High Court of Fiji

[10] When this matter was taken up for hearing on 6 September 2010, due to illness of one counsel, I was compelled to adjourn the matter to the following day. However, both counsel by consent filed examination-in-chief of their main witnesses the following day. I am thankful to the manner in which the parties and counsel attempted to crystallize the issues and conclude the action within the time allocated for the trial.

[11] Both the plaintiff and the defendant led the evidence of two witnesses each. On behalf of the plaintiff, PW1- Mr Sanmorgam, (f/n Gania), and PW2 - Ramesh Kapor gave evidence. DW1, Papaya (driver of the defendant) and DW2 - Ravindra Deo Prasad gave evidence on behalf of the defendant. Both Mr Sanmorgam (PW1) and Ravindra Deo Prasad (DW2) gave their evidence-in-chief by affidavit dated 7 September 2010. The parties also filed an Agreed Bundle of documents. The plaintiff produced documents marked P 1 to P 9 and the defendant D 1 to D 12 respectively. Both counsel requested court to only consider documents 3, 4 and 16 in the agreed bundle when considering the accounts.

[12] At the conclusion of the case, both parties also filed written submissions, which were received by me on 24 November 2010.

[13] At the commencement of the hearing, both counsel requested me to consider the amount stated in clause 3(b) of the sales agreement as $57,018.81 as at the date of trial. Mr Ram also informed that a $1000 payment stated in receipt no 221259 dated 10 January 2001 had been inadvertently omitted from the bundle of documents and moved court to include it in the final calculations. Mr Kholi had no objection. When I commenced the trial, the parties were also at variance of a payment of $3000.00 made on 27 November 2000 as claimed in the counter claim at clause 12. The plaintiff later admitted that the defendant had paid this sum.

[14] The defendant in his evidence said that he had paid $27,900.00 in cash, which included the $3000.00 and the $1000.00 stated above. (Paragraph 6 of examination-in-chief of Ravindra Deo Prasad).The plaintiff agreed receiving $27,900. At the commencement of the trial, parties agreed that the final amount due to the plaintiff is $57,018.81. Therefore, after deducting $27,900.00, the parties are now at variance only of $29118.81.

[15] Let me now turn to consider the three issues as agreed to by the parties.

Issue 1-

A sum of $15,000.00 payable under clause 10(d) of the agreement being the value of the chassis of bus (registered number AZ 234).

[16] Paragraph 9, of the amended Statement of Defence, sets out this cause of action as follows.

'IN breach of clause 10(c) and (d) of the said agreement, the plaintiff sold BUS No. AZ 234 to a third party but failed to repay the defendant the agreed sum of $15,000.00'.

[17] The plaintiff in his amendment reply, responded to this issue as follows:

AS to paragraph 8 (sic) of the amended statement of defence he says:-

(a) The defendant was unable to pay off the debts and requested the plaintiff to sell off the bus.
(b) That he gave a signed transfer form for registration of transfer of bus AZ 234
(c) That the plaintiff then sold the bus to a third party and paid off Merchant bank.
(d) He denies owing the sum of $15,000.00.

[18] Admittedly, the plaintiff borrowed $20,000.00 from Merchant Bank to repair the bus. The defendant by special condition of sale agreed to permit the plaintiff to continue to ply bus AZ 234, subject to the terms and conditions set out in clause 10 of the sales agreement.

[19] PW 1- Mr Sanmorgam, the Managing Director of the plaintiff company, in his evidence said that at the time of sale, the bus was in the garage of Sathis Motors; the repair of it took about 4 months; the repair was carried out after obtaining a loan of $20,000 from Merchant Bank; the loan has to be repaid in 3 years; he operated the bus for two months on Seva route as agreed in clause 10 of the agreement; thereafter despite his objections the defendant requested him to ply the bus on Navidamu route, which he did for two more months. The witness also said that the second route was not profitable and his request to permit him to operate again on Seva route was refused by the defendant. He said when the defendant requested to operate on the Navidamu route, he had no choice but to heed to the defendant's request, as he was indebted to the Merchant Bank, which required repayments of his debt.

[20] PW 1- Mr Sanmorgam also said that when he could not operate the bus profitably he parked the bus in the defendant's yard and the defendant had thereafter continued to operate the bus for 3 to 4 months. The plaintiff said that the defendant paid him about $ 50 to $60 during this period, either directly or at times left the money at his residence and he serviced the Merchant Bank using this money. The plaintiff says that the defendant offered to purchase the bus for $15,000; since he was unable to accept the offer, with the concurrence of the defendant, he sold the bus on 26 January 1999 to Kamal Dev of 'Bus Latchman', who is the brother of Ravindra Deo Prasad (DW2). The plaintiff says that the defendant signed the transfer form and gave it to him to sell the bus to Kamal Dev. He also maintained that he is illiterate.

[21] DW2 – Ravindra Deo Prasad, the Managing Director of the defendant company, in his evidence said that after repairs, bus AZ 234 operated on the license as agreed in clause 10 (b) of the sales agreement. He admitted signing the transfer form but said he signed it on the request of Mr Sanmorgam to obtain further advances from Merchant Finance, but later found that Mr Sunmorgam had used the signed transfer forms to sell the bus to Kamal Dev. In cross-examination, he said that, had the plaintiff operated the bus even on Seva route, he would have never have had made profits.

[22] The following evidence of DW 2- Ravindra Deo Prasad are significant, in this regard:

Q- If Mr Sanmurgam ran the bus [AZ 234] for 3 years he would have taken profit.

A- On Seva route he would have never made profit. $80 a day. I have now closed the Seva route about 4 or 5 years ago as it was not profitable. Navitabu route would have given him profit to service the MF loan. It was giving around $180 a day. Now about $300 a day.

Q- Summorgam owes money to Merchant Finance. He requests you to keep it. You give him a profitable route. Why did he not run

A- Mr Koli. No operator can make profit from one bus. It was his choice.

Q- When you saw he stopped operation in the Navitabu trip why did you not take over.
A- I was not given a choice because he was operating, the next morning the bus was with my brother Kamal. Then only I knew it was sold.

Q- Did you tell your brother Kamal that he has taken your bus?

A- No.

Q- When the bus was sold you put your bus?
A- Yes.

Q- Did you go and demand $15,000.00 from Mr Sunmorgam for the chassis?

A- Yes, I told him that I will deduct it from $56,023.81.

Q- I put it to you when Mr Summorgam told you that the route is not profitable you said you have lot of buses and said he can sell it and also signed the transfer form.
A- The transfer form was signed almost one week earlier for him to take another loan from Merchant Finance. The loan was on plaintiff's company.

[23] Clause 10 of the sales agreement reads:

'SPECIAL CONDITIONS OF SALE

(a) The parties accept that the Vendor [plaintiff] has borrowed $20,000.00 from Merchant Bank of Fiji and will utilize the same to carry out repairs to Bus No. AZ234 and will have the same in good working order and condition by 10th of October, 1998.

(b) That the Vendor shall be entitled to and the Purchaser [defendant] shall allow the Vendor to operate the said bus No. AZ 234 on Road Service Licence No. 12/23/49 for as long as he desires and shall be entitled to all the income derived from the operation of the said bus provided he maintains the said bus and meets all the operational costs of the same.

(c) Thould endor beor be unablunable to operate the said bus AZ234 then the Purchaser shall have the first option to operate the said bus on its trip with no remunerato thdor provided that the Purchaser pays off to the Mthe Merchaerchant Bank of Fiji the balance debt outstanding on the date of takeover of the said bus.

(d) That the Vendor accepts and acknowledges that he has purchased the chassis of the Bus AZ 234 from the Purchaser for the price of $15,000.00 which sum the Vendor agrees to pay in full upon satisfaction of debt to Merchant Bank of Fiji in which event the Purchasers shall transfer to the Vendor the said bus.

(e) Thathe V desiressires to reto repurchase the buses together with Road Service Licence No. 12/23/49 then the Purchase shall sell the to tndor for the price of $35,000.00 plus the market value of the buses operating on g on that that licence.'

[24] It is evident that sub-clause (a) to (e) of clause 10 stated above are independent of each other for interpretation. In other words, they are not connected as follow ups, hence should be considered separately for interpretation.

[25] The defendant's case is that he was entitled to the first option to operate the bus under sub-clause 10 (C) and for $15,000.00 for the chassis in terms of sub-clause 10 (d).

[26] Having considered the evidence on this issue, I am inclined to accept the unchallenged evidence of Mr Sanmorgam that he parked the bus at the defendant's yard and the defendant operated the bus for 3 to 4 months and serviced the Merchant Finance loan from the proceeds handed over by the defendant. Mr Ravindra Prasad was present in court and heard Mr Sanmorgam giving the aforesaid evidence. Nevertheless, none of these facts were contested or denied in his evidence. The aforesaid evidence reveals that the defendant had the first option to operate the bus. I therefore determined that the plaintiff in fact gave the defendant the first option to operate the bus as set out in clause 10 (c) of the sales agreement.

[27] Mr Ravindra Deo Prasad (DW2) in his evidence said that he signed and handed over the transfer form to Mr Sanmorgam one week before the sale of the bus. PW1 also admitted that DW2 signed the form. This evidence reveals that both PW1 and DW2 had a cordial relationship even a week prior to the transfer-form being signed. Here are two people who had a good rapport, and I am unable to accept that suddenly, Mr Sanmorgan unknown to Mr Prasad, sold the bus to Kamal Dev. Selling a bus, takes time and negotiations. Mr Sanmorgam said that Mr Kamal Dev took over the outstanding loan from Merchant Finance, when the bus was purchased. I am unable to accept that Mr Prasad was unaware or had no knowledge that Mr Kamal Dev was planning to purchase the bus. Mr Prasad even admitted that he saw the bus at his brother the following day. I am not inclined to infer that Kamal Dev who is also in the bus business was unaware that the bus belonged to his brother nor discussed the condition of the bus with Mr Prasad before its purchase. Before paying valuable consideration and especially when he was ready to take over an outstanding loan of the plaintiff from Merchant Bank, it would be a natural consequence before the purchase of the bus by Kamal Dev to have discussed it with his brother Mr Prasad. I have no reason to doubt that the defendant was fully aware that the bus was sold to Kamal Dev and in fact Mr Prasad signed the transfer-form with full consent.

[28] The plaintiff's case is that he is not obliged to pay the $15,000.00 in terms of sub-clause 10(d) for the chassis, as he was not permitted to operate on Seva route. I have already determined that sub-clause 10(d) stands alone from the other sub-clause of clause 10 of the Sales agreement.

[29] Let me therefore examine sub-clause 10(d).

(d ) That the Vendor accepts and acknowledges that he has purchased the chassis of the Bus AZ 234 from the Purchaser for the price of $15,000.00 which sum the Vendor agrees to pay in full upon satisfaction of debt to Merchant Bank of Fiji in which event the Purchaser shall transfer to the Vendor the said bus. (Emphasis added )

[30] The plaintiff admits purchasing the chassis for $15,000. The plaintiff says that Kamal Dev had undertaken the repayment of Merchant Finance loan. As at the date of trial, Merchant Finance had not made a demand on the plaintiff for the moneys loaned for a 3 year repayment period. Approximately, repayment period of three years should have ended in 2001. It is therefore reasonable for this court to infer that the Merchant Finance loan had been fully serviced as at the date of trial in 2010. Nor there any evidence to the contrary. Clause 10(d) clearly requires the plaintiff to pay back the $15,000.00 to the defendant, after the debt to Merchant Finance was satisfied. It is irrelevant whether the plaintiff made profit or loss operating the bus. His agreement under sub-clause 10(d) was, upon repayment of the loan to Merchant bank, the defendant had to be paid $15,000. The defendant was then obliged to transfer the bus to the plaintiff, which he did when he transferred it to Kamal Dev on the plaintiff's instructions. Therefore, I determined that the plaintiff had breached its obligation under this clause and is therefore liable to pay $15,000.00 for the chassis to the defendant.

[31] The plaintiff's stand is that his agreement was to operate the bus on Seva route, which was not permitted by the defendant. Mr Prasad in his evidence never explained why he refused the plaintiff to operate on this route. He simply says that the alternative route would have been more profitable. Perhaps he must be correct about the profitability. However, what was agreed to was different. The defendant was obliged to permit the plaintiff to operate on the Seva route and requesting the plaintiff to operate on an alternative route is a breach of sub-clause 10(b) of the sales agreement. However, there is no claim by the plaintiff for this breach.

Issue 2-
$4000 paid to the credit corporation

[32] The defendant at paragraph 8 of the amended Statement of Defence states that on the request of the defendant, he paid Credit Corporation $4000.00, as the plaintiff was unable to meet his debt to the Credit Corporation.

[33] PW1-Mr Sanmorgam in his evidence said that this payment related to an earlier transaction where he sold three other buses to the defendant. He states that he has been in the transport business since 1998, approximately one year before the execution of the sales agreement, he had also sold three other buses to the defendant.

[34] DW 2- Mr Prasad maintains that $4000.00 was paid as a personal loan. When cross-examined he said that by an oversight, he forgot to include $4000.00 when he negotiated the second transaction as his accountant detected the arrears only at the end of the year. In cross-examination, the witness also admitted that he had not demanded the money from the plaintiff and had only spoken to him about it.

[35] DW2, Mr Prasad also said that with the first transaction of buses, the plaintiff had two other loans; one with Credit Corporation and the second with Merchant Finance and that he agreed to pay-off both outstanding loans and also paid $36,500.00 in cash. In support he produced, receipt dated 27 February 1998 marked D4, which confirms the payment of $36,100.00.

[36] The receipt marked P 5, issued by Credit Corporation (Fiji) Limited for $4000.00, evince that the money was paid to Credit Corporation on 31 January 1998, by Bullika Transport Ltd. The photocopy produced in the agreed bundle is unclear, but it reads as:

'.......part-payment for..buses .....motor vehicles on o/a of Tanoa Buses Limited'

[37] It appears from P 5 that the payment was made by the defendant, on behalf of the plaintiff as a part –payment for some buses and motor vehicles. DW2- Mr Prasad admits taking over the payment of the outstanding loan of Credit Corporation. This is not a personal loan as alleged by the defendant. The receipt establish that the payment was made by the defendant as a part payment for an undertaking. I am not satisfied with the evidence before me that the defendant had established this claim.

Issue 3 - $20,000.00 being value of bus BA 063

[38] The issue before court is whether the defendant is entitled to the value of the bus, as the plaintiff failed to deliver the bus in working order and with a certificate of fitness. The defendant estimates the value of the bus at $20,000.00.

[39] PW1 – Mr Sanmorgam in his evidence said that bus no. BA 063 was delivered after one month of signing of the sales agreement; after its delivery there were no complains relating to the bus; approximately, 8 to 9 months thereafter he received a letter from the defendant company (ABOD Exhibit 13 - letter dated 15 November 1999) complaining that the bus was not working; he had not received any demand letter from the defendant claiming the value of the bus.

[40] PW2- Ramesh Kapur, the driver, in his evidence said he was working for the plaintiff before the sale of the business, thereafter was employed by the defendant. He was unable to remember the exact date when the bus was removed to the defendant's yard, but said it was around 2 or 3 months after the sale. His evidence was that the foreman of the defendant company, Jithan, requested him to take a battery and pick up the bus and park it at Bulileka. He states that the defendant's buses are generally parked at Naseakula yard but this bus was parked in Bulileka on the instructions of Jithan. He said he accompanied driver Papaya to drive back the bus. Half way through the journey the axel had broken and Papaya had replaced it with a part from the defendant's garage. After the repair, the bus was parked at Bulileka. In cross-examination, the witness said that two months prior to the sale he worked as the driver of BA 063 bus, and it had no engine trouble.

[41] DW1- Papaya, the driver who drove the bus in his evidence said that he was requested to drive the bus by Mr Sanmorgam. He said he was satisfied that the bus was in running condition when he drove it from plaintiff's yard to Bulileka. He admitted that during the journey, the axel had broken, but after repairs, he drove the bus and had parked it at Bulileka, as informed by Ramesh- PW2. He also said that the engine and many other parts were in good condition, but said the bus was unsuited to be driven with passengers; which was not explained. He also said that he did not complain to the defendant of any defects of the bus. In cross-examination, Mr Papaya admitted that breaking of an axel cannot be previously detected.

[42] DW2- Mr Ravindra Doe Prasad, said that while he was overseas, unknown to him, the bus had been parked at the defendant's house at Bulileka. He also said that he did not authorize his foreman to take over the bus from the plaintiff. He maintained that the bus was not in a running condition, since it was parked, depriving him of its utilization. In his evidence, he said that all three buses had fitness certificates when he inspected them at the plaintiff's yard before purchasing the bus two weeks prior to entering into the sales agreement. In cross-examination, he said that he had several buses and he in fact had bought the plaintiff's business not because of the buses but for the route license, as it was valuable.

[43] It appears from the evidence before me that, Ramesh Kapur (PW2) and Papaya (DW1) who were employed by the plaintiff but later on, became employees of the defendant were asked to remove the bus from the plaintiff's yard. The uncontested evidence established that the above two employees had reached the plaintiff's yard with fuel and a battery to start the bus and had driven away. There was no evidence adduced before me that there was any difficulty starting the bus. Mr Papaya who was the driver for the day, said that he was satisfied that the bus was in a running order before he took possession. I am mindful that breaking of the axel cannot be attributed to the bus being in a non running state.

[44] Clause 6 of the sales agreement required the plaintiff to ensure that all buses, including BA 063, "were in good running order and condition with current certificate of fitness" at the time of delivery. In cross-examination, DW2- Ravindra Prasad admitted that all the buses were in running condition as stated in clause 3 of the agreement.

[45] In clause 4 (b) the parties agreed that:

'Upon completion the Vendor shall execute and deliver to the Purchaser (together with all other relevant documents) duly executed releases of any Bill of Sale and transfers of vehicle forms as the Purchaser may require to vest in the Purchaser title to and the full benefit of the assets'.

[46] In clause 5 of the sales agreement the defendant covenant that:

That the Purchaser admits and accepts that he has inspected the assets and that he purchased them solely in reliance upon his own judgement and not upon any representation or warranty made by the Vendor or any agent of the Vendor as to the assets 1998 and that the same were all in good running order and condition with current certificate of fitness.'

[47] The vehicle inspection history of BA 063, substantiates that the bus had a roadworthy license from 15 May 1998 to 15 February 1999. (D 6). When the parties executed the sales agreement on 2 October 1998, the bus had a fitness certificate. The LTA vehicle history extract at D 8 establishes that the ownership of the bus had been registered on 9 February 1999.

[48] The defendant's own witness Papaya testified in court that he was satisfied that the bus was in running order. He had not complained or made negative comments that the bus was not in a running order when he drove the bus back to the defendant. He said the bus could not carry passengers. If the bus was in running order then the defendant must establish why it could not carry passengers. Mr Prasad's stand is that, the bus was not in a running condition, contrary to his own witness Papaya. I am satisfied that the bus was in fact in a running condition when it was delivered to the defendant. Furthermore, under clause 4, the purchaser took over the title and possession of the assets on 21 September 1998.

[49] The sales agreement does not provide for specific delivery. Clause 4(b) only refers to delivery of the documentation. Therefore, it was the duty of the defendant to remove the buses from the plaintiff's yard. If the bus was not in a road worthy state with the current fitness certificate as alleged by the defendant, then the parties would have made provision for same in the sales agreement, like they did for bus AZ 234. I do not accept the contents of P 2 and D5 letters as true. They are clearly contrary to the evidence adduced by the defendant. Mr Prasad in his evidence told that the plaintiff's buses were no use for him, except the route license. He also said that the buses were old and the parts are used to repair the buses operating in routes. In my mind, that appears exactly what the defendant did with BA063 bus, used its parts to service his other buses, thereby letting it be in its present state. Having considered the explicit evidence before me, I conclude that BA 063 was in a running condition when it was delivered to the defendant. Admittedly, the bus had a certificate of fitness at the time of sale. It was defendant's obligation to have had obtained a valid roadworthy certificate at its expiry. I determine that the defendant had not proved this issue. Accordingly, this issue must fail.

INTEREST

[50] D 9, LTA transfer- form depicts that Tanoa Transport acquired bus AZ 234 on 20 July 1991 and sold it on 20 July 1992 to the plaintiff, Tanoa Buses limited. However, the plaintiff has sold the bus the same day, but the LTA document does not reflect the new owner. Meanwhile the insurance policy extracts obtained from the LTA, which was produced before me by consent, depicts that the bus was insured in the name of Bulileka Transport Ltd (defendant) since 30 November 1991 to 17 January 1998. The sales agreement was signed on 2 October 1998. Neither party explained me of these discrepancies. I therefore do not order any interest on the payment of $15,000.00 by the plaintiff to the defendant, on issue no. 1.

[51] The plaintiff moved for interest at 15%. The defendant moved for interest at 13.5%. Neither party had justified the basis of the claim for their respective interest. The parties had not agreed a rate of interest in the sales agreement. Having considered that the defendant admits that fair rate of interest for his claim is 13.5%, I order interest to be paid at 13.5% for the balance sum due to the plaintiff by the defendant. The defendant undertook to service the HFC loan in four years, i.e by 2 October 2002. Therefore payment of intrest should commence after that period.

COSTS

[52] Having considered the facts of this case, I do not award costs.

DETERMINATION

[53] I have given my reasons on the three issues, as stated above. Accordingly, I determined that:

• (a) Issue no 1 - plaintiff to pay $15,000.00 to the defendant.
• (b) Issue no 2 - dismissed.
• (c) Issue no 3 - dismissed.
  

[54] Defendant agreed at the hearing that the balance outstanding is $57,018.81 as at the date of the hearing. Both parties agreed that $27,900.00 as stated in paragraph 14 above was paid by the defendant. Therefore the outstanding sum is then $29,118.81.(57,018.81– 27,9000.00). I have already determined that the plaintiff must pay the defendant $15,000.00 for the chassis. After setting off the $15,000.00, the defendant is then liable to pay a balance sum of $ 14,118.81 to the plaintiff. ($ 29,118.81 - $15,000.00).

[55] After setting off the amounts owed to each party i.e. the plaintiff to defendant $15,000.00 and defendant to the plaintiff $29,118.87, I determined that the defendant must pay the plaintiff a balance sum of $14,118.81.

ORDERS

The defendant to pay the plaintiff a sum of $ 14,118.81 together with interest at 13.5% from 2 October 2002 to final date of payment.

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