Subject to the provisions of this rule, at any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application –

(a)	order any person who has been improperly or unnecessarily made a party or who has for any reason ceased to be a proper or necessary party, to cease to be a party;

(b)	order any of the following persons to be added as a party, namely-

(i)	any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon; or

(ii)	any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter.

(5)	No person shall be added or substituted as a party after the expiry of any relevant period of limitation unless either-

(a)	the relevant period was current at the date when proceedings were commenced and it is necessary for the determination of the action that the new party should be added, or substituted, or

(b)	…

(6)	The addition or substitution of a new party shall be treated as necessary for the purposes of paragraph (5)(a) if, and only if, the Court is satisfied that-

(a)	…

(b)	…

(c)	…

(d)	…

(e)	The new party is sued jointly with the defendant and is not also liable severally with him and failure to join the new party might render the claim unenforceable. 

[29]	The present case falls within the provisions of r 6(2)(a), 6(2)(b)(i) and 6(2)(b)(ii) of O 15. The cause of action in this case arose after the vehicles were sold and a demand made, that is, on 12 July 2005. This Writ was issued 5 months later on 14 December 2005, well within the 6 years limitation period. It is necessary to join the business as a party as it is the party that is solely liable for the debts. In any event, if I am correct in holding that the cause of action arose on 12 July 2005 and the limitation period is 6 years, the limitation period would expire in 2011. Therefore the provisions of subrules 6(5) and 6(6) do not apply.

[30]	In the exercise of the powers vested in this Court by the provisions of O 15 r 6, I order that "Mana Rose Company Limited formerly trading as Ratu Kini’s Hostel (a firm) but now trading as Ratu Kini’s Dive Resort (a firm)" be the defendant in this action instead of the defendants as currently named. The Writ is amended accordingly. The provisions as to service do not apply as the principals of the new defendant are the defendants in this action.

COSTS

[31]	The hearing of this case had been unnecessarily prolonged because the defendants through their Counsel refused to admit the contents of the APAs so Counsel for the Credit Corp had to go through the tedious process of having to prove what was undeniably recorded in the documents. It was not inconsistent with their defence to admit the contents as their defence was simply that the contents were not explained. It was not the accuracy or the truthfulness of the contents that was being attacked.

[32]	The trial took the best part of two days lasting in total about 8 hours. The documents ran to several hundred pages. This case should never have been fought out in this Court because it is indefensible in my view. It seems more than a coincidence that the change in the trading name of the defendants happened in 2005 when Credit Corp was seeking repayment from the business. Taking all these matters into account, I therefore award costs summarily assessed at $5,000 to Credit Corp.

ORDERS

[33]	The Orders are therefore as follows:

1.	Mana Rose Company Limited formerly trading as Ratu Kini’s Hostel (a firm) but now trading as Ratu Kini’s Dive Resort (a firm) is substituted as the Defendant in this action instead of the defendants as currently named.

2.	The said Defendant shall pay to the Plaintiff the sum of $91,200.12 being the balance due under the various Asset Purchase Agreements.

3.	The said Defendant shall pay to the Plaintiff the sum of $34,200 being default interest due under the said agreements.

4.	The said Defendant shall pay to the Plaintiff the sum of $5,000 being the costs of this action within 28 days.

……………………………………………………
Sosefo Inoke
Judge