IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No: HBC 294 of 2003 L

BETWEEN

NATIONAL BANK OF FIJI T/AS COLONIAL NATIONAL BANK 
a limited liability company having its registered office at Suva.
Plaintiff

AND

SACHIDA NAND NAICKER
(f/n Subramani) C/- Vaileka Electric, Vaileka, Rakiraki
Defendant

INTERLOCUTORY JUDGMENT

Judgment of : Ms Dias Wickramasinghe J.

Counsel : Ms B Narayan for the Plaintiff
Samual K Ram for the Defendant

Solicitors : Lateef & Lateef for the Plaintiff
Samual K Ram for the Defendant

Date of Judgment : 6 May 2011

Keywords: Amendment of pleadings; High Court Rules O. 20 r.5; Limitation Act

INTRODUCTION

[1]	The defendant by its Summons dated 17 March 2011, seeks inter alia to amend the Statement of Defence under O. 25 r. 5 of the High Court Rules. The affidavit of the defendant dated 23 February 2011 was filed in support of the Summons. The plaintiff filed an affidavit in opposition of Isimeli Bola dated 11 April 2011. The defendant did not file a reply to the affidavit in opposition. 

[2]	The Summons in issue, seeks four orders. However, at the hearing, Mr Ram, Counsel for the Defendant informed court that he is only pursuing the order sought in paragraph 3 of the Summons, viz to grant leave to amend the statement of Defence and file Counter Claim. Accordingly, this interlocutory judgment is confined to the amendment issue. 

[3]	The substantive matter is partly heard and is fixed for further hearing on 18 May 2011. The application for amendment was strenuously argued by the counsel on 6th and 11th of April, 2011 and was adjourned for further submissions on 19 April 2011. When the matter was called on 19 April 2011, a further date was moved for oral submissions, as counsel for the defendant was unwell. However, since the substantive mater is partly heard the counsel consented to file additional written submissions if necessary. Both parties filed written submissions before the commencement of the oral submissions. 

FACTS 

[4]	The plaintiff, a duly registered bank in Fiji, had loaned a sum of $20,000.00 and another $2,000.00 subsequently, to the defendant to purchase a residential property. The loaned sum had been secured on the first registered mortgage over Crown Lease No. 8249. The plaintiff alleges that a sum of $16,200.73 is currently outstanding from the loan account and seeks judgment against the defendant to recover the said sum.

[5]	The defendant in its Statement of Defence and at the pre-trial conference admitted the borrowing of $20,000.00 and providing the crown leased land as collateral. He also admits that due to the downturn of business and/or of the economy, he fell into arrears of payment of the loaned installments of $400 per month. 

LEGAL MATRIX

[6]	The amendment seeks the introduction of nine new paragraphs to the existing Statement of Defence, including the addition of a counter claim. The crux of the amendments are premised on two issues viz:

i)	Whether the plaintiff induced the defendant to execute the mortgage over his Crown Lease no. 8249 without explaining the contents. 

ii)	Whether the plaintiff by its action and /or conduct had agreed and represented that the plaintiff would undertake the payment of insurance premiums over the property secured. 

[7]	The plaintiff objects to the proposed amendments on two grounds. Firstly, that they are prejudicial to the rights of the plaintiff; and secondly, that the proposed amendments attempt to introduce a new cause of action, which is barred by the Limitation Act. 

FIRST ISSUE – Did the plaintiff induced the defendant to execute the mortgage over his Crown Lease No. 8249 without explaining the contents?

[8]	Before I examine this objection, let me first set out the law. 

Order 20 r.5 (1) and (5) of the High Court Rules provide as follows:

5.-(1) Subject to Order 15, rules 6, 8 and 9 and the following provisions of this rule, the Court may at any stage of the proceedings allow the plaintiff to amend his writ, or any party to amend his pleading, on such terms as to costs or otherwise as may be just and in such manner (if any) as it may direct.
…….

(5) An amendment may be allowed under paragraph (2) notwithstanding that the effect of the amendment will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment.

[9]	Order 20 r. 5(1) is lucid, that courts can permit amendments of the writ or pleadings at any stage of the trial. Both counsel also agrees that the pleadings can be amended at any stage of the trial. However, it is well settled that courts should exercise these powers only if the proposed amendments are not prejudicial to the opposing parties case. 

[10]	The law relating to grant of leave to amend pleadings is well set out under Order 20 rule 5 of the Supreme Court Practice 1988 ("the White Book")

[11]	Under order 20/5-8/6 of the White Book it is stated that:

"It is a guiding principle of cardinal importance on the question of amendment that generally speaking, all such amendments ought to be made" for the purpose of determining the real question in controversy between the parties to any proceedings or of correcting any defects or error in any proceedings." (see per Jenkins L.J in R.L Baker Ltd v Medway Building & Supplies Ltd [1958] 1 W.L.P 1216, p 1231; [1958] 3 All E.R 540, p. 546)." 

[12]	The White Book further goes on to state under Order 20/5-8/10 that:

"There will be difficulty however, where there is ground for believing that the application is not made in good faith. Thus, if either party seeks to amend his pleading, by introducing for the first time allegations of fraud, or misrepresentation or other such serious allegation, the Court will ask why this new case was not presented originally; and may require to be satisfied as to the truth and substantiality of the proposed amendment (Lawrence v Norreys (1890) 38 Ch D. 213; see judgment of Stirling J. p. 221, and of Bowen L.J. p. 235. (emphasis added)

[13]	Pathik J in the case of Rokobau v Marine Pacific Ltd [1997] FJHC 248; Hbc0503d.93s (29 October 1997) considered at length, the principles relating to amendment as stated by Lord Esher, MR in the leading case of WELDON v NEAL 19 QBD C.A. 394 at 395 where his Lordship said:

"We must act on the settled rule of practice, which is that amendments are not admissible when they prejudice the rights of the opposite party as existing at the date of such amendments. If an amendment were allowed setting up a cause of action, which, if the writ were issued in respect thereof at the date of the amendment, would be barred by the Statute of Limitations, it would be allowing the plaintiff to take advantage of her former writ to defeat the statute and taking away an existing right from the defendant, a proceeding which, as a general rule, would be in my opinion, improper and unjust. Under very peculiar circumstances the Court might perhaps have power to allow such an amendment, but certainly as a general rule it will not do so."

[14]	Let me now examine whether the proposed amendments sought by the defendant are prejudicial to the plaintiff. 

[15]	The defendant submits that he was unaware of the particulars of the loan. He also asserts that the plaintiff did not explain the terms and conditions of the mortgage to him when it was executed. Mr Ram, counsel for the defendant has highlighted many errors in the loan documents that he submits, is evident of the fact that the loan documents were not explained to the defendant. Mr Ram also submits that the lease on the land expired 5 months after the execution although it was kept as collateral, which obviously reveal the carelessness of the bank officers. He also asserts that although the certificate that had been issued by Mr Graham Bruneette confirmed that the contents of the mortgage was explained to the defendant in the 'Hindustani language', Mr Graham Bruneette does not speak Hindi. 

[16]	The defendant alleges that there was inducement by the bank staff. However, the inducement is not particularized. Nor does the affidavit disclose who induced the defendant. 

[17]	The plaintiff loaned the money in November 1997. Up until April 2000 the plaintiff had paid its installments although not regularly. (P 36). The defendant admits receiving the loan money but fell into arrears due to business downturn. The Writ of Summons was filed on 15 August 2003 and the Statement of Defense on 19 September 2003. This is a partly heard trail where plaintiff's first witness is on stand. The allegations are made for the first time after almost 14 years from the time the money was loaned to the defendant and almost 8 years after the Statement of Defence was filed. The affidavit of the plaintiff simply states that 'I was told by the bank to sign this mortgage document on the (sic) 5th of December 1997. I was not explained (of) the contents and was especially not told about the insurance requirements stated in the mortgage'. The defendant did not explain the reasons for delay in making the allegation in his affidavit. In my mind, it was inevitable that the defendant required explaining the delay. Mr Ram submitted that Mr Graham Bruneette does not speak Hindi and therefore could not have explained the terms and conditions of the mortgage. The court is unaware of the accuracy of this statement and the bank would be required to explain. Nevertheless, the defendant failed to disclose in his affidavit his knowledge of the English language; why he did not read the documents on his own or require someone to explain it to him; especially as the defendant had initiated several correspondences that are already before court in English. 

[18]	The defendant is a businessmen who had made an application to obtain a loan from the plaintiff's bank. It is common knowledge that the bank requests security from its customers when loans are processed. It is apparent that the defendant had informed of his assets to the bank and offered the crown lease as security. The real controversy between the parties is whether the plaintiff paid $20,000 and $ 2000 subsequently to the defendant and did the defendant repay the sum. The defendant admits that he received the $20,000 but was unable to repay it due to business downturn. It appears that there is an issue as regards the payment of $2000, which the court would have to determine after considering the evidence. Since the defendant admits receiving the loan of $20,000, the issue whether the defendant was induced to sign the mortgage without explaining the contents would anyway become only academic. I am therefore of the view that the proposed amendment is not necessary for this court to determine the real issue before court.

[19]	Moreover, this is the foremost defence of the defendant. In my mind, the aforesaid conduct of the defendant, together with unexplained delay in alleging a vital defence such as inducement at the very earliest opportunity, do not justify to be introduced as an amendment to the Statement of Defence at this stage of the trail. Clearly this is a defence, if true should have been taken in the Statement of Defence and not as an afterthought after 8 years. In the circumstances, I am of the view that the proposed amendments, if allowed, at this stage of the trial would in fact cause injustice to the plaintiff and would be prejudicial to the plaintiff's case. 

[20]	Accordingly, I do not permit the proposed amendment at paragraph 7 and 14. 

SECOND ISSUE – Did the plaintiff by its action and /or conduct had agreed and represented that the plaintiff would undertake the payment of insurance premiums over the property secured? 

[21]	Paragraph 3 of the Mortgage required the defendant to insure the building against destruction or damage by fire, storm and earthquake. On 11 October 2000, a fire destroyed the building, which was secured by the mortgage. The insurer, Tower Insurance refused to honour the claim as the premium was in arrears. 

[22]	Paragraph 3 of the Mortgage requires the defendant to insure the building. However, when the plaintiff's witness gave evidence, it revealed that the plaintiff had paid or attempted to pay the 2nd and 3rd insurance premiums. The defendant claims he was unaware of the 'insurance requirement' and in fact was informed that insurance premiums will be paid by the defendant. (paragraphs 10 and 11 of the affidavit). 

[23]	The evidence thus produced before me reveals that the defendant paid the first premium and the bank paid or attempted to pay the other two premiums. There appears to be an issue whether the plaintiff had assumed payment of the insurance premiums by its conduct contrary to the provisions of paragraph 3 of the Mortgage. 

[24]	As I have reasoned out earlier, the amendments are permissible at any stage of the trail. The proposed amendment on 'insurance', seeks to introduce a new counter claim based on the liability of payment of the premium. If the insurance was operative the defendant would have been entitled to the insured sum of $40,000.00 when the building was destroyed by fire. The plaintiff admits making the payments, but explains that it was made on behalf of the defendant and on his request. The untested affidavit evidence of both parties discloses that the last insurance premium was attempted to be made without the knowledge of the defendant. The defendant states that he was unaware of the payments of the two insurance premiums and heard it for the first time when the plaintiff's witness gave evidence in court. The delay of including the amendment of the counterclaim is therefore explained. In my mind, this is a justifiable issue, which needs to be examined by court after hearing all evidence. In the circumstances, I am of the view that permitting the said amendment would not prejudice the rights of the plainitff. 

[25]	Ms Narayan states that the amendments are statute-barred. Let me therefore examine whether the proposed amendments are barred by the Limitation Act. 

[26]	The mortgage was executed only for the purpose of securing the money loaned to the defendant. The defendant alleges that the crown lease has lapsed and had not been renewed or extended by the defendant. The evidence before me does not disclose whether the lease was renewed or why the bank had accepted such a land as security. If the crown lease had not been renewed then, in effect the loan would be unsecured. Then the entire transaction would be a simple contract where action would have to be filed within 6 years from the date when the cause of action accrued. (S 6 of the Limitation Act). If however the cause of action in the proposed counter claim is based on the terms and conditions of the Mortgage, then the Limitation is 20 years from the date when the cause of action accrued. Mr Ram says in any event his cause of action is not time barred as the action falls under s 25 of the Limitation Act. 

[27]	I find that the issue of limitation before me is centered on facts and law. I do not wish to pre-judge the issue on the available evidence as I view that this issue should only be determined after a due hearing of all the evidence. Accordingly, I permit the amendment sought under paragraph 8 and the corresponding paragraphs of the proposed Statement of Defence.

COSTS

[28]	The defendant moves that the costs of this application to be in the cause. I disagree. Plaintiff has not submitted its cost claim. However, counsel was present on two occasions to make oral submissions and filed written submissions. The matter was also mentioned on three other occasions. I summarily assess costs as $1100. 

ORDERS

1)	The proposed amendments sought in the Statement of Defence are permitted subject to the following variations:

(a)	paragraph 7 to be deleted
(b)	paragraph 14 to be deleted. 
(c)	Paragraph c of the prayer; 'damages for breach of the Fair Trading Decree' to be deleted. 

2)	Costs of $1100 to be paid by the defendant to the plaintiff on or before 18 May 2011. 

……………………………………………………
Ms D. Dias Wickramasinghe
Judge