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Dominion Finance Ltd v Shamshood [2012] FJHC 1372; HBC128.2012 (16 October 2012)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 128 of 2012

BETWEEN:

DOMINION FINANCE LIMITED
a limited liability company having its offices in Suva.
PLAINTIFF

AND:

MOHAMMED SHAMSHOOD trading as SAM CIVIL SERVICES
of 37 Vunakece Road, Namadi Heights, Suva, Businessman.
DEFENDANT

BEFORE : Master Deepthi Amaratunga

COUNSEL : Mr. Tuitogo Tomasi for the Plaintiff

Mr. Samad I. H. Q. for the Defendant

Date of Hearing : 24th September, 2012

Date of Ruling : 16h October, 2012

RULING

1. INTRODUCTION
   

1. The Plaintiff is a financial institution and provided a loan to the Defendant in order to purchase a tractor for logging. The Defendant was unable to repay the loan as per the loan agreement and this action is instituted for the recovery of the loan outstanding. The Defendant has filed an acknowledgement of service on 8th June, 2012 but no statement of defence was filed. This is the summons of the Plaintiff for the summary judgment. The Defendant has filed the affidavit in opposition and admitted the loan and reiterated the purpose of the loan was to purchase a tractor for logging and stated that due to faults in the engine of the tractor and adverse weather condition the logging got disrupted resulting the depletion of cash flow from the said tractor. The Defendant state that he had indicated this predicament to the Plaintiff, but he was not granted any relief in terms of the Section 66 of the Consumer Credit Act. The Plaintiff state that since the purpose of the loan was a commercial one the provisions contained in the Consumer Credit Act will not be applicable. This is the only issue raised by the Defendant, in its affidavit in opposition.
   

2. ANALYSIS
   

2. In order to grant the summary judgment I have to consider whether the Defendant’s defence is a ‘sham’ defence. There is no statement of defence filed and the only issue raised in the affidavit in opposition is the Section 66 of the Consumer Credit Act and the Plaintiff’s alleged non compliance of the said provision. The Plaintiff state that Consumer Credit Act does not apply to the said loan.
   
3. The issue is whether the Defendant can avail the provisions contained in the Section 66 of the Consumer Credit Act and whether the Plaintiff could have facilitated the repayment by rescheduling it.
   
4. Section 66 of the Act reads as follows:
   
   • (1) A debtor who –
     
     • (a) Is unable because of illness, unemployment or other reasonable cause, to meet the debtor’s obligations under a credit contract; and
       
     • (b) Reasonably expects to be able to discharge the debtor’s obligations if the terms of the contract were changed in a manner set out in subsection (2),
       

May apply to the credit provider for such a change.

(2) An application by a debtor under subsection (1) must seek to change the terms of the contract in one of the following ways without a change being made to the annual percentage rate or rates –

• (a) Extending the period of the contract and reducing the amount of each payment due under the contract accordingly;
  
• (b) Postponing for a specified period the date on which any payment is due under the contract;
  
• (c) Extending the period of the contract and postponing for a specified period the date on which any payment is due under the contract.
  

(3) The credit provider may charge reasonable finance fees or penalty interest for changes made to a contract under subsection (2).

5. The Section 6 of the Consumer Credit Act deals with the applicability of the Act and state as follows
   

“6. (1) This Act applies to the provision of credit (and to the credit contract and related matters) if, when the credit contract is entered into, or, in the case of pre-contractual obligations is proposed to be entered into -

(a) the debtor is a natural person ordinarily resident in the Fiji Islands, or is a body corporate or unincorporated formed in and under the law of the Fiji Islands;

(b) the credit is provided or intended to be provided wholly or predominantly for personal, domestic or household purposes;

(c) a charge is or may be made for providing the credit; and

(d) the credit provider provides the credit in the course of a business of providing credit or as part of or incidentally to any other business of the credit provider.

(2) If not all the debtors under a credit contract are persons or corporations to whom or which subsection (1) (a) applies this Act applies only if credit is first provided under the contract in the Fiji Islands.

(3) This Act applies to the provision of credit (and to the credit contract and related matters) –

(a) whether or not it takes place in the Fiji Islands; and

(b) even though the debtor ceases to be ordinarily resident in the Fiji Islands.

(4) For the purposes of this section, investment by the debtor is not a personal, domestic or household purpose.

(5) For the purposes of this section, the predominant purpose for which credit is provided is –

(a) the purpose for which more than half of the credit is intended to be used; or

(b) if the credit is intended to be used to obtain goods or services for use for different purposes, the purpose for which the goods or services are intended to be most used.”

6. It is an admitted fact the loan was provided by the Plaintiff to the Defendant in order to purchase a tractor for the purposes of commercial logging. Paragraph 11 of the affidavit in opposition state that the repayment was not possible due to adverse weather and problems with the engine of the said tractor indicating clearly the intended cash flow for the loan repayment was the commercial usage of the tractor for logging and this cannot be considered as ‘the credit is provided or intended to be provided wholly or predominantly for personal, domestic or household purposes' as required by Section 6(1) (b) of the Consumer Credit Act.
   
7. The loan granted to the Defendant is not covered under Section 6 of the Consumer Credit Act. The claim is based on the loan agreement. The main contention of the Defendant is that the bill of sale signed between the parties as a security of the loan indicate the provisions of the 'Consumer Credit Act'. The claim of this writ action is based on the loan agreement and if the said loan is excluded in the Consumer Credit Act there is no need to comply with the Section 66 of the Consumer Credit Act irrespective of the mentioning of Consumer Credit Act in the Bill of Sale. The claim is based on the loan and the bill or sale is only a security and the claim is not based on it.
   
8. The clause 2 of the bill of sale under the 'Bill of Sale Security' state as follows
   

'BILL OF SALE SECURITY

2.1 Security

To secure payment of the secured money and performance of my obligation to Dominion (the Plaintiff) I charge mortgage, transfer and assign all my right, title and interest in the property to Dominion subject to my right to have it transferred back to me under clause 9 (which deals with discharging this bill of sale)'

The purpose of the bill of sale is clear and this action is not based on the said bill of sale, but on the loan and the purpose of the loan does not fall within the ambit of Section 6(1) (b) of Consumer Credit Act and Section 66 of the Consumer Credit Act has no application to this claim based on the writ of summons and the proposed defence in the affidavit in opposition is a 'sham defence'.

9. Order 14 of the High Court deals with application for summary judgment. Order 14, r.1 requires the plaintiff to satisfy the court that the defendant has no defence. The no defence position and the obligations that the rules impose on the parties have been examined of authorities. In Pemberton – v – Chappell [1986] NZCA 112; [1987] 1 NZLR 1 at 3 the Court of Appeal said as follows:
   

"In this context the words "no defence" have reference to the absence of any real question to be tried. That notion has been expressed in a variety of ways, as for example, no bona fide defence, no reasonable ground of defence, no fairly arguable defence."

At page 4:

"On this the plaintiff is to satisfy the court; he has the persuasive burden. Satisfaction here indicates that the court is confident, sure, convinced, is persuaded to the point of belief, is left without any real doubt or uncertainty."

And further at 4:

"Where the only arguable defence is a question of law which is clear cut and does not require findings of disputed facts or the ascertained of further facts, the court should normally decide it on the application for summary judgment, just as it will do on an application to strike out a claim or defence before trial on the ground that it raises no cause of action or no defence."

10. The Court also commented on the position where a defence is not evident on a plaintiff's pleading and said at 3;
    

"If a defence is not evident on the plaintiff's pleading I am of opinion that if the defendant wishes to resist summary he must file an affidavit raising an issue of fact or law and give reasonable particulars of the matters which he claims ought to be put in issue. In this way a fair and just balance will be struck between a plaintiff's right to have his case proceed to judgment without tendentious delay and a defendant's right to put forward without tendentious delay and a defendant's right to put forward a real defence."

A complete defence does not have to be shown by the defendant at the stage when summary judgment is sought: The Cloverdell Lumber Co Pty Ltd – v – Abbott [1924] HCA 4; [1924] 34 CLR 122 at 133 but if the defence is doomed to fail it should not be an obstacle to grant summary judgment for all or some of the claims of the Plaintiff as stated in Order 14 rule 1(1) of the High Court Rules

100. CONCLUSION
     

11. The Defendant did not file a statement of defence and the only defence contained in the affidavit in opposition is the applicability of Section 66 of the Consumer Credit Act. The purpose of the loan is admitted and it is for the purchase of a tractor. The reason given for non repayment of loan installments are the adverse weather conditions and the problems in the engine of the said tractor. This indicate the intended cash flow for the repayment of the loan was the commercial utilization of the tractor for logging. These facts are not disputed (see paragraph 11 of the affidavit in opposition). I do not have any evidence of such hardship being informed to the Plaintiff and seeking relief under Section 66 of the Consumer Credit Act this again proves that the applicability of the Section 66 is only an afterthought where the Defendant did not file a statement of defence. There is no bona fide defence and the alleged defence of the applicability of the Section 66 of Consumer Credit Act is without any merit in the analysis of the law. Though I granted the Defendant to file submissions on this point of law, no submission was filed. I am convinced that Section 66 of the Consumer Credit Act has no application this action. The summons for summary judgment is granted for a sum of $66,209.64 and pre judgment interest of 13.5% per annum from 4th May, 2012 to 16th October, 2012 and post judgment interest of 4% p.a from today to the full settlement of the sum. I assess the cost of this application summarily at $1,000.
    

4. FINAL ORDERS
   

1. The Defendant is ordered to pay a sum of $66,209.64 with interest of 13.5% p.a from 4th May, 2012 to 16th October, 2012 and 4% p.a from today until the final settlement of the sum.
   
2. The Defendant is further ordered to pay a cost of this application summarily assessed at $1,000.
   

Dated at Suva this 16th day of October, 2012.

..............................................
Master Deepthi Amaratunga
High Court, Suva